Direct Engagement Activities

PSP Investments actively engages in dialogue with public companies whose securities it holds with a view to improving their environmental, social and governance (ESG) issues. In fiscal year 2017, we engaged with 477 such companies on a range of ESG issues.

Governance Issues

Governance is defined as the framework of rules and practices which guide a Board of Directors to ensure a company is accountable and transparent in its relationship with its shareholders. During the past fiscal year, PSP Investments engaged with public companies on a number of governance issues. Examples of the issues raised include: Director independence, majority voting, separation of Board Chair and CEO roles, succession planning, committee structures, performance-linked compensation, disclosure, and risk management, including bribery and corruption risk.

Example of an Engagement with a Canadian retall company

Engagement objective

  • Encourage greater diversity on the Board.
  • Improve supply chain management and product safety from a risk management perspective.
  • Ensure that Director remuneration is aligned with long-term performance.

What PSP Investments achieved

Following several engagement meetings with PSP Investments, the company has made progress on several fronts. It has moved away from an all-male Board by appointing a new female Director with highly relevant experience. With regard to supply management, the company mapped out its risk profile and implemented procedures to mitigate these risks. This includes a new supplier code of conduct and more thorough monitoring of suppliers’ compliance with company policies. In terms of ongoing engagement, PSP Investments has expressed concerns about the use of stock options as remuneration for Directors. The company has confirmed it will replace stock options with deferred share units to create a better alignment with long-term performance.

Social Issues

PSP Investments engaged public companies on a variety of social issues, including labour and community relations, particularly with those operating in troubled regions and those with worker health and safety concerns.

Example of an Engagement with a European chemicals company

Engagement objective

  • Improve labour standards in the supply chain.

What PSP Investments achieved

The company was engaged to ensure that it was meeting the highest ethical standards in terms of sustainable business practices and fair labour conditions. The company undertook an independent assessment of its supply chain activities in India. This assessment is expected to contribute to ensuring fair compensation for third party workers in India.

Environmental Issues

In fiscal year 2017, PSP Investments met with a significant number of public companies to discuss environmental issues. These engagements focused on such issues as climate change, water stress, oil and gas, mineral and metals extraction, forestry and biodiversity.

Example of an engagement with a US beverage company

Engagement objective

  • Encourage the implementation of best practice water management systems and controls.

What PSP Investments achieved

The company has conducted a comprehensive site-level water stress survey at more than 50% of its manufacturing facilities by volume. This initiative has been accompanied by a strategy to ensure resilience of water supply over the next decade and beyond. With a focus on irrigated crops, the company has appraised the risks of water scarcity to its agricultural supply chains. PSP Investments will continue to press for greater disclosure of water risk management.

Engagement activities by issue

Direct Engagement by Region