- Do you measure the carbon footprint of your infrastructure portfolio? And do you measure your footprint at the GP level?
Like other institutional investors, we are continually seeking ways to measure climate risk across a broad, diversified portfolio. We are engaging in carbon footprinting exercises and developing an approach to conduct scenario analyses that will help us determine the Plan’s resiliency to effects of climate change.
Working on behalf of more than 500,000 members, OMERS has a responsibility to invest and manage the Plan’s funds to meet our long-term obligations. We do this by investing in a portfolio of diversified, high-quality assets around the globe. As a long-term investor, we try to identify and address changes in the world around us that will or may affect the value or risk of our investments – including environmental, social and governance factors.
We specifically recognize that climate change and the expected transition to a lower-carbon global economy could have a significant long-term impact on the companies and assets in which we invest. We have therefore endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which create a framework for consistent disclosure related to climate change through, for example, our annual report.
Furthermore, OMERS collaborates with diverse partners, in addition to TCFD, to create a more powerful voice and influence on sustainable investing practices. We regularly work with other organizations to advocate for better performance, management and disclosure across ESG factors – such as Investor Leadership Network (ILN), Canadian Coalition for Good Governance (CCGG), the 30 Percent Club and The Prince’s Accounting for Sustainability Project (A4S).
From a governance perspective, OMERS Board has approved a formal Sustainable Investing Policy. The Investment Committee of the OMERS Board is responsible for overseeing our approach to sustainable investing. Board members receive regular reporting on our sustainable investing practices.
We have also established a Sustainable Investing Committee, overseen by our Senior Executive Team, to lead our integrated approach. That Committee’s membership includes our Chief Investment Officer; our Executive VP [and] General Counsel; our VP of Sustainable Investing; decision-makers from each of our investing business units; and representatives from finance, risk, legal and communications.
Its mandate is to:
- stay current on emerging trends, issues and best practices relevant to ESG matters;
- support and guide others across OMERS on ESG matters;
- report to the Investment Committee, Senior Executive Team, and other stakeholders;
- recommend amendments to our Sustainable Investing Policy, ESG Guidelines and Climate Change Guidelines.
For more information, please see:
- Do you have any fossil-fuelled energy generation/transmission assets in your infrastructure portfolio? If so, what percentage of your portfolio do they represent?
All of our energy holdings are posted to OMERSInfrastructure.com. OMERS currently invests in both the next generation of clean energy (such as through our Leeward Renewable Energy wind energy platform) and, thoughtfully, in the traditional energy industry – with a focus on transportation, including pipelines, rather than production. This sector remains important to the global economy, and we believe that responsible and long-term investors play a vital role in providing leadership on the cleaner and safer production and transportation of traditional energy.
OMERS energy production holdings includes an investment in Bruce Power, the largest operating nuclear power facility in the world. Its eight units provide approximately 30% of the Province of Ontario’s electricity, and it employs over 4,000 full-time staff. Bruce’s contribution to Ontario’s energy mix was key to helping the province phase out its use of coal-fired electricity.
- Do you have any energy-transition assets in your portfolio? If so, what percentage of your portfolio do they comprise?
OMERS has a diverse portfolio of investments related to energy, which includes clean energy/renewables (representing 3% of the total fund).
- Have you implemented or do you have plans to implement, emissions-reduction targets across your infrastructure portfolio?
- Could you provide details on those targets, including how much CO2 you are offsetting and how you will go about doing it?
- Do you seek to also influence the supply chain your portfolio companies work with?
- Will you be relying on data gathering and/or technology to ‘green’ your portfolio?
- Are you reducing emissions at the GP level, by, for example, rationing travel or offsetting it?
As a high-level summary of our approach, we use our influence to address climate change risks specifically through our governance rights and proxy voting activities. (Our disclosure policy limits our ability to provide specific capex information.)
Our investment teams actively promote sustainable business practices and long-term perspectives across our investment portfolio through direct engagement with management and Boards of Directors. When investing in private assets we typically acquire governance rights, including board seats. We exert our board-level influence to encourage the investee company to maintain and build on sustainable business practices and long-term thinking.
Investors in publicly traded equities have voting rights through proxies; we always exercise these rights and vote according to our Proxy Voting Guidelines, which are reviewed and updated regularly.
Through this active governance, OMERS influences material ESG-related practices in our investees’ strategies and operations.
We are happy to refer you to the follow examples of sustainability/climate-change-related work underway across our global portfolio of infrastructure investment assets:
Bruce Power – https://www.brucepower.com/what-we-do/a-cleaner-tomorrow/
- How resilient is your infrastructure portfolio to climate change?
- Do you have any assets that are particularly exposed to climate change?
- Does your portfolio require climate-adaptation measures, and, if so, what is the projected capex spend?
- Have you already spent capex making your portfolio more climate-resilient? And if so, how much?
- Also, will this spend impact the projected returns of your infrastructure portfolio?
- Have you ever divested an asset due to climate-change considerations?
We integrate ESG factors into our investment analyses, asset management practices, and decision-making processes. This means that the investment teams pay careful attention to evaluating both qualitative and quantitative factors in making investment and asset management decisions. These processes are tailored to their type of asset to ensure that important and relevant factors are considered. Our investment approval processes require specific discussion of material ESG risks and opportunities. These factors include climate change, labour practices, inclusion and diversity practices, Indigenous Rights and board composition, among others.
When the impact of climate change is considered material to a proposed investment, our teams analyze the potential impacts to value or to risk – whether positive or negative. They involve internal or external experts as necessary. Each of our asset class teams has developed assessment procedures on climate change tailored to their unique investing approaches and strategies.
- Could climate change adversely impact the valuation of your infrastructure portfolio?
OMERS has a formal risk framework which governs our approach to identifying and managing risks, including those related to ESG and climate change. We have established a Climate Risk Working Group, comprised of risk professionals from each investment team and representatives from our Sustainable Investing Committee.
Our investment teams assess risk at the underwriting and asset management level with assistance from internal or external advisers where necessary. Our investment approval process includes separate risk reporting on items such as climate change, if it could materially impact the investment opportunity.
- Have you adopted a strategy for future assets you will be investing in? For example, investing less in fossil fuel-based assets and more or only in clean energy?
OMERS currently invests in both the next generation of clean energy and, thoughtfully, in the traditional energy industry. This sector remains important to the global economy, and we believe that responsible and long-term investors play a vital role in providing leadership on the cleaner and safer production and transportation of traditional energy.
We believe that OMERS can have a greater positive impact through engagement, rather than divestment.
While OMERS continues to carefully and selectively invest in traditional energy assets as part of a balanced energy portfolio, clean energy is a significant and growing part of our strategy.