ESG Policies
1. Please provide your ESG-related policies.
Fiera Capital’s Sustainable Investing Policy outlines the firm’s approach to integrating ESG assessments into investment processes and highlights the many benefits of increasing our knowledge of companies in which we invest, better controlling the risk of our portfolios and helping companies improve over the long term. The policy also provides a blueprint for “active ownership,” which includes the tactical use of proxy voting rights and engagement with the management of companies in which the firm invests in order to address ESG issues and affect positive change. The policy was approved by Fiera’s Board of directors in December 2017 and is subject to yearly review. Our Sustainable Investing team is currently reviewing and updating our Sustainable Investing Policy to better reflect recent developments and practices. The policy is made publicly available on our website.
Furthermore, Fiera Capital’s Proxy Voting Policy covers ESG issues and is strictly applied by all investment teams as we believe that high standards of corporate governance are necessary for maximizing shareholder value. Our investment management teams therefore take ESG issues into consideration when voting each proxy. Our teams tend to vote in favour of ESG issues, while taking into consideration the impact on a company’s ability to create wealth. Our Proxy Voting Policy has been in effect since 2002. The proxy voting policy was last revised on January 17th, 2023. As part of this update, we ensured that our Proxy Voting Policy represents our beliefs and practices regarding voting on proposals related to systemic environmental and social issues, as well as on corporate governance matters
Fiera Capital’s Sustainable Investment Policy and Proxy Voting Guidelines enclosed.
2. Are sustainable investing and ESG factors integrated into your investment process and portfolio management decisions? If yes, please provide details.
The Integrated Fixed Income team takes a holistic approach to sustainable investing by combining ESG factors into their corporate credit framework. By including such factors in the investment process, the team seeks to gain greater insight into a company’s ability to manage risks and its ability to create sustainable value over the long term. If an area of concern is identified, the team assesses the potential impact this may have on the financial performance of the issuer. Additionally, when the team believes there could be a material impact on the business or financial profile of the issuer it is factored into the assessment of the issuer’s securities, or the team modifies its judgement on the required returns to compensate for these additional risk factors.
See a detailed overview of the integrated approach in the chart below:
While ESG-related concerns can affect the teams’ investment decisions, the credit selection does not necessarily preclude investment opportunities based on ESG factors alone, since Fiera Capital recognizes that ESG factors are often intertwined with other factors that can affect the risk-return assessment of a given security. However, the team regularly elects to engage with issuers on ESG-related subjects with the goal to express concerns and positively impact issuer behavior. The team believes that engagement can improve issuer performance and reduce their risk profile, while better aligning issuer’s behavior with our client’s interests. To this effect, the team records the number of engagements they participate in and closely track ESG milestones. As the team is actively participating in funding discussions with corporate issuers on an ongoing basis, the team’s exposure to management teams is significant and the nature of the discussions gives the team the right levers for engagement which has led to companies adopting the recommendations of Fiera Capital’s analysts (i.e. greater board diversity, increased transparency in reporting, etc.).
The team has developed a proprietary Fiera ESG Score to enhance the data infrastructure, to potentially improve on identifying points of engagement related to ESG and improve client reporting. The most significant deficiency from third party ESG rating providers is the insufficient ESG rating coverage of Canadian corporate bond issuers. Our assessment of Fiera’s current ESG data provider reveals they provide data on only 62% of the corporate issuers in the FTSE Canada indices.
The Integrated Fixed Income Team in collaboration with Fiera’s Sustainable Investments team developed the Fiera ESG Score where the team now has E, S, G and Overall ESG Scores for 100% of the 230 Canadian corporate issuers.
As an introduction to the Fiera ESG Score, it is based on publicly available ESG scores by a leading ESG Research provider. This forms the fundamental basis of issuer ESG ranking methodology across the Canadian corporate universe:
- Focus on underlying E, S and G scores ranging from 0 to 10
- Overall ESG score is a weighted average of industry-dependent weights applied to each E, S and G criteria
Fiera has flexibility to adjust E, S and/or G components, if deemed appropriate, based on assessment from credit analyst covering a given issuer:
- Adjustments can be max +/-2 notches for each E, S and G component
- In cases of adjustments, the Overall ESG score gets recalculated
For issuers that do not have an external ESG rating, data gaps are being filled with:
- Global average scores for E, S and G based on the issuer’s sector
- Potentially adjusted to a max +/-2 notches, for each E, S and G component
- Overall Issuer ESG Score is calculated based on global average sector weightings for E, S and G components
Independent governance and oversight of all issuer ESG Scores is performed by Risk and Sustainable Investment teams. Fiera applies a similar process to improve coverage of issuer emissions data with a focus on Scope 1 & 2 emissions, as well as carbon intensity metrics.
