My Account

Environmental, social and governance (ESG) Factors

Taking into consideration the environmental, social and governance (ESG) factors in supplemental pension plans is a subject of current interest for stakeholders involved in such plans. Integrating the factors into the decision-making process could make it possible to better manage certain risks, and could improve the performance of the plans' pension funds.

The factors mainly concern investments, but also other aspects such as the administration, conception and governance of a pension plan.

Examples of ESG factors

Environmental factors

Environmental

  • Climate change
  • Pollution
  • Biodiversity
  • Deforestation
  • Energy efficiency
  • Waste management
  • Water scarcity
Social factors

Social

  • Diversity
  • Inclusion
  • Work conditions
  • Compliance with legislation
  • Human rights
  • Relations with communities
  • Contribution to society
Governance factors

Governance

  • Composition of the Board of Directors
  • Executive management remuneration
  • Corruption
  • Lobbying
  • Political contribution
  • Whistleblower program
  • Transparency

Certain plans have already set up a separate policy or added a section to their investment policy dedicated to sustainable investments that takes ESG factors into account.

Survey with administrators

For several years now, Retraite Québec has been implementing best practices focused on sustainable development. ESG factors are an integral part of sustainable development.

As mentioned in its Plan stratégique 2024-2027 (2024-2027 Strategic plan; French only), Retraite Québec wishes to make a significant contribution to the development of sustainable finance by raising awareness among pension plan administrators of the need to take ESG factors into account in their decisions.

Retraite Québec wanted to provide a portrait of the consideration of ESG factors in supplemental pension plans. To do so, and in accordance with its Plan d'action 2023 (Action plan for 2023; French only) and its sustainable development strategy, Retraite Québec conducted a survey with plan administrators in May and June 2023. The main objectives of the survey were:

  • to measure the extent to which ESG factors are currently taken into account in plans;
  • to establish indicators that will make it possible to set targets for the integration of ESG factors into plans, and to monitor their implementation over time;
  • to guide Retraite Québec's actions in this regard.

Summary of the methodology

The survey covered 785 of the supplemental pension plans monitored by Retraite Québec. Data collection was carried out between 25 May and 23 June 2023 using an online questionnaire. The administrators from 390 affected plans responded to the survey, giving a response rate of 49.7%. Due to this low response rate, the results cannot be generalized to all plans surveyed. The results therefore relate exclusively to the plans whose administrators responded to the survey.

Summary of the results

Pension plan administrators' level of knowledge regarding sustainable investments

50% 
of responding administrators consider themselves to be "beginners" (meaning they know the basic concepts of sustainable investments) or have "no knowledge at all."
14% 
mentioned having an "advanced" level of knowledge (meaning they can distinguish between the different approaches to sustainable investments and are able to weigh them).

Interest in and training on sustainable investments

63%

of responding administrators claim that there have been discussions about sustainable investments between the administrator and portfolio manager of their pension plan over the past 12 months.

64%

of responding administrators would like to see Retraite Québec offer training on sustainable investments.

Initial measure of the consideration of ESG factors

30%

of responding administrators claim to have developed a sustainable investment policy that takes ESG factors into account, or to have added a section on this subject in their investment policy.

The main motives for administrators to consider ESG factors in their investment strategy are the following:

69%

Improve financial risk management

66%

Respect their missions and values

60%

Fulfill their fiduciary obligations

facteurs de gouvernance
52%

Generate a social or environmental benefit

  • Among the 70% of responding administrators who have not developed a sustainable investment policy that takes ESG factors into account, and who have not added a section on this subject to their investment policy:
    • Nearly 26% of them plan to develop a sustainable investment policy that takes ESG factors into account by the summer of 2025 or add a section on this subject to their investment policy;
    • the lack of knowledge of nearly 31% of them is the main reason why they do not take ESG factors into account in their investment strategy.

Retraite Québec's actions

from 30% to 50% by 2027 
Retraite Québec aims to increase the rate of adoption of sustainable investment approaches by plan administrators from 30% (the initial measure taken from the survey) to 50% by 2027 (see the Plan d'action de développement durable 2023‑2027 (2023-2027 Sustainable development action plan; French only).

To do so:

  • a new question has been included on the Annual Information Return (AIR) in 2023 to track the progress of the consideration of ESG factors;
  • various information and training tools will be developed regarding ESG factors.

CAPSA's actions

On 9 September 2024, the Canadian Association of Pension Supervisory Authorities (CAPSA) published the Guideline for Risk Management for Plan Administrators (Guideline number 10) This link will open in a new window.. The guideline takes into account ESG factors, among other things. Retraite Québec participated in its development in collaboration with other governments in Canada.

Top of page