March 26, 2007
Also announces focus areas for engagement
(Calgary, AB) March 26, 2007 — In the keynote address at the Conference Board of Canada’s National CSR Conference being held today in Calgary, the CPP Investment Board announced that it will become a signatory of the Extractive Industries Transparency Initiative (EITI). EITI is a coalition of governments, industries, investors, and others committed to enhancing governance and transparency in resource-rich countries in the belief that doing so can mitigate investment risk in the oil, gas and mining industries, and contribute to broad-based economic growth. In his remarks, Donald Raymond, Senior Vice-President of Public Market Investments, said, “Disclosure is the key that allows investors to better understand, evaluate and assess potential risk and return. Through enhanced transparency, we believe that companies that adopt the principles of EITI can reduce political and reputational risk and improve their prospects for delivering long-term value to their shareholders.” Launched at the World Summit on Sustainable Development in Johannesburg in September 2002, the EITI has won the support of over 70 global investment institutions that collectively managed over US$12.3 trillion as of October 2006. For more information on EITI, please visitwww.eitransparency.org. The CPP Investment Board’s participation in the EITI initiative is consistent with its Policy on Responsible Investing. A copy of the Policy and the full text of Mr. Raymond’s remarks are available at www.cppib.ca. “At its core, our policy reflects the belief that responsible corporate behaviour with respect to environmental, social and governance (ESG) factors can generally have a positive influence on long-term corporate financial performance,” said Mr. Raymond. The policy has three broad components: (1) engagement with companies in the CPP Investment Board’s portfolio; (2) helping to fund and conduct research into the long-term materiality of ESG factors; and (3) integrating these factors into the investment process. The CPP Investment Board also announced today that within its engagement program, it has identified three focus areas: the extractive industries (e.g. oil, gas and mining), climate change, and executive compensation. “These are the areas we believe have the greatest potential to affect the long-term value of our portfolio holdings, and where we believe our engagement activities can have the greatest impact,” said Mr. Raymond.
During today’s speech, Mr. Raymond outlined how the CPP Investment Board is engaging with companies indirectly through proxy voting and investor coalitions such as EITI, the Carbon Disclosure Project and the Canadian Coalition on Good Governance, among others, as well as through direct contact with the senior management and boards of directors of selected companies within its portfolio. To date, the CPP Investment Board has engaged directly with companies in a number of industries, including mining, tobacco, and energy to encourage improved disclosure and performance on ESG factors. In 2006, the CPP Investment Board voted on 12,400 proxy resolutions, which are disclosed at www.cppib.ca. However, the CPP Investment Board generally does not disclose the companies it is engaging directly, though it reserves the right to do so if warranted.
CPP Investment Board Canada Pension Plan Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits. In order to build a diversified portfolio of CPP assets, the CPP Investment Board is currently investing cash flows in publicly traded stocks, private equities, real estate, inflation-linked bonds and infrastructure to balance the legacy government bond portfolio. Based in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At December 31, 2006, the CPP fund totalled C$110.8 billion, including approximately C$98 billion in the public market investments portfolio. For more information, please visit www.cppib.ca.
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