The team seeks to gain greater insight into a company’s ability to manage risks and its ability to create sustainable value over the long term. If an area of concern is identified, the team assesses the potential impact this may have on the financial performance of the issuer. Additionally, when the team believes there could be a material impact on the business or financial profile of the issuer it is factored into the assessment of the issuer’s securities or the team modifies its judgement on the required returns to compensate for these additional risk factors.
A holistic due diligence process which integrates ESG factors dives deeper into elements that have the potential to influence a company’s financial performance. We thus must identify which, if any, ESG factors may have a material positive or negative impact on a company and determine if the compensation is commensurate with the risk. By digging deeper, a competitive edge can be gained through a better understanding of how traditional financial and non-traditional non-financial factors can influence a company’s costs, risks, opportunities and competitive advantages. Therefore, in every company research report produced, we include a formal ESG section highlighting both positive and negative ESG aspects that our credit analysis has identified. The results of this analysis feed directly into the valuation conclusion.
Customization of ESG and Carbon Exposure
Our proprietary ESG scoring also allows for customization to achieve client objective. This may include Fossil Fuel Free portfolios that excludes debt from energy companies, as well as issuers in nonenergy sectors with high carbon intensity, strategies focused on excluding issuers with a high risk of loss from current or past controversies and carbon intensity focused portfolios that seek to reduce the portfolio’s carbon footprint over time or relative to a benchmark.
3.a. Are you a signatory to the UNPRI?
Yes, Fiera Capital has been a Signatory of the United Nations Principles for Responsible Investment (UNPRI) since 2009.
3.b. If you are signatory to other coalitions, please list them.
Fiera Capital interacts and participates in a number of industry work groups on ESG reporting standards. We believe that part of being a responsible investor is to actively contribute and collaborate with other players in the investment value chain to further develop the field. We therefore endorse or sign relevant standards and statements and are active members and signatories of various networks and Responsible Investment initiatives. We furthermore consider a range responsible business conduct codes and internationally recognized standards for due diligence and reporting.
Fiera Capital is a member and signatory in several RI initiatives:
Better Buildings Partnership (BBP) Climate Commitment: Fiera Real Estate UK joined the Better Buildings Partnership (BBP) as of October 2022 and has signed up to the BBP’s Climate Commitment. The BBP Climate Commitment acknowledges the transformation that is required across the real estate sector to deliver net zero buildings by 2050. The aim of the Commitment is to: leverage collaborative and tangible strategic action on climate change, increase transparency and accountability enabling the market to operate and compete effectively, and provide clear client demand for net zero assets, driving the industry to respond.
Canadian Coalition for Good Governance (CCGG): CCGG promotes good governance practices among public companies in Canada, with a strong focus on independent board members of corporations. CCGG is increasingly focusing on environmental and social factors when engaging with board members.
Canadian Fixed-Income Forum (CFIF): CFIF is a group set up by the Bank of Canada to facilitate the sharing of information between market participants and the Bank on the Canadian fixed-income market. An ESG committee was created by CFIF and several other sub-committees and working groups were then created to work and issue recommendations on several themes and issues. Members of Fiera Capital have created and chaired a working group on ESG data which seeks the betterment of ESG disclosures by Canadian Issuers through collaborative and direct engagement.
Carbon Disclosure Project (CDP): We are a signatory to the CDP, a project that aims to collect and share information on greenhouse gas emissions and climate change strategies.
Climate Action 100+: Fiera Capital is a part of the Climate Action 100+ investor engagement initiative, which addresses climate change with some of the world’s largest corporate emitters of greenhouse gases. As a member of this initiative, we participate in engagement activities centered around key goals: companies reducing their greenhouse gas emissions, implementing a strong governance framework that clearly articulates the board’s accountability and oversight of climate-related matters, and improving their climate-related disclosures. Our engagement efforts are underway, targeting Canadian energy issuer(s) on the Climate Action 100+ list that operate in Canada.
