FÉRIQUE Fund Management was again very active during the year, especially in the fight against climate change.
As one of Quebec’s first financial firms to address the issue, FÉRIQUE Fund Management is continuing the engagement efforts that prompted it, in 2006, to adopt a Responsible Investment Policy that governs the exercise of the FÉRIQUE Funds’ proxy voting rights. For more than a decade since this initial action, the firm has taken many initiatives to become an important player in the field of responsible investment.
For a number of years, FÉRIQUE Fund Management’s investment philosophy has incorporated the concept of sustainability into the investment process. This approach not only makes it possible to better manage risk and aim for returns that exceed the median, but also contributes to the creation of a more prosperous and sustainable world.
► Proxy voting rights
► Integration of ESG criteria into the investment analysis and decision-making process
► Shareholder engagement
► Climate was central to our actions in 2019
► Activity Reports on Responsible Investment
Proxy voting enables shareholders to positively influence the companies in which they invest. In this sense, long-term profitability, accountability and transparency are the three main principles defining our policy.
In 2019, the FÉRIQUE Funds exercised their voting rights on 6,674 proposals at 502 shareholder meetings.
In 55% of the cases, we supported management recommendations. Our dissent mainly concerned the election of board members and executive compensation, which were not aligned with shareholders’ interests. For more information, see the Voting Reports and the Proxy Voting Policy.
The integration of environmental, social and governance (ESG) criteria is an effective complement to the organization’s overall investment risk management approach. It is intended above all to be pragmatic; we strive to improve our practices in a collaborative manner, considering extra-financial factors rather than excluding securities and thereby losing our power of influence.
As set out formally in our prospectus, all FÉRIQUE Funds' managers are signatories to the PRI and therefore have made a commitment to include ESG criteria in their investment approach and decision making.
Extra-financial factors are an essential complement to the traditional analysis done by portfolio managers. FÉRIQUE Fund Management therefore ensures that it is familiar with the responsible investment policies and practices of the managers to whom it entrusts mandates. In this regard, due-diligence reviews conducted over the past year enabled us to observe the very high degree of ESG expertise acquired by some of our managers. These leaders in the field provide us with ideas that we can then promote to our other managers and thus improve our overall practices.
As in other years, a report on our managers’ evolving practices was submitted to us in 2019. Due-diligence visits provided an opportunity to meet members of the management firms’ key departments, including the teams dedicated to ESG issues. All our equity portfolios were once again assessed on the basis of ESG risks. This initiative improves our monitoring and allows us to identify certain at-risk securities and then discuss them with the managers.
The ultimate component of our approach is shareholder engagement, which involves engaging portfolio companies to improve their ESG practices.
Our collaboration with the shareholder engagement services firm Æquo continued in 2019. We also initiated dialogues with Metro and Pfizer (in the United States) and we continued discussions begun last year with Suncor, TC Energy, Scotiabank , Dollarama and Dollar General (United States).
Æquo also took part in various collaborative investor initiatives on a variety of topics, such as liability related to opioids, labour standards in agrifood supply chains, plastics and taxation. Such initiatives are generally intended to raise awareness of certain issues and improve disclosure and best practices.
Being represented by Æquo enables us to join forces with other investors to increase our influence and thereby promote best practices within these companies.
The past year saw unprecedented activism against climate change. More than ever, the urgent need to take action against this threat was communicated to the managerial class, which can no longer disregard it. Aware of the role that it can play in this fight, FÉRIQUE Fund Management made this environmental and societal issue a priority during the year.
Public support for the TCFD and its recommendations
It goes without saying that access to quality information is vital if we are to play an effective role in the fight against climate change. Therefore, FÉRIQUE Fund Management did not hesitate to publicly support the Task Force on Climate-related Financial Disclosures (TCFD) and its recommendations. We hope this initiative will encourage other businesses to adopt better climate disclosure practices and allow for a successful energy transition.
Climate Action 100+
Of the various actions undertaken by FÉRIQUE Fund Management during the year, a particularly significant one was the decision to join the Climate Action 100+ initiative.
The purpose of this group of more than 370 investors that collectively represent more than US$35 trillion is to force the world’s large emitters of greenhouse gases (GHGs) to take the necessary action to combat climate change.
The group’s power of influence has enabled us to extend our reach and has led to concrete results. Specifically, this initiative asks polluters to put a solid governance framework in place, to improve their disclosure and to take the necessary measures to reduce GHG emissions all along the value chain, in line with the Paris Agreement.
Always doing more
Beyond the three main components that constitute the core of its approach, FÉRIQUE Fund Management makes public commitments to the causes it supports. In 2019, it endorsed various declarations concerning such issues as the exclusion from stock indexes of companies that manufacture controversial weapons, greater disclosure of information on workplace equity, alignment of corporate climate policies with those of lobbying associations acting on their behalf, compliance with government commitments under the Paris Agreement and the maintenance of current rules on proxy voting and shareholder proposals.
To stay at the leading edge of developments in this area and to maintain a strong collaborative network, FÉRIQUE Fund Management joined this year the Responsible Investment Association (RIA), an organization representing the Canadian responsible investment industry.
Activity Reports on Responsible Investment
(PRI Transparency report)
PRI signatories are required to report annually on their responsible investment activities. This ensures: