Shareholder engagement is fundamentally important for CDPQ. As a shareholder, we closely monitor our portfolio companies’ practices pertaining to environmental, social and governance (ESG) matters. They are an integral part of our investment process and central to our actions.
For more details on our actions on climate change matters, read our 2018 Stewardship Investing Report.
ESG factors may impact a company’s return by affecting its risk levels. In contrast, they can help increase recognition and create value.
We assess ESG risks and issues before investing in a company and continuously monitor them afterwards as well.
If potential issues are identified, we use two main tools to encourage companies to make the necessary adjustments:
- Dialoguing directly with Boards of Directors and management teams.
- Exercising our right to vote at shareholder meetings.
Hold upfront discussions with companies
We encourage open dialogue with our portfolio company’s management teams. Each year, we engage them in discussions on issues of particular concern to us, including:
- ESG strategy, risk and reporting
- Respect for the environment and actions to combat climate change
- Social responsibility and business practices
- Governance, including questions of:
- Executive compensation
- Competency and independence of Boards of Directors
Exercise our voting rights
When we invest in a company, we expect it to behave responsibly in all the communities in which it is active.
We systematically exercise our right to vote at shareholder meetings:
- Whether or not our positions on proposals are favourable.
- No matter where the company is located around the world.
We aim to exercise leadership on ESG matters, and promote our positions to our portfolio companies through our shareholder engagement.
Election of the directors
Each year, a large share of our discussions and shareholder votes address governance issues, starting with the responsibilities of Boards of Directors.
Broadly speaking, we believe that a company’s Board should:
- Be made up of a majority of independent directors.
- Aim for a diversity of experiences and competencies, and encourage the inclusion of women.
- Adopt measure to widen the pool of qualified candidates for director seats.
We have no hesitation in voting against company management on compensation matters when justified by the context.
We regard executive compensation as particularly important for companies. Whether through private discussions or our votes as a shareholder, we regularly engage to explain our position on this topic.
We act based on clear principles. Compensation must be:
- Tied to the company’s long-term performance