Staff
The Financial Services Commission of Ontario has clarified its guidance note on how environmental, social and governance factors should be incorporated into a plan sponsor’s statement of investment policies and procedures.
In the previous version of the note, FSCO stated plan sponsors should include the information described in each of the three following paragraphs:
- Either a broad statement that it incorporates all ESG factors, or an enumeration of the ESG factors that are incorporated, such as a particular category or categories and/or specific factors within those categories, which form the focus of the administrator’s approach to incorporating the factors;
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- A brief explanation of the approach taken by the plan to incorporate ESG factors; and
- A description of the scope of the application of ESG factors. The disclosure should indicate if ESG factors are considered across the entire pension fund, or only certain portions of the pension fund, such as certain asset classes or internally managed assets rather than externally managed assets.
The revised version clarifies that the information described in the three paragraphs are only examples and the pension sponsor may use its own judgment to describe how environmental, social and governance factors have been incorporated.