Global Real Estate Sustainability Benchmark (GRESB): GRESB is the most recognized global ESG benchmark for real assets. More than 170 institutional investors, representing approximately USD 7 trillion in assets under management, use GRESB data to monitor their investments and make decisions that lead to a more sustainable industry.
Impact Management Norms by Impact Frontiers: Formerly known as the Impact Management Project, the framework was initially backed by many foundations, asset owners, and asset managers around the world and aimed to provide a framework for impact measurement. This framework is currently used in our Global Impact Fund, which was launched in 2020.
Net Zero Asset Managers Initiative (NZAM): As an investor signatory since June 2021, Fiera Capital is committed to supporting the goal of net zero greenhouse gas emissions by 2050, in line with global efforts to limit global warming to 1.5 degrees Celsius. We are also committed to supporting investments aligned with net zero emissions by 2050 or sooner.
Responsible Investment Association (RIA): The RIA is Canada’s membership association for Responsible Investment. Members believe that the integration of environmental, social and governance factors into the selection and management of investments can provide superior risk-adjusted returns and positive societal impacts.
Sustainability Accounting Standards Board (SASB): SASB is a framework with growing global recognition. As an official supporter since 2020, we have promoted the standards internally, and it is used by an increasing number of Fiera Capital investment teams.
Task Force on Climate-related Financial Disclosures (TCFD): We are an official supporter of TCFD. The task force’s recommendations provide a foundation for climate-related financial disclosures for all companies, encouraging them to report on the climate-related risks and opportunities most relevant to their particular businesses. More detail about our approach to climate change can be found in our TCFD report, available on our website.
UK Net Zero Carbon Buildings Standard: Fiera Real Estate UK is collaborating with the wider industry to help produce the Net Zero Carbon Building Standards. A member of our ESG team is representing Fiera Real Estate UK on the Operational Energy Task Group (1a), and Fiera Real Estate UK has committed to contribute operational energy data to assist with benchmark creation.
We also frequently engage with external thought leaders, such as corporate social responsibility and impact investing experts, to broaden our perspectives, improve our understanding of key topics, and complement our internal research. We have participated in or presented on a number of ESG expert panels and conferences and published several ESG-focused white papers.
The firm’s personnel are involved in numerous activities and have been invited as guest speakers to address sustainable investing. Furthermore, the firm’s personnel have been recognized by numerous industry organizations.
3.c. Indicate any other international standards, industry guidelines, reporting frameworks, or initiatives that guide your responsible investing practices.
Please see question 3b)
4. Please describe how ESG oversight and integration responsibilities are structured at your firm, including the process for escalation of key ESG issues. How do you obtain ESG information/data (e.g. public information, third party research, reports and statements from the company, direct engagement with the company)?
Oversight and accountability for Fiera Capital’s sustainable investing activities primarily fall under the auspices of the Office of the Global Chief Investment Officer (Global CIO) and the Chief Investment Officers and management teams of our subsidiaries. However, integrating the assessment of material environmental, social and governance (ESG) risk factors rests with each investment team, as they decide how to integrate ESG in a manner that best suits their particular investment style or asset class.
Fiera Capital’s Global Sustainable Investing Committee reviews the practices and initiatives relating to environmental, social and governance (ESG) matters and oversees their development in line with market and regulatory expectations. The membership includes the Chief Investment Officers of both Private and Public Market groups, alongside representation from internal stakeholders across a broad array of functional areas to support the integration of ESG throughout the organization. Collectively, they implement the firm’s strategic objectives related to sustainable investing. The Committee sets new objectives for improvement on an annual basis and meets regularly to track the progress in implementing these improvements.
Vincent Beaulieu, Head of Sustainable Investing – Public Markets, and Jessica Pilz, Head of Sustainable Investing – Private Markets, are heavily involved with firm’s ESG initiatives. They both sit on the Global Sustainable Investing Committee and work collaboratively on enhancing the sustainable investing practices of the firm.
The Sustainable Investing Team is responsible for implementing a consistent, purpose-led and proactive approach to sustainability in our investing activities. Its focus is on improving support to investment teams, providing transparency to our clients and ensuring that Fiera Capital complies with applicable regulations. The Sustainable Investing team collaborates with the investment teams and the Chief Investment Officers of both the Private Markets and Public Markets divisions to improve and support our ESG capabilities while also working closely with distribution channels to help create new ESG-focused solutions. The Sustainable Investing team also collaborates with the Risk Management team on various ESG projects, such as ESG data and reporting projects.
