Responsible Investing Guidelines

RESPONSIBLE INVESTING GUIDELINES RESPONSIBLE INVESTING GUIDELINES

As a steward of our clients’ capital, Vestcor takes fiduciary responsibility to make prudent sustainable investment decisions that are aligned with client guidelines and objectives. As part of this investment process, we have over time incorporated increasing levels of active ownership and actionable Environmental, Social, and Governance (ESG) information into our investment processes and will continue to make enhancements in this area as client interest, data availability and resources permit.

Vestcor first published its updated Responsible Investing Guidelines in 2018 and plans to make the next revision of our standards in 2022. In 2019, we presented the revised principles to clients at our inaugural Client Forum and have since continued to provide periodic client updates on issues related to responsible investing to clients as part of our regular reporting process and at their request. A further detailed update was also provided to our clients during a webinar in June 2021 and all future updates to our Responsible Investing Guidelines will be communicated in a similar fashion.

Vestcor’s core principles of Responsible Investing are: • Good governance, • Active ownership and engagement, • Incorporation of ESG information into our investment process wherever practicable, and • Transparency with clients.

In addition to directly incorporating ESG information into our investment process, Vestcor also continues to be a very active long-term member/ partner in various organizations that support best practice environmental, social, and governance-related investment actions. For example, Vestcor has been an active long serving member in organizations such as the Pension Investment Association of Canada (piacweb.org) and the Canadian Coalition for Good Governance (ccgg.ca).

In 2020, Vestcor’s Board of Directors endorsed the CCGG’s inaugural Stewardship Principles which are designed to assist institutional investors in fulfilling their responsibilities toward their clients and beneficiaries, while enhancing the value of their investments. These Stewardship Principles provide an excellent complement to our corporate Responsible Investment Guidelines and Vestcor has identified a number of internal processes and relationships which assist us in meeting each of the following related principles:

• Principle 1 – Develop an approach to stewardship • Principle 2 – Monitor companies • Principle 3 – Report on voting activities • Principle 4 – Engage with companies • Principle 5 – Collaborate with other institutional investors • Principle 6 – Work with policy makers • Principle 7 – Focus on long-term sustainable value

In addition to general updates to our Responsible Investing Guidelines, Vestcor’s focus in 2022 will be on improved understanding of carbon risk inherent in our clients’ portfolios through the completion of a Task Force on Climate-Related Financial Disclosures (TCFD) aligned report that will be shared with clients and used as a starting point for more effective climate risk management on behalf of our clients.

Additional details and any updates to our Responsible Investment Guidelines can be found at vestcor.org/investments.