ESG at OMERS
OMERS believes that well-run organizations with sound Environmental, Social and Governance (ESG) practices will perform better, particularly over the long-term and when looking at what ESG means for OMERS, we start with broad principles and then we integrate specific factors into investment decision-making, as described below.
OMERS recognizes that environmental factors may affect the operations, value and future prospects of investment assets, particularly in industries that use or are dependent on natural resources. We expect our investee companies to have a good understanding of the environmental risks they face and have appropriate practices to address such issues in their businesses.
In addition, we believe that climate change is one of the environmental factors that poses a significant long-term financial exposure (risk or opportunity), driven by physical and transition climate factors for businesses and countries across the globe. OMERS has set out its position on climate change in separate Climate Change Guidelines.
OMERS recognizes that our investee companies interact with various stakeholders including employees, local communities, end users, key suppliers, clients and customers and that managing this interaction effectively over the long-term affects profitability.
OMERS expects investee companies to foster good community and government relations, promote the health and safety of their employees and customers, support and respect the protection of internationally proclaimed human rights and make sure that they are not complicit in human rights abuses.
OMERS expects investee companies to uphold international labour rights, including the freedom of association and the right to collective bargaining, the elimination of forced and child labour, and protection from discrimination in respect of employment and occupation.
OMERS recognizes that long-term profitability of our portfolio may be impacted by the effectiveness of the governance structures in place at investee companies. Within our private market asset classes, in many cases OMERS employs a “direct-drive” strategy whereby it is directly and actively involved in influencing the governance of the investee companies, both as a shareholder and through appointments to the boards of directors or other governing bodies of the investee company. In our public markets portfolios, subject to the particular investment strategy, we exercise our governance rights through our proxy voting procedures and, where appropriate, direct engagement with investee companies.
OMERS integrates specific ESG considerations into its investment processes in a number of ways, including through ESG assessments of potential new investments and ongoing oversight and influence of ESG topics in our investee companies. For each ESG assessment, we seek to evaluate a range of material ESG factors, including some of the following topics, as appropriate (“ESG Factors”):
The specific approaches used by OMERS Business Units may vary given the nature of the assets or investment strategies they pursue and the extent to which ESG factors may be relevant to investment performance. In addition, the level of influence that OMERS has over an investee company will generally vary in proportion to its economic interest. While ESG factors are often long term in nature, we recognize ESG factors can play a part in assessing the valuation and future performance of an investment over the short, medium and long-term. Further, ESG factors can impact the reputation of an investee company and potentially of OMERS.