Fixed income teams benefit from the in-house expertise of the firm, draw upon the expertise of specialists and generalists and maintains a proprietary database of select current and historical ESG factors affecting Canadian corporate issuers. The analysis of ESG factors is performed based on various sources of information such as company disclosures, discussions with management, news items and third-party information from our external ESG research provider MSCI and Bloomberg. Insights generated by the database and other sources are used to generate engagement points with issuers and facilitate the discussion with management teams.
5. What channels do you use to communicate ESG-related information to clients and/or the public? Do you produce thought leadership (written reports and publications)? If so, is the information available to the public? Please provide links, if applicable.
Fiera Capital and its affiliates (where applicable) report on ESG and responsible investing related progress. Depending on the strategy, Fiera Capital provides client specific reporting on a quarterly basis. At the firm level, Fiera Capital produces its Sustainable Investing Report and TCFD on an annual basis.
Fiera Capital’s UN PRI Transparency Report, which describes our initiatives and progress during the year as well as expected activities for the year to come, is produced annually and is available to our clients and beneficiaries upon request. Additional ESG related information, such as carbon intensity reporting and engagement reporting are also available to clients. The below reports can be made available to clients, as well as the potential to customize reports that incorporate ESG metrics that are important to a client:
- Portfolio Summary Reports
- Portfolio Snapshot Reports
- Proxy Voting Results
- Carbon Metrics and Attribution Reports
While we do not explicitly measure the social impact of our RI approach on our portfolios, on an ad-hoc basis, we can provide ESG analysis reports on portfolios using MSCI ESG reporting tools. These reports can provide comparisons on key ESG metrics between the portfolio and benchmark.
We have built a dedicated Sustainable Investing are on our website, which houses annual ESG reports and our sustainable investing policies.
Thought Leadership
Our commitment to responsible investing entails we abide by key pledges and frameworks. It also implies we collaborate and partner with organizations to promote robust corporate governance, and sound and sustainable business practices. We support and participate in many initiatives around the world and our collaboration takes many different forms.
Fiera Capital aims to promote responsible investment principles within the investment industry and as such, we regularly produce thought leadership pieces and white papers on key ESG themes. In the past years, we have produced the following white papers and case studies on a variety of responsible investment themes:
- Investing for a Low Carbon World
- Good Governance. Greater Returns. Why corporate governance is the key to an ESG-friendly portfolio.
- Impact Investing: A Third Factor to the Risk/Return Mindset
- What Would Milton Friedman Say About Proxy Voting and ESG?
- ESG Case Study: Emerging Markets Equity
- ESG Case Study: Canadian Equity
- ESG Case Study: Fiera Infrastructure
- ESG – What it is and why it matters?
6. Do you have periodic reviews of your ESG process/approach to assess its effectiveness? What are the results? What would cause you to disregard ESG issues in your investment/analysis decisions?
In 2022, Sustainable Investing Team and CIO office conducted ESG Due Diligence reviews with each investment team. The Due Diligence reviews allowed us to better map the current ESG integration processes of our investment teams as well as allowed us to address the gaps and suggest improvement opportunities. Also, these ESG due diligence reviews acted as an internal control, proved that we have put the appropriate controls in place and helped reduce the perceived risk of greenwashing. The interviews were led by the Sustainable Investing Team with representation from the CIO office and Compliance and Legal. The discussion was guided by a questionnaire that was created by leveraging existing ESG-related questions from previous investment DDQs, RFPs, UN PRI questionnaire and CFA institute, among others. These results are then reported into the Global Sustainable Investing Committee, which is comprised of business leaders across the firm in multiple jurisdictions to ensure Fiera Capital’s ESG ambitions are being met and to identify any additional support/resources that are required by teams.
The Firm’s ESG-related policies are reviewed annually and updated as needed by our Sustainable Investing Team to ensure that the policies are effective and in line with best practices. The policy is then reviewed by the Compliance and Communications teams. Lastly, Fiera Capital’s Global ESG Committee reviews and approves the policy and any changes prior to its publication.
