State of Responsible Investment in Canada

Jane Ambachtsheer Partner & Global Head of Responsible Investment Mercer

MERCER 1 March-7-13

Environmental, social and governance (“ESG”) factors - Investors are scrutinizing Canadian issuers on a range of issues

Environmental

• Climate

disclosure

• Environmental

risk management

and energy

efficiency

• Toxic chemicals

• Genetic

engineering

• Pollution

• Water risk

management

(availability and

sourcing)

Social

• Free, prior and

informed consent

of indigenous

peoples

• Working conditions

• Supply chain

management

• Health and safety

• Product safety

• Treatment of

customers

• Labour relations

• Human rights

Governance

• Transparency

• Board structure

• Independent directors

and oversight

• Separation of

Chairman and CEO

• Diversity

• Remuneration

• Executive

compensation and

‘Say on Pay”

• Shareowner rights

• Accounting and audit

quality

• ESG disclosure

MERCER 2 March-7-13

Canadian Coalition for Good Governance

• The CCGG encourages boards of Canadian public companies to voluntarily

adopt a number of corporate governance best practices

• CCGG articulates the perspectives of many of the largest Canadian

institutional investors on corporate governance matters

– Policy documents

– 45-50 meetings with boards a year

MERCER 3 March-7-13

Canadian PRI signatories • As of 1 February 2013 there are 48 Canadian signatories to the UN-backed Principles

for Responsible Investment, representing in excess of $825 billion in assets under management

25 Investment Managers

• Alberta Investment Management

Corporation

• Addenda Capital Inc.

• AlphaFixe Capital Inc.

• Bentall Kennedy

• Birch Hill Equity Partners

Management Inc.

• British Columbia Investment

Management Corporation

• Caisse d`économie solidaire

Desjardins

• Cordiant

• Fiera Sceptre Inc.

• Fonds Desjardins

• Global Alpha Capital Management

• Hexavest

• HR Strategies Inc

18 Asset Owners

• British Columbia Municipal Pension Plan

• Caisse de dépôt et placement du Québec

• Canada Pension Plan Investment Board

• Comité syndical national de retraite Bâtirente

• Community Foundation of Ottawa

• Fondaction CSN

• Fonds de solidarité FTQ

• Gestion FÉRIQUE

• Healthcare of Ontario Pension Plan (HOOPP)

• Native Benefits Plan

•Ontario Teachers’ Pension Plan

• OPSEU Pension Trust

• Public Service Alliance of Canada Pension Fund

• Régime de Retraite de l'Université de Montréal

• Régime de retraite de l’Université du Québec

• Société d'assurance-vie inc. (SSQ)

• UFCW International Union Pension Plan for

Employees

• University of Ottawa

• Matrix Asset Management Inc.

• Montrusco Bolton Investments

Inc.

• NEI Investments

•OceanRock Investments Inc

• Optimum Asset Management

Inc.

• Presima

• Qube Investment Management

Inc.

• Sarona Asset Management

• TD Asset Management

• Tricon Capital GP Inc.

• Vancity Investment

Management

• XPV Capital Corporation

5 Professional Service Partners

• Corporate Knights

• Groupe Investissement Responsible

• Mercer Investment Consulting

• PBI Actuarial Consultants Ltd.

• RRSE

• SHARE – Shareholder Association for

Research & Education

MERCER 4 March-7-13

$600.9 billion in Responsible Investment assets in Canada (SIO 2012)

Source: 2012 SIO / 2012 Global

Sustainable Investment

Review, GSIA

MERCER 5 March-7-13 5 07 March 2013

Sustained growth in SRI assets in Canada over the past decade

Source: Social Investment Organization 2012 Review

0 100 200 300 400 500 600 700

2000

2002

2004

2006

2008

2010

2011

SRI assets in Canada

($ billions)

Year

MERCER 6 March-7-13

Engagement, Integration and Negative screening most common approaches

Source: 2012 SIO / 2012 Global

Sustainable Investment

Review, GSIA

MERCER 7 March-7-13

Jantzi Social Index vs. S&P/TSX Composite

MERCER 8 March-7-13

MERCER 9 March-7-13

The road ahead…

• Responsible Investing and ESG issues are appearing on a growing number

of committee agendas as topics for discussion

• New interest in the PRI from several large Canadian investment managers

• But challenges remain…

– Progress – on the whole – continues to lag other markets

– Are signals being sent throughout the investment supply chain as in

other regions?

MERCER 10 March-7-13

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