Ontario leads on sustainable investment of pension funds

TORONTO, March 29 /CNW/ - In the wake of the global financial crisis, Ontario has taken a bold step to lead the way on sustainable investment of pension funds.

In a first for North America, the province will require pension plans to report to regulators on the sustainability of their investments, helping to protect pensioners and guard against systemic risk.

The surprise measure unveiled in the province's annual budget will compel pension plans to disclose whether they have given consideration to environmental, social and governance risks when investing on behalf of plan members.

"This bold step will enhance Ontario's bid to become a world leader in financial services and risk management," according to a spokesperson for SEIU Capital Stewardship.

SEIU Capital Stewardship oversees the pension contributions of more than 2.2-million union members who contribute to more than 70 pension plans with combined assets of more than $1.2-trillion.

"Safeguarding the future is a shared responsibility. Managing risks and preventing systemic shocks requires collaboration between regulators, investors, and stakeholders," said the spokesperson.

Pension plans were badly damaged by the financial crisis and have struggled to regain their balance after the global banking meltdown revealed weaknesses in their risk management systems and wiped out more than $1-trillion of value.

The move by Canada's most populous province is significant because Ontario is home to many of the world's largest and most influential direct investors.

The country's financial capital, Toronto, plays host to the Ontario Teachers Pension Plan, Ontario Municipal Employees Retirement System, Canada Pension Plan Investment Board, Healthcare of Ontario Pension Plan, and the OP Trust.

"This is a prudent move by Ontario Finance Minister Dwight Duncan that sets an example for finance ministers around the world."

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