Climate
7. Describe how you identify, assess, and manage climate-related risks.
Environmental, social and governance (ESG) factors, including climate-related, are integrated into the fundamental investment decision-making process of the Integrated Fixed Income strategy. The team’s investment processes reflect the belief that organizations that successfully manage ESG factors create more resilient businesses/assets and are better positioned to deliver sustainable value over the long term.
The team takes a holistic approach to sustainable investing by combining ESG factors into their corporate credit framework. Fiera Capital is of the view that climate change-related risks are increasingly important in fundamental analysis of a company because they have the potential to materially affect company value in the long run. In its analysis, the team is breaking down climate-related risks as follows:
- Transition risks, which are often easier to identify, and the team is relying both on its own/internal credit analysis and analyses done by our ESG data providers to assess this risk. According to the UN PRI’s “Inevitable Response” document, there are definitely some sectors that are more exposed to that risk and most often than not, the higher risk companies will be the ones that are lagging their peers in terms of carbon emissions (higher carbon intensity) and those that don’t have any plans to shift some of their operations.
- Physical risks, which on the other hand, are a little bit harder to identify and monitor. We are aware of many tools that are being developed to better capture the potential impact on portfolio returns but methodologies still need to be fine-tuned.
When the team believes there could be a material impact on the business or financial profile of the issuer it is factored into the assessment of the issuer’s securities or the team modifies its judgement on the required returns to compensate for these additional risk factors. To support the decision-making process, the credit team has developed a proprietary Fiera ESG Score to enhance the data infrastructure, to potentially improve on identifying points of engagement related to ESG and improve client reporting. The most significant deficiency from third party ESG rating providers is the insufficient ESG rating and carbon emissions coverage of Canadian corporate bond issuers. The goal of developing a proprietary ESG score is to help inform judgement and compare peers across an industry to help identify outliers and assess how this may have an impact on the financial profile, if any, of the company. It also helps to develop points of engagement with company management to understand the reason and company managements awareness to the data.
The team believes that engagement can improve issuer performance and reduce an issuers risk profile across sectors, while better aligning issuer’s behavior with our client’s interests.
8. Describe the climate-related risks and opportunities you have identified over the short, medium, and long term.
Although material/key climate-related risks do vary from industry to industry, the team expects transition risks to be something that will most likely have more impact in the short to mid-term. Physical risks related to climate change are on the other more likely to have greater impact in the medium to long term, as the frequency and intensity of climate change-related disasters is more likely to increase.
In the Canadian landscape, the key sector that the team has identified to be exposed to transition risk is the energy space. In recent years, the team has regularly passed on new issues of Integrated Oil & Gas companies (esp. long bonds), as the team is becoming increasingly concerned about stranded asset risks with traditional oil companies. While the companies are still generating very strong cash flows today, the energy transition is posing significant challenges requiring these companies to make substantial investments in technology to e.g. meet emission reduction targets and other environmental standards. Also, with increasing electrification of mobility, there is growing risk of oil losing its relevance as the main energy source. Since we only invest in strong actors in this space to begin with and in companies that have outlined a clear path towards emission reduction going forward, we are mostly staying away from long-dated maturities of these issuers (e.g. >15yrs) as uncertainty around stranded assets etc. will challenge the business model over time.
Regarding physical risks, the team is still looking to get a better sense of assessing how these will impact sectors (e.g. insurance sector where we already observe increasing claims as a result of changing weather patterns) and other sectors.
9. Describe the resilience of your investment strategy, taking into consideration different climate-related scenarios.
When assessing the resilience of the investment strategy, the team is currently mainly relying on credit analysis factoring in their own proprietary research, but also extensively leverage MSCI ESG research and data. Using the MSCI data as a starting point, the team has created a proprietary ESG scoring that completes the coverage out of scope from MSCI and also adjusts scores across the E, S and G pillars where the team has come to a different conclusion and reflective of their views. This proprietary Fiera ESG Score equips the team with the necessary data to more effectively compare the ESG profile and carbon metrics across issuers to better identify outliers and establish points of potential engagement with company management. Additionally, it potentially helps to identify companies that require a higher degree of compensation for their assessed risk relative to peers.
Fiera is currently on the lookout for tools that may be used to properly assess physical risks and transitions risks over the very long term but have yet to find one that best suits our needs. Exploring climate-related scenarios is one of the key features we are looking for in the potential new tools.
