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Canadian pension plan CEOs call for adoption of SASB, TCFD

Joint statement on leveraging standardized sustainability accounting standards

Author: Canadian Accountant

TORONTO, Nov. 26, 2020 – The chief executive officers of Canada’s eight largest pension plans are calling for the adoption of Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-related Financial Disclosures (TCFD) framework. In a joint statement, the CEOs are want “companies and investors to provide consistent and complete environmental, social, and governance (ESG) information to strengthen investment decision-making and better assess and manage their collective ESG risk exposures.” 

The eight pension plan investment managers — AIMCo, BCI, Caisse de dépôt et placement du Québec, CPP Investments, HOOPP, OMERS, Ontario Teachers' Pension Plan, and PSP Investments — represent approximately $1.6 trillion in assets under management. The joint statement signatories are also committed to strengthening ESG disclosure within their own organizations and to allocating capital to investments best placed to deliver long-term sustainable value creation. 

The adoption of ESG accounting standards has been slowed by the number of frameworks. In September 2020, five global organisations whose frameworks, standards and platforms guide the majority of sustainability and integrated reporting (including GRI and SASB), announced a shared vision and intent to work together towards comprehensive corporate reporting.This is the first time, however, that Canada’s largest pension managers have called for the standardized use of SASB and the TCFD specifically. 

"CPP Investments is a strong supporter of both the Sustainability Accounting Standards Board (SASB) and the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD),” states Mark Machin, president and CEO of the Canada Pension Plan Investment Board. With more than $450 billion in assets, the CPPIB is Canada’s largest pension fund. 

“By aligning their reporting with these standards,” says Machin, “companies can help global investors like CPP Investments to better understand, evaluate and assess potential risk and opportunities related to environmental, social and governance (ESG) factors." 

The CEO of the Sustainability Accounting Standards Board, Janine Guillot, says "SASB welcomes the leadership of Canada's eight largest pension plan investment managers in advancing investor-focused sustainability disclosure. By asking companies to use SASB Standards, along with the TCFD recommendations, this group is helping improve the availability and comparability of sustainability information and contributing to more resilient markets." 

The joint statement declares, "How companies identify and address issues such as diversity & inclusion, human capital, and climate change can significantly contribute to value creation or erosion. Companies have an obligation to disclose their key business risks and opportunities to financial markets and should provide financially relevant, comparable and decision-useful information." 

"We applaud these Canadian pension funds for their efforts in contributing to a more resilient global economy,” says Mary Schapiro, Head of the Task Force on Climate-related Financial Disclosures Secretariat and Vice Chair for Global Public Policy at Bloomberg LP. “By asking companies to disclose in line with the TCFD and SASB frameworks, they are paving the way for convergence around a common set of disclosure principles and furthering Canada's leadership in this area." 

Myriad disclosure frameworks

A September 2020 report from Millani advisory services revealed that, while the number of Canadian companies disclosing ESG information has been rising in recent years, Canada is well behind the United States in the number of companies that released a sustainability report in 2019. 

Furthermore, 64% of Canadian companies disclosing ESG information are using the Global Reporting Initiative (GRI), compared to 36% using SASB. But the use of the SASB framework has “jumped significantly, a trend that Millani sees continuing, given the support of investment management giant Blackrock. 

According to the joint statement, “the signatories recognize that while companies face a myriad of disclosure frameworks and requests, it is vital that they report relevant ESG data in a standardized way to provide clarity and improve data flow. They ask that companies measure and disclose their performance on material, industry-relevant ESG factors by adopting the Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-related Financial Disclosures (TCFD) framework.” 

The joint statement: “recognizes the ongoing impact of the COVID-19 pandemic and recent events that have highlighted long-standing inequalities revealing business strengths and shortcomings concerning social inequity, including systemic racism, environmental threats, and board effectiveness. The signatories call on companies and investment partners to seize the tremendous opportunity available at this historic moment to actively take steps to drive lasting change. 

"We are inspired by this opportunity to help confront the most urgent challenges facing our global community and create more inclusive economic growth. We encourage other parties committed to our vision to join us on this journey towards a more sustainable future for all," the statement concludes. 

By Canadian Accountant staff with files from the joint statement. In 2015, CPA Canada published a handy guide to three sustainability reporting frameworks (GRI, IR, and SASB) with a comparison chart. Image by Jo_Johnston from Pixabay.

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