As a long-term investor, PSP Investments believes in the importance of establishing strong governance oversight of its investments. PSP Investments uses its ownership positions to promote good corporate governance practices by exercising its proxy voting rights and actively engaging with companies individually and through collaborative initiatives with other like-minded institutional investors.
PSP Investments recognizes that a broad range of financial and non-financial considerations are relevant in terms of making investment decisions. PSP Investments has adopted a Responsible Investment Policy that embodies its belief that responsible corporate behaviour with respect to environmental, social and governance (ESG) factors can have a positive influence on long-term financial performance. In analyzing the risks inherent in any investment, PSP Investments undertakes to identify, monitor and mitigate ESG issues which are or could become material to long-term financial performance. These risks are discussed in the business plans of PSP Investments’ various asset classes. They are considered part of the due-diligence process and addressed in each investment recommendation submitted to the Board of Directors’ Investment Committee, the President and CEO, or other approving officers. The monitoring of ESG risks is also part of an ongoing dialogue with external managers, Boards of Directors and senior management of the private and public companies in which PSP Investments invests.
With the assistance of a service provider, PSP Investments actively engages in direct dialogue with public companies to improve their ESG practices. Public companies are selected for engagement based on a process that takes into account such factors as ability to create shareholder value, prospects for successful engagement and relevant ESG issues. The intensity of PSP Investments’ involvement with public companies evolves over time. Some engagements entail one or two meetings over a period of months; others are more complex and warrant multiple meetings with board members and senior management over several years. PSP Investments tracks its engagement objectives primarily on issues for which it believes changes in behaviour are justified.
PSP Investments has adopted Proxy Voting Guidelines to address issues of corporate governance on which it may be requested to vote from time to time, as well as the principles on which it will rely in determining a response to such requests. PSP Investments will give due consideration to corporate governance principles when assessing the merits of an issue and will exercise its voting rights with a view to maximizing the value of its shareholdings. As part of the active management of its proxy voting, PSP Investments reviews proxy circulars and research from service providers when voting the equities held in accounts managed internally, as well as those in segregated accounts managed by external managers.