The investment strategy is resilient and allows for consistent outperformance across market environments as a result of the investment process's dynamic approach which aims to exploit diversified sources of alpha. Top-down factors, including duration, yield curve, and sector positioning, allow the team to define their strategy and establish a quantitative framework. Bottom-up factors focus on credit research reviews which helps portfolio managers identify attractive securities. Environmental, Social and Governance (ESG) factors, including climate change-related risks are accounted for in the fundamental analysis of a company because they have the potential to affect company value in the long run. Additionally, our ESG data provider provides us with different carbon metrics that are used in our own carbon monitoring and carbon attribution reports. The investment team has been increasingly getting their hands-on carbon data in order to fully integrate this factor whenever it is relevant for the specific company being analyzed. The team is also leveraging the data to work towards its goal to effectively quantify the carbon footprint of its portfolios in relation to their respective benchmarks.
10. Do you track the carbon footprint of portfolio holdings?
Yes - Fiera Capital can provide carbon reports and carbon attribution reports for our different portfolios and benchmarks.
If yes, please describe the methodology and metrics used, and whether you have a set target for reducing the portfolio's footprint.
Through MSCI ESG research, we have access to carbon emissions data and other carbon-related factors. Although emissions could be reported in multiple different ways, we most often use carbon emissions of scope 1 and scope 2 to calculate carbon intensity (total tons of CO2 equivalent normalized by total sales in M$USD).
Our proprietary ESG scoring also allows for customization to achieve client objective. This may include Fossil Fuel Free portfolios that excludes debt from energy companies, as well as issuers in nonenergy sectors with high carbon intensity, strategies focused on excluding issuers with a high risk of loss from current or past controversies and carbon intensity focused portfolios that seek to reduce the portfolio’s carbon footprint over time or relative to a benchmark.
11. What are your firm's emissions? Please demonstrate how/whether you are taking steps to reduce these emissions.
Fiera Capital attempts to conduct its company operations in a carbon-neutral manner by reducing the carbon footprint of our operations as much as possible. Various initiatives at grassroots level are underway or being considered to improve the footprint, for example relating to employee travel.
Fiera Capital does not track its overall emissions as a firm. In order to minimize the depletion of natural resources and to reduce waste and greenhouse gas emissions, Fiera Capital applies sound environmental practices to all operations. Depending on the office these practices include, but are not limited to:
- Improved sorting for recycling/garbage
- Eliminating single use products: straws, cups, water bottles
- Battery & electronic waste recycling
- Limiting energy usage by having motion sensors on the floor and in offices & using energy-efficient lightbulbs
- Replacing bottled water with pitchers for onsite meetings
- Considering local caterers that are more sustainable and use either reusable plates/cutlery or compostable containers
- Incorporating sustainable considerations for office supplies that limit waste & are more earth-friendly (less plastic)
- Replacing coffee pods with ground coffee
12. For the mandate you manage for Queen’s, what percentage of equity holdings (if applicable) have credible net zero commitments?
Not applicable for fixed income investments.
13. How do you assess the credibility of a company’s emission reduction targets?
The team believes that engagement can improve issuer performance and reduce an issuers risk profile across sectors, while better aligning issuer’s behavior with our client’s interests. In advance of engagements, we set clear objectives of what we want to achieve and this can vary across issuers dependent on their ESG risk exposure, sector or past history. At a high level, the objectives typically revolve around:
- Establish or understand emission reduction targets and if they have been publicly disclosed
- Transparency around target setting/intentions
- Data and disclosure around specific ESG factors, in particular carbon emissions and intensity with expected improvement in accuracy and inclusion of Scope 3 over time
- Request further data and verify currently published data to make sure we can accurately compare companies within the sector and adequately assess emission-elated risks
Our objective is to understand clearly the company’s intentions, strategy and targets, and ensure we have proper data and disclosure to track progress to hold management accountable.
14. What forward-looking metrics do you use to assess an investment’s alignment with global temperature goals?
The credit team focuses on engagement as their most effective tool to translate portfolio decarbonization to economy decarbonization. The Canadian energy sector is producing a very significant amount of GHG emissions and is facing a heightened level of scrutiny by investors and other stakeholders. There is a real risk that energy companies will face funding challenges in the future if they do not address this issue and do not sufficiently disclose data on their emission and set clear emission reduction targets.
