ATRF Responsible Investing Policy
In 2017, the ATRF Board approved a Responsible Investing Policy that guides our investment strategy and decisions.
Last Updated: April 1, 2021
Alberta Teachers’ Retirement Fund’s (ATRF’s) primary investment goal is to generate returns that are sufficient to fund the plans over the long term while remaining within the risk tolerance of the plan sponsors (the Alberta Teachers’ Association and Government of Alberta). Providing a secure pension at a reasonable cost is consistent with ATRF’s fiduciary duty to act in the best interest of its beneficiaries.
Responsible Investing (RI) involves evaluating both financial and non-financial attributes of investment opportunities. The consideration of environmental, social and governance (ESG) factors is an important part of this process.
ATRF believes that over the long term, organizations that identify and manage ESG risks and opportunities well are more likely to represent good long-term investments. ATRF will apply this belief to our investment activities in three ways:
- integrating ESG factors into our evaluation of investments
- being an active owner
- taking a responsible approach to proxy voting
Integrating ESG Factors
Integrating the identification and evaluation of ESG factors into the investment process allows for a more comprehensive understanding of an investment’s risk and opportunities. Environmental and social factors such as water usage, greenhouse gas emissions, and labour safety practices can represent risks to the long-term success and sustainability of an organization, but can also present competitive advantages if managed well. Similarly, an organization’s corporate governance practices, such as the composition of the board or the rights it grants to its shareholders, can have a significant impact on its risk profile and potential return.
ATRF considers ESG factors in the analysis of all of our investment opportunities, including: investments in the securities of individual companies; prospective partnerships with other institutional or strategic investors; and prospective fund investments and external investment management firms. ESG factors are considered along with other attributes of the investment. In the case of external managers or fund commitments, ATRF examines the manager or fund’s responsible investing practices. Before delegating the authority to invest on behalf of ATRF, we must be satisfied the fund manager’s responsible investing practices are sufficient. Further, ATRF regularly monitors the RI practices of its existing managers. Should ATRF be dissatisfied with the RI practices of an existing manager, we will engage with that manager in an effort to improve its practices. If, after an appropriate interval, no improvements are forthcoming, ATRF may choose to either not renew or to terminate the manager.
As an active owner, our internal and external investment managers communicate regularly with the companies in which we invest in to discuss ESG-related issues. We also regularly participate with other institutional shareholders in shared ESG engagement initiatives, with a significant focus on corporate governance.
ATRF is a founding member of the Canadian Coalition for Good Governance (CCGG), which serves to promote good governance practices in Canadian public companies and improve the regulatory environment for shareholders.
ATRF is a member of the Pension Investment Association of Canada, which promotes sound investment practices and good governance for the benefit of pension plan sponsors and beneficiaries.
ATRF is also a signatory to the CDP (formerly the Carbon Disclosure Project), a global initiative to encourage companies to publicly disclose information on risks associated with greenhouse gas emissions, water and deforestation.
ATRF considers proxy voting to be an important shareholder responsibility. Our proxy voting practice encourages companies to adopt best practices in corporate governance and to improve their actions and disclosure related to issues of environmental and social responsibility. ATRF regularly casts proxy votes in favour of shareholders’ proposals advocating better disclosure around ESG issues such as climate change, labour practices and shareholder rights. Our proxy voting guidelines also encourage companies to adhere to the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, which is a comprehensive set of principles and standards for responsible business conduct in areas such as the environment, employment and industrial relations, sustainable development, consumer interests and taxation.
ESG Integration and Active Ownership, Not Exclusion
ATRF does not exclude investment opportunities solely because of the non-financial views (generally environmental, religious or political) of a specific person or group. Rather, we take an active approach to ESG issues by integrating consideration of ESG factors into our investment analyses and by being actively engaged with our investee companies, partners, and external managers.
At ATRF we believe our approach of being engaged, active owners with a responsible proxy voting policy and active participation in industry groups dedicated to best corporate practices is the most effective way to encourage corporate responsibility while fulfilling our fiduciary duty to plan stakeholders.