ESG Guidance for Pension Plan Investment and Risk Management

Radha Curpen writes on the Canadian Association of Pension Supervisory Authorities' (CAPSA) draft guideline for ESG considerations in pension plan management in Business in Vancouver's Business Excellence Series. Radha was a member of the CAPSA working group that drafted the guideline.

The guideline sets out three overarching principles for plan administrators to consider when integrating ESG factors into pension fund investment and risk management. Pension plan administrators should:

• Consider ESG characteristics that may have material relevance to the financial risk-return profile of the pension fund’s investments.
• Assess whether plan governance and practices are sufficient to identify and respond to material ESG information.
• Disclose in their statement of investment policies and procedures (SIPP) information about the pension fund’s investment policies in relation to ESG considerations.