We want to see real world decreases and this is why we are seeing companies across sectors setting ambitious Net Zero-aligned objectives. A key objective of ours has been to clearly understand how energy companies within our coverage get to their 2050 Net Zero target? What resources are they putting in place? What investments are they planning to do? What interim targets have they established to assess progress? We want to ensure that it is not just a loose commitment and that it is something that they take very seriously.
Overall, we believe engagement is the most effective tool to translate portfolio decarbonization to economy decarbonization. We do not just want companies selling off their dirty assets to other actors, which in effect reduces emissions of the issuers so they appear greener but overall the economy has not improved. What we want to see is a transition where the brown is being decommissioned and is being replaced by green technology. We believe by remaining engaged, laying out expectations and giving companies time to execute on their transition strategy, while holding companies accountable, is an effective strategy to address climate-related risks.
Diversity
15. Please provide the composition of your senior leadership team and board of directors, including women and visible minorities. How do you encourage diversity of perspectives and experience?
Fiera Capital has placed emphasis on the diversity of its talent. This fundamental principle is at the heart of our strategic vision, as it is the complementary nature and expertise of our people that drive our growth ambitions and elevate our firm to the highest level of excellence.
Fiera Capital is proud of both the strength and pedigree of its current board, which is comprised of both senior executive management, as well as independent members. The independent members are highly respected Canadian and International business leaders. As of June 30, 2023, our firm’s Board of Directors is composed of 12 individuals, which includes 2 directors who identify as women.
We have made significant strides since starting our DE&I journey in 2021 and we are putting the full force of the organization behind strengthening our foundation and achieving our goals. These include strengthening our pipeline of top talent with greater inclusion of women in management positions and greater representation of racial and ethnic groups to create a culturally diverse workforce that reflects the communities and organizations we serve around the world.
Currently, our DE&I-CSR Council is comprised of 23 leaders and 27 ambassadors from across our global offices and from diverse and underrepresented groups who are responsible for promoting our diversity, equity and inclusion initiatives across the firm. The Council is committed to acting as champions of diversity, equity and inclusion and to supporting our efforts to ensure we deliver consistent and impactful outcomes aligned with our DE&I strategy. The Council reports directly to our Executive Chairman of the Board and provides regular updates to the Board and its Nominating and Governance Committee.
Fiera Capital has a Global Equity and Inclusion Policy to establish our commitment to cultivating and preserving a culture of diversity, equity and inclusion. To support a culture of inclusion, we also launched mandatory training on Conduct Conscious Inclusion, Respect at Work and Allyship for all employees. We also regularly host global events with executive team members and renowned speakers to promote workplace inclusion.
Every year, a cohort of women from Fiera Capital participate in The A Effect Ambition Challenge, a program aimed to help them embrace their ambition and maximize their leadership potential. With our goal to increase the presence of women in management roles, we more than tripled the number of participants in The A Effect Ambition Challenge, which propels female ambition and fosters greater equality. Thirty-five women from across the organization enrolled in this unique international training program in 2022.
Furthermore, we announced our participation in the Parity Certification of Women in Governance, a six-step process designed to help organizations assess their current gender parity status and outline the way forward to close the gender gap.
In 2022, Fiera Capital became one of the first 16 signatory organizations to the CFA Institute Diversity, Equity and Inclusion Code for the Investment Profession in Canada and the United States. DEI Code signatories commit to six metrics-based principles to accelerate and amplify the impact of their commitment by making the economic, business, and moral case for diversity, equity and inclusion. Further, in Canada, signatories commit to implementing the Truth and Reconciliation of Canada Call to Action #92 and to embracing Indigenous reconciliation. We are taking an important leadership role on the path towards a more diverse and inclusive investment industry, and we are committed to further driving positive and meaningful change within our organization and the communities we serve and support around the globe.
Every year, we celebrate and commemorate several important events and observances such as International Women’s Day, Black History Month, Pride Month, National Day for Truth & Reconciliation, World Mental Health Day and International Day of Persons with Disabilities.
We embrace our employees’ diverse backgrounds and view our people as central to our success. We are committed to fostering a culture of inclusivity and diversity that promotes equality and respect through a harmonious and collaborative work environment. Diversity encompasses differences in backgrounds, qualifications and experiences as well as differences in approaches and viewpoints. These differences include gender, gender identity, sexual orientation, age, ethnicity, religious or cultural background, disability, marital or family status, and other areas of potential difference.
