VOICE OF THE CLIENT A Conversation with Canada Post Corporation Pension Plan
Delivering Sustainable Pensions
The Canada Post Corporation Pension Plan manages over CAD$30 billion ($24 billion) for its 100,000 members. We spoke to its first Director of ESG Investing, Karen Lockridge, about the progress made since she joined the Plan two years ago. You are just over two years into your tenure at the Canada Post Pension Plan. What have been the key milestones on the sustainability journey so far? Karen Lockridge: The Board of Canada Post Corporation had a strong emphasis on sustainability across its organization, and by 2019 it was ready to get the pension plan aligned. Having such a clear mandate from the plan sponsor is powerful. The first milestone was to sign up to the United Nations-supported Principles for Responsible Investment (PRI) and put together a three-year roadmap identifying two strategic ESG priorities: climate change and diversity, equity and inclusion (DE&I). Momentum picked up when Irshaad Ahmad joined as our CIO in February 2021. He came from Allianz Global Investors in London and brings a lot of experience of how ESG has evolved in Europe. Irshaad led the development of our first set of Investment Beliefs, two of which relate explicitly to ESG factors. We also undertook scenario analysis with Mercer and Ortec in 2021, looking at the energy transition as well as the physical impacts of climate change. A key conclusion was that a failure to aggressively reduce emissions would expose the plan to increasing physical risks that would negatively impact financial returns across all asset classes, regions and sectors. That led to a recommendation to the Pension Committee to commit to managing its investment portfolio in line with achieving net-zero greenhouse gas (GHG) emissions by 2050 or sooner, and to develop a Climate Action Plan. The most recent milestone I’d identify involves Neuberger Berman directly. We included a special addendum on Responsible Investing Requirements in our Investment Management Agreement (IMA) to ensure alignment with our net-zero commitment. We talk about it with our peers, with advocacy groups and with other asset managers. We want to get other asset management partners onboard with it, as we think it will open the door to more collaborative and coordinated action on climate change. That’s important for a lot of reasons, but I’ll give one example. I’ve been asking managers that are signed up to the Net Zero Asset Managers Initiative whether the strategy they manage for us is covered by their net-zero commitment. Often it is not, because they generally start their transitions in specific ESG and sustainability strategies. The Initiative calls for engagement with the clients on this journey, and we hope to see more of that to help us achieve our own net-zero goals—I think talking through things like the addendum in our IMA can start that conversation.
32 2021 ESG ANNUAL REPORT
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