SUSTAINABLE FINANCE
iA acts responsibly to provide quality investments and returns while taking into account environmental, social and governance (ESG) factors.
Cultivating a responsible investment philosophy
At iA Financial Group, investments are under the responsibility of iA Investment Management Inc. (“iAIM”). This subsidiary is responsible for the management and oversight of the organization’s general fund, as well as its investment fund offerings, which include segregated funds and mutual funds. These assets total more than $110 billion in assets under management and are managed by more than 140 investment professionals.
The team’s investment philosophy is strongly influenced by its insurance heritage, leading to an emphasis on diversification, portfolio construction and risk management. The investment team favours disciplined approaches and does not wish to compromise long-term objectives in favour of short-term results. This long-term focus is in line with the company’s responsible investment policy and the importance of incorporating environmental, social and governance (ESG) factors and sustainability into the decision-making process.
Sustainable finance commitments
In 2019, iA Financial Group, through iAIM, became a proud signatory of the United Nations-supported Principles for Responsible Investment (PRI), among more than 4,000 other companies worldwide representing a total of approximately US$120 trillion in assets under management. The Principles were developed by investors, for investors, and today represent the largest network of investment managers, asset owners and financial services providers working together to implement six inspiring principles. In this way, signatories contribute to developing a more sustainable global financial system. At iA Financial Group, we commit to the following:
- Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
- Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
- Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
- Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
- Principle 5: We will work together to enhance our effectiveness in implementing the Principles.
- Principle 6: We will each report on our activities and progress towards implementing the Principles.
In October 2021, iA Financial Group signed the Statement by the Quebec Financial Centre for a Sustainable Finance, together with over 20 institutions representing more than CAN$900 billion in assets under management. Our industry must play a leading role to support a green, fair and responsible low-carbon transition of Quebec and Canada’s economy. We recognize the importance of aligning capital allocation not only with the transformation efforts of our industries, but also with the vision and values of our stakeholders. We are committed to undertaking or pursuing one or more actions in the following themes:
- Developing a local expertise in sustainable finance and investment
- Promote the establishment or growth of local teams and business units in sustainable finance in Quebec
- Support the local development of sustainable finance products and services
- Promote the growth of funds managed by locally established managers with leading-edge expertise in responsible investment
To learn more, read our statement.
iA Financial Group is one of the companies in the Canadian financial sector that has actively lobbied for Canada to host the International Sustainability Standards Board (ISSB). These efforts have paid off, as on November 3, 2021, the International Financial Reporting Standards Foundation (IFRS Foundation) announced at the United Nations Climate Change Conference (COP 26) that Montreal is officially among the cities that will host the offices of the International Sustainability Standards Board (ISSB). The ISSB is a new international organization that will set sustainability disclosure standards for companies around the world. It is the result of an initiative of the IFRS Foundation, which is responsible for the financial accounting standards used in more than 140 jurisdictions. The standards set by the ISSB will allow companies to provide strategic information on their environmental impact to all financial markets.
Implementing our responsible investment policy
Responsible Investment Policy
We have formalized our responsible investment practices by adopting a Responsible Investment Policy. The purpose of this policy is to outline iAIM’s beliefs, commitments and approach to responsible investment. This policy provides a framework and guidance to incorporate ESG considerations in investment management and stewardship activities in a consistent and comprehensive manner. The responsible investment approach will evolve over time as research, evidence and industry practice evolve. iAIM’s goal is to act with purpose, to continuously improve and to be transparent. Accordingly, this policy applies across all iAIM managed portfolios and covers all investment activities.
Proxy Voting Policy
To vote responsibly, iA Financial Group, as a trustee, has chosen and votes in accordance with the Institutional Shareholder Services (ISS) sustainability proxy voting guidelines referenced in our Proxy Voting Policy. These guidelines recognize the growing view among investment firms that sustainability or environmental, social and governance (ESG) factors are important considerations in managing portfolios. As a result, we are concerned not only with shareholder returns and good corporate governance, but also with aligning our activities and practices with the wider goals of society. This includes requesting information on an issuer’s adoption of or adherence to universally recognized norms, standards, codes of conduct or initiatives.
High ESG standards
As ESG integration has become increasingly important, iA Financial Group has strengthened its monitoring in these areas. We note that 97% of the investment firms managing our investment funds are UN PRI signatories. Moreover, the average length of time these firms have been signatories is nine years, demonstrating that most of them have reached a high degree of maturity with respect to ESG integration in their investment processes. This is confirmed by the due diligence activities that our investment team conducts with these companies. Furthermore, 89% of the firms have a UN PRI rating of A or A+.
Beyond these results, many of the firms also demonstrate a high level of commitment through collaboration. For example, 55% of them work with organizations such as Climate Action 100+, and 47% of them have committed to support the Net Zero Asset Managers initiative.
Socially responsible investment funds
iA Financial Group is proud to have launched eight new socially responsible investment funds (“SRI funds”) in the past few years, for a total of 18 SRI funds available to our clients through our three investment fund platforms: iA Clarington mutual funds, individual savings and retirement funds and group savings and retirement funds.
iA Clarington currently offers a range of nine socially responsible mutual funds, including fixed income, equity and managed solutions, with two funds having been added in the first quarter of 2022. These funds are managed by Vancity Investment Management Ltd., a pioneer in socially responsible investing in Canada.
iA Financial Group’s individual savings and retirement fund platform also benefits from Vancity’s strong ESG expertise. Three iA Clarington Inhance SRI portfolios (Moderate, Balanced and Growth) managed by Vancity are also available as segregated funds.
In 2021, our Group Savings and Retirement business line has launched six new segregated funds. These funds are managed by five firms, each of which brings strong investment management capabilities including a variety of responsible investment objectives.
- Responsible Fossil Fuel Free Bond
- Green Bond (AlphaFixe)
- Canadian Ethical Equity Fossil Fuel Free (Fiera Capital)
- Canadian Equity Fossil Fuel Free (Jarislowsky)
- Global Equity Fossil Fuel Free (Jarislowsky)
- Global Stewardship Equity (Baillie Gifford)
Creating a positive impact through our investments
During the year, iA Financial Group, through its general fund, invested hundreds of millions of dollars in investments that meet its risk/return and portfolio diversification requirements while offering favourable environmental and social objectives.
Private investment portfolio exposure to certain “growth” sectors
Renewable
energy
Health
Sustainable
mobility
Total
This includes many investments in renewable energy, such as hydro, wind or solar projects; in the health sector, such as hospitals, long-term health care or sports complexes; and in the sustainable mobility sector, such as public transport.
Our Sustainability Bond Framework
In February 2022, an important step was taken with the publication of our first Sustainability Bond Framework. This publication enabled us to conclude an inaugural issuance of sustainable debentures and therefore enhance our ability to finance our sustainability strategy to support our commitment to ESG standards.
The framework lays out how the net proceeds of each green, social or sustainable bond issued can be used for the financing or re-financing of assets. It specifies the eligibility criteria for assets in each green or social category eligible for financing. The framework also outlines the composition and functions of the Sustainability Bond Committee set up to ensure sound governance of the asset selection and evaluation process, as well as details regarding the management of net proceeds.
Our Sustainability Bond Framework has been reviewed by Sustainalytics, a global leader in providing ESG research, ratings and data. Sustainalytics has issued a second party opinion confirming alignment of the framework with the International Capital Markets Association (ICMA) Sustainability Bond Guidelines 2021, Green Bond Principles 2021 and Social Bond Principles 2021.