Proxy Voting
16. What proportion of the time do you vote with or against management on shareholder resolutions, board appointments, and auditor appointments? What proportion of the time do you vote with or against management on ESG issues? How does this break down for climate, diversity, and remuneration issues?
Whilst Proxy voting applies only to Equity holdings which are outside of the mandate managed for Queen’s University, the following represents Fiera Capital’s share of votes instructions with or against management on shareholder resolutions:
- With Management: 166 (44%)
- Against Management: 213 (56%)
Proportion of the time Fiera Capital votes instructions with or against management on board appointments:
- With Management: 7,380 (95%)
- Against Management: 392 (5%)
Proportion of the time Fiera Capital votes instructions with or against management on auditor appointments:
- With Management: 641 (100%)
- Against Management: 2 (0%)
Proportion of the time Fiera Capital votes instructions with or against management on climate-related issues:
- With Management: 16 (59%)
- Against Management: 11 (41%)
Proportion of the time Fiera Capital votes instructions with or against management on board diversity and EEO (Equal employment opportunity) related issues:
- With Management: 7 (44%)
- Against Management: 9 (56%)
Proportion of the time Fiera Capital votes instructions with or against management on remuneration-related issues:
- With Management: 18 (69%)
- Against Management: 8 (31%)
17. What proportion of all independent ESG shareholder resolutions do you support?
Fiera Capital supported independent ESG shareholder resolutions 63% of the time.
18. What proportion of remuneration packages do you vote in favour of? In your view, is the current level of executive remuneration too high, too low, or about right? How is this view reflected in your voting record on remuneration?
Fiera Capital voted in favour of remuneration packages 78% of the time in 2022. We analyze each company’s specificities to decide whether the current level of executive remuneration is adequate. Fiera Capital is generally of the view that a compensation plan must contribute to aligning the interests of executives with the long-term interests of the company and its shareholders. Compensation plans must factor in market conditions and the need to attract and retain qualified people without being excessive. This is reflected in the fact that 100% of votes on remuneration packages cast in 2022 were in line with Fiera Capital’s proxy voting policy.
19. Have you ever co-filed an ESG-related shareholder resolution? If so, how many and with what frequency?
No, we have never co-filed an ESG-related shareholder resolution.
20. Have you ever voted against a director for explicitly ESG-related reasons? If so, why? If not, would you consider doing so in the future?
This is not a metric that Fiera Capital currently tracks and as such we cannot provide an example at this time. We have never and would never rule out the possibility of voting against a director explicitly for ESG-related reasons.
Engagement
21. How many companies do you engage with? What proportion of your engagements focus on environmental and social issues? What are your engagement goals? Are these goals outcome/action-based (e.g. decreases in emissions or increases in number of women on the board) or means-based (reporting on emissions or number of women on the board)?
The IFI team regularly elects to engage with issuers on ESG-related subjects with the goal of positively impacting issuer behavior. The team believes that engagement can improve issuer performance and reduce their risk profile, while better aligning issuer’s behaviour with our client’s interests. As the team is actively participating in funding discussions with corporate issuers on an ongoing basis, the team’s exposure to management teams is significant and the nature of the discussions gives the team the right levers for engagement.
The team had 72 meetings with Management teams of Corporate Issuers in 2022 (vs. 94 in FY 2021 and 92 in FY 2020). The team actively engaged on ESG-related subjects ~40% of time. Engagements can be broken down as follows by area of Engagement:
- Environmental: ~69%
- Social: ~7%
- Governance: ~24%
The team keeps track of engagements and monitors the outcomes. See further detail of our engagement efforts in the charts below.
22. What is your policy around the escalation of engagement; how and why might this happen and what is the ultimate tool you might use (e.g. voting against board re-election, etc.)?
As the team is actively participating in funding discussions with corporate issuers on an ongoing basis, the team’s exposure to management teams is significant and the nature of the discussions gives the team the right levers for engagement. Should an engagement not deliver the right outcome and/or the team will conclude that they are not adequately compensated for ESG specific risks related to the issuer, the team would typically pass on the new issue and/or provide specific feedback to the issuer (either directly or through the dealers). Additionally, in some cases where they already have substantial exposure to an issuer, the team might decide to exit a bond position. Since they are fixed income investors, voting against board re-election etc. are tools that are typically not available to them.