Focus List

As responsible investors, our goal is to grow long-term sustainable value for our clients. We believe one of the most effective ways to pursue that goal is to exercise our rights as shareholders, using corporate engagement and proxy voting to influence corporate direction. In a spirit of collaboration, we discuss with companies how they can improve their environmental, social and governance performance to achieve long-term sustainability.

A company’s relationship with its stakeholders—its social capital—is one of the most intuitively material risks it faces. The success of a business is clearly linked to its ability to attract and retain the best employees, while fostering a workplace culture that empowers innovative thinking and treats safety and wellbeing as top concerns. Relationships with Indigenous communities, community stakeholders, and host governments have a direct and consequential impact on a company’s license to operate, and growing scrutiny on the human rights risks of companies, directly or through their supply chains, brings reputational, regulatory and legal risks. Our social capital sub-themes capture the breadth of material issues and reflect several topics currently gaining attention, whether it is concern over artificial intelligence and misinformation in the technology space or the pressure companies are facing to walk back diversity-related programs. We expect this to be a year that social capital issues take prominence.

Companies in focus include Alphabet, LVMH and UnitedHealth Group

Natural capital is a global asset that underpins our economy yet is so ubiquitous in its presence that it is easy to take for granted. Businesses have a complex web of impacts and dependencies on nature that bring both risks and opportunities, but it is not easy for investors to parse them out. This is a theme which is probably the least developed when it comes to the information and tools required to manage risks effectively, and much of the conversation around natural capital is focused on building a more comprehensive understanding of impacts and dependencies. However, some clearly material risks with readily definable mitigation strategies have risen to the top of our list.

Companies in focus include Amazon, Bank of America and Nutrien.

Despite the significant regulatory uncertainty and concerted political effort to derail investor and corporate net-zero commitments in the U.S., the materiality of the topic and the imperative to address it remain unchanged. If anything, the current uncertainty will only heighten the risks facing companies if it leads to their inaction. The science is unambiguous and inescapable, and the trajectory clear. Companies that do not adapt their business model to fit a low-carbon future will face increased regulatory risks, fail to capture potential opportunities, and run the risk of demand destruction. In 2021, as part of our climate strategy, we set ambitious targets for 2025 when it comes to engaging our highest-emitting companies. Our internal alignment framework, developed using guidance from the Net Zero Investment Framework, assesses the high-impact companies in our portfolio on their alignment with a net-zero pathway. Our goal for 2025 is that high-impact companies responsible for 70% of our portfolio’s financed emissions will either be aligned and on a trajectory toward a credible net-zero path, or they will be the subject of engagement on the aspects they need to implement to get them there.

Companies in focus include Enbridge, NVIDIA and Capital Power