Corporate Engagement
An important tool used in active ownership is corporate engagement. In some cases, companies within our equities portfolio will have exposure to ESG issues that carry with them potential financial, reputational or other risks. A corporate engagement strategy provides OPTrust staff with a mechanism to address potential risks.
OPTrust has been taking steps to increase engagement efforts in recent years. We have explored three methods for engagement to boost this capacity: :
Direct: We identify the engagement and lead the company dialogue either alone or in partnership.
Collaborative-direct: We engage collaboratively with other investors, in a leading or supporting role in these dialogues (e.g. PRI Engagement Clearinghouse).
Collaborative-indirect: We lend our name to an engagement conducted by a group we belong to (e.g. CCGG, CDP), but do not actively participate.
Summary of corporate engagements for the reporting period:
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Engagement Subject
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Bangladesh Supply Chain
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Corporate Governance - Canada
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Climate Change
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Anti-Corruption
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Hydraulic Fracturing
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CDP non-disclosure
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Compensation
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Status
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Phase I - completed
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Ongoing
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Ongoing
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Ongoing
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Ongoing
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Completed
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Completed
ENGAGEMENT CASE STUDY:
BANGLADESH TEXTILE FACTORY TRAGEDIES
In April 2013, Rana Plaza, an eight-storey building housing several garment factories in Dhaka collapsed, killing more than 1,100 people and injuring 2,500. The alarming situation gained world-wide attention. This tragedy, the worst garment factory accident in history, prompted trade unions, labour rights’ organizations and concerned citizens to call upon global retailers to intervene.
Read the case studyProxy Voting
As an investor in public companies, we have the right to vote at shareholder meetings. Since most shareholders cannot or do not want to attend the annual and special meetings where voting occurs, corporations provide shareholders with the option to cast a proxy vote. Issues commonly decided by proxy vote include electing directors to the board, approving a merger or acquisition, and approving an executive compensation plan. Given the large number of public companies in our portfolio, and the concentration of votes during certain parts of the calendar year, we use a proxy voting service to facilitate the voting process.
Proxy voting is conducted in-house, with the support of ISS, to vote at all of OPTrust’s publicly-listed companies. Votes are executed according to OPTrust’s Proxy Voting Guidelines, which exemplify best practice in board composition, executive compensation, shareholder rights, and disclosure on social and environmental factors. For the 12-month period from August 1, 2013 to July 31, 2014, we voted on more than 25,700 proposals at 1,371 company meetings.
As part of our efforts to ensure good corporate governance practices at the companies in which we invest, OPTrust actively exercises our shareholder voting rights. Stock ownership rights are financial assets that must be managed with the same care and diligence as any other asset. The Plan's shares are voted according to OPTrust's detailed Proxy Voting Guidelines approved by the Trustees.
Advocacy
We engage policy makers and regulators in efforts to promote good governance practices and sustainable financial markets. This engagement is executed primarily through organizations we belong to, with the aim of ensuring that the perspectives of shareholders with a long-term view are maintained when policies and laws are revised or introduced.
Advocacy involves responding to regulators on proposed amendments to existing regulations or on new regulations, as well as to industry associations and organizations that develop best practices in areas of responsible investing. This requires maintaining memberships at key organizations to ensure OPTrust is part of the dialogue in the development of policies and best practice guidance.
We work with leading organizations that seek to promote sound corporate governance, shareholder advocacy and RI in Canada and around the world.
