The Schkopau coal-fired power plant operates near wind turbines in Teutschenthal, near Halle, eastern Germany, Oct. 15, 2024.Matthias Schrader/The Associated Press
Canadian institutional investors increased their support for climate-related shareholder proposals in 2024, with a dozen supporting every measure put to them in shareholder proxy voting.
Investors for Paris Compliance (I4PC), in its third annual assessment of voting records, found aggregate support from institutional investors for proposals related to climate-change issues rose from just over 50 per cent in 2023 to almost 65 per cent in 2024. That’s more than 40 percentage points higher than the average for all investors, I4PC says.
It said 12 of the 33 institutional money managers it reviewed – or 36 per cent – supported all of the climate resolutions they voted on last year, up from 14 per cent in 2023.
As well, I4PC found that more than one-third cited climate matters as a reason for withholding votes from individual directors last year. I4PC called it “a promising trend.”
I4PC is an advocacy group that works to hold Canadian publicly traded companies accountable to their net zero promises, based on the Paris Agreement reached at the 2015 UN Climate Change Conference. The report, I4PC says, is designed to examine how investors are escalating their public-company climate engagement beyond the private discussions that typically come earlier in the process.
The group chose to look at Canadian institutional investors that are members of either Climate Action 100+ or Climate Engagement Canada. This year, I4PC also included the Canada Pension Plan Investment Board (CPPIB), which is not a member of either, because of its influence as the largest public pension in the country.
I4PC selected 17 shareholder resolutions on climate filed at companies in the U.S. and Canada. Few of the investors I4PC examined owned shares in all 17 companies, and some owned shares in just a handful.
In the private sector, smaller money managers, typically with a special social or ESG focus, led the way.
AGF Management Ltd., Aviso Wealth Inc.’s NEI Investments, Gestion FÉRIQUE, Genus Capital Management Inc., Vancity Investment Management Ltd., Bâtirente Corp. and Triasima Inc. all supported 100 per cent of climate proposals in the study. National Bank Investments Inc. was the only bank-affiliated money manager scored at 100 per cent by I4PC.
TD Asset Management supported 71 per cent of the proposals, up from levels in the 40-per-cent range in the prior two years. CIBC Asset Management Inc.’s 65-per-cent support was up from 42 per cent in 2023. Bank of Montreal’s asset managers supported 47 per cent of proposals, up from 38 per cent in 2023.
RBC Global Asset Management Inc. supported 12 per cent of the proposals, while Bank of Nova Scotia asset managers supported none, I4PC says. Scotia also owns Dynamic Funds and Jarislowsky Fraser Ltd., which I4PC tracked separately. They combined to vote for three proposals out of 13.
Private-sector wealth managers often have outside investment firms or advisers manage some of the retail funds that are sold under their brands. In many cases, they allow the outside manager to make the voting decisions. When some of the money manager’s funds vote yes and some vote no, I4PC counts it as a “split” vote, and doesn’t consider the money manager to have supported the proposal.
RBC had 10 split votes, while Scotiabank had nine.
Scotiabank spokesperson Alexandra Mathias said the company’s asset managers “believe ESG considerations, including climate-change-related considerations, are a key component in delivering long-term value to clients.” Proxy voting, she said, “is only one of many engagement tools and may not reflect broader engagement conversations on a topic.”
RBC did not provide comment for this article.
Among public pension plans, Investment Management Corp. of Ontario (IMCO), Canada Post Pension Plan and University Pension Plan supported 100 per cent of proposals in the I4PC study. Caisse de dépôt et placement du Québec supported 90 per cent and British Columbia Investment Management Corp. (BCI) supported 88.2 per cent, the highest rates among Canada’s “Maple Eight” large pensions. (Healthcare of Ontario Pension Plan does not disclose its voting record.)
Ontario Teachers’ Pension Plan and Ontario Municipal Employees Retirement System voted for 75 per cent and 66.7 per cent of the proposals, respectively, increases from 2023 levels. Public Sector Pension Investment Board and Alberta Investment Management Co. (AIMCo) voted for 47.1 per cent and 41.2 per cent of the proposals, respectively, similar to the prior year.
CPPIB voted for 29.4 per cent of the proposals, the worst level of any public pension in the report.
Spokesperson Michel Leduc said CPPIB actively engages with boards and management teams to improve the governance practices of the companies in which it invests and believes disclosing the specific rationale for votes or details on individual engagements “can negatively impact dialogue and ultimate outcomes.” CPPIB might vote against a proposal, he says, when it believes it’s duplicative of the company’s existing initiatives; overly prescriptive; or encroaches on the duty of directors.
I4PC says 13 of the 33 asset managers studied withheld votes from directors for reasons explicitly linked to climate performance. They included BCI, AIMCo IMCO and University Pension Plan among pensions, and NEI Investments, BMO GAM, RBC GAM, Gestion FÉRIQUE, Genus Capital, Vancity Investment Management, Bâtirente and Triasima among private-sector managers.
Five of the private-sector investors are clients of Quebec-based proxy service provider Groupe Investissement Responsable.
I4PC says BCI used this tactic the most in 2024, withholding votes for directors on climate-related grounds at 94 companies.