Proxy voting played a major role in the Alberta Investment Management Corp.’s responsible investment strategy during the past year, according to its newly released annual responsible investment report for 2018-19.
During the 2018/19 proxy voting season the AIMCo reviewed and approved more than 30,000 ballot items and voted on 99 per cent of 3,324 meetings across its portfolio holdings.
This is up from 2,970 in 2017-2018 and 2,902 the year prior.
“Much of our responsible investment activity is focused on encouraging companies to improve their [environmental, social and governance]-related disclosure, whether on board diversity, cybersecurity or climate-related financial disclosure,” said the AIMCo’s chief executive officer, Kevin Uebelein, in the report. “Last year we added two key ESG focus areas: data privacy, now considered a fundamental human right; and water risk, an outcome of climate change.”
Specifically with regard to gender diversity on boards, the AIMCo updated its proxy voting policy, such that subject to its discretion it will either vote against or withhold its vote for directors in developed markets where issuers have less than 20 per cent women on their boards. In 2022 that threshold will rise to 30 per cent. This past season, the AIMCo voted against boards in 21 per cent of cases for issuers in the U.S., Canada, Europe and Australia.
As for climate change, the AIMCo voted in favour of 32 per cent of shareholder proposals that pertained to climate change. It noted that is doesn’t support proposals that it finds are redundant or overly prescriptive.
Regarding executive compensation, the AIMCo supported 95 per cent of say-on-pay proposals for Canadian issuers. And, it co-filed two shareholder proposals requesting companies adopt say-on-pay.
“Institutional investors have a unique opportunity to lead by example, effect real change and have meaningful global influence,” said Angela Fong, the AIMCo’s chief corporate officer. “The alignment of AIMCo’s corporate strategy and core values with our responsible investing strategy demonstrates that we are ‘walking the talk’ on ESG integration.”
Outside of public equity, other asset classes received attention as well. For real estate, 2018 saw major changes for the AIMCo.
“In 2018, we adopted sustainability targets for energy consumption, water usage and waste diversion and encouraged our third-party property managers to bring forward capital spending recommendations, the report said. “In 2018 alone, more than $100 million was invested in efficiency-related capital projects within our portfolio of assets.”
Micheal Dal Bello, senior vice-president in real estate noted the firm is focusing on continuously improving performance where the asset class is concerned. Improving on ESG issues attracts quality tenants, reduces operating costs, mitigates risk and serves to meet increasing demand for sustainable assets within capital markets generally, he said.
As for infrastructure and renewables, the report highlighted the boost to alternative energy investments within the portfolio. Currently renewable energy allocations make up 18.7 per cent of the overall infrastructure portfolio, up from 1.4 per cent in 2015.
“ESG factors impact value creation and investment risk management and are an important consideration when looking for investment opportunities and in managing our assets for the long run,” said Ben Hawkins, senior vice-president of infrastructure and renewable resources. “With our latest investments in renewable energy assets in Spain and the United States, and in a water utility in Brazil, we are striving to meet the growing demand for clean and reliable infrastructure services.”
Within private equity, the report made note of how the firm’s responsible investment team have worked with the private equity team to analyze deals based of rigorous criteria. Notably, over the past three years, the teams have examined $4 billion in deals, $3 billion worth of which went through.
“As long-term investors, we are very conscious of managing all our assets and relationships in a way that aligns with AIMCo’s values and objectives,” said Peter Teti, senior-vice president for private equity. “Systematically integrating environmental, social and governance considerations is a critical part of that process.”