PSP Investments strives to embed sustainable investing into its culture, operations, and investment activities
The Public Sector Pension Investment Board (PSP Investments) is striving to embed sustainable investing into its culture, operations, and investment activities and to continue to advance capabilities and address emerging risks and opportunities, it said in its annual ‘Sustainable Investment Report.’
“In a year marked by challenges and uncertainty for investors, PSP Investments continued to deliver resilient long-term financial results and advance its capabilities to address emerging risks and opportunities,” says Deborah K. Orida, president and chief executive officer at PSP Investments. “We aspire to develop additional foresight on the structural changes that will impact investments over the long term. This will include our evolving insights on climate, biodiversity, and the impact of social matters on our license to operate.”
The report shows PSP Investments has identified more eligible transition assets in its portfolio than anticipated when it first implemented its ‘Green Asset Taxonomy,’ enabling the organization to reach a target of increasing investments in transition assets to $7.5 billion earlier than expected.
PSP also expanded the scope of application of the ‘Green Asset Taxonomy’ to include listed corporate bonds and applied more stringent criteria for green assets in public and private markets. To increase transparency and promote market convergence, PSP has published a white paper on the initiative. Additionally, it released an inaugural ‘Green Bond Impact Report,’ which is linked to the issuance of its first green bond of $1 billion in fiscal 2022.
Expanding data capabilities
The report also says the pension fund continues to expand its data capabilities. It rolled out an inaugural total fund sustainability-related data collection process, covering key performance indicators in the areas of climate change, diversity, equity, and inclusion (DE&I), business ethics, cybersecurity and data privacy, and human capital management.
As well, it carried out an asset-level GHG data collection initiative with local operating portfolio company partners in six countries, covering over three million hectares of farmland and timberland across more than 400 individual properties.
The pension fund has created a number of initiatives to advance its sustainable investing approach, including the updating of its ‘Sustainable Investment Policy and Corporate Governance and Proxy Voting Principles.’ It says this update will further embedding its approach to sustainability and climate into investment and active ownership activities and enhancing expectations with respect to corporate governance and public disclosures on climate change risks and opportunities.
To help its investment professionals integrate material sustainability-related considerations into their investment processes, PSP Investments has created a selection of sustainability due diligence tools. The organization has introduced a hub-and-spoke model for integrating material sustainability factors into the investment process, providing tools, resources, and training that will ultimately enable them to take on greater responsibility for this activity.
PSP Investments says it also continues to create value through active ownership. For example, over the past fiscal year, it has engaged with 860 publicly listed companies whose securities it holds. In fiscal year 2023, the organization voted at 5,760 meetings on a total of 58,872 management and shareholder resolutions.
“PSP Investments has developed a holistic approach to sustainable investing, leveraging our capital, influence, and capabilities to preserve and enhance long-term value,” says Herman Bril, managing director and head of sustainability and climate innovation at PSP Investments. “A strong focus on materiality enables us, as investors, to better understand the potential impact of sustainability-related factors on financial performance and to make informed investment decisions that support long-term value creation.”
