In our view, companies that contribute to climate change not only harm the natural environment, they also take on risks that can threaten their ability to deliver strong financial results over the longer term. For example, companies in the real estate sector are particularly vulnerable to an increase in the frequency and severity of hurricanes and flash flooding, which can increase insurance costs and damage critical infrastructure. One aspect of our climate risk strategy is to persuade companies to disclose their vulnerability to climate risk and the measures they are taking to mitigate that risk.
Engagement
Every year, we encourage companies to participate in the Carbon Disclosure Project, which includes an annual questionnaire addressing climate risk strategies, governance structure and emission goals. We have recently encouraged disclosure from Pembina Pipeline, Peyto Exploration, Tourmaline Oil, Veresen, Facebook, H&R REIT, Chartwell Retirement Residences and RIOCan REIT.
How does “engagement” work?
Through engagement, we utilize our rights as shareholders to communicate with company management on environmental, social and governance matters that are significant to our clients.
Outcome
A standout success story in 2016 came with H&R REIT’s agreement to provide its first report to the Carbon Disclosure Project. We look forward to similar reporting by other REITs as well as companies we are engaging in the energy and other industries.