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ETHICS AND GOVERNANCE

OPTIMIZING
RESPONSIBLE
INVESTMENT

Investing responsibly is a daily challenge because it involves complex social, human, environmental and governance issues that are evolving in a market globalization context. Aware of these challenges, the Fonds de solidarité FTQ strives to maintain investment approaches that are consistent with its values and mission.

Consequently, since the Fonds de solidarité FTQ adhered to the Principles for Responsible Investment (PRI) in 2011, it has used the services of SHARE (Shareholder Association for Research & Education), a not-for-profit organization, to ensure better monitoring of its responsible investments in Canadian large-capitalization securities. SHARE may intervene at shareholders’ meetings, by proposing resolutions or debating resolutions that were already submitted or, more directly, by contacting certain companies. But, regardless of the way it is done, the objective is the same: engaging companies in a dialogue to improve some of their governance, human rights or environment protection practices. SHARE intervenes in its capacity as representative of an investor group that includes the Fonds; this organization is therefore taking action on behalf of the Fonds.

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Vigilant shareholders

Shareholders are increasingly interested by sustainable development issues, and investors pay further attention to the environmental, social and governance performance of their investments. Financial performance alone is not enough; both individual and institutional investors want their investments to reflect their values as closely as possible.

Engagement and responsible investment activities

Here are a few examples of engagements and activities undertaken by SHARE on our behalf from January 2012 to March 2013 on environmental, social and governance fronts.

Environmental:

  • Climate risk disclosure – SHARE continued its annual campaign advocating for additional climate risk disclosure by encouraging companies to respond to their 2013 Carbon Disclosure Project (CDP questionnaire or otherwise disclose their management of climate change-related risks and opportunities).
  • Hydraulic fracturing – SHARE requested companies with hydraulic fracturing operations to provide improved disclosures on the processes they use and the impact of this technique, and it visited well sites in the United States.

Social:

  • Human rights – SHARE produced a discussion paper on investors’ human rights expectations and circulated it for comment to mining sector companies. Then, it contacted several Canadian mining companies to follow up and seek feedback on this document entitled Investor Expectations on Human Rights Performance for Mining Companies.
  • Phosphate rock – SHARE continued its engagement with companies that use phosphate rock coming from the Non-Self Governing Territory of the Western Sahara to discuss the production conditions of this mineral ore in that region.

Governance:

  • Executive compensation – SHARE initiated and pursued its engagement with companies on improved executive compensation disclosure.
  • Board gender diversity – SHARE wrote to targeted companies on the topic of gender diversity on corporate boards and provided a set of recommendations intended to assist those boards in improving their gender diversity.

Socially responsible investment (SRI) is a form of investing that takes into account environmental, social and governance criteria in addition to the financial aspects. Institutions that make SRIs are actively engaging the companies in which they invest. To paraphrase LCL (Crédit lyonnais), a major French bank, SRI is the financial translation of sustainable development for savings products.