BCI releases 2022 ESG Annual Report

A message from Gordon J. Fyfe, Chief Executive Officer / Chief Investment Officer

The past year continued to bring about significant changes in the global economy and geopolitical landscape.

Unprecedented natural disasters caused a number of humanitarian crises across the globe and billions in financial losses. The Russia-Ukraine war wreaked havoc on the ground and in financial markets, leading to large-scale volatility across the global energy sector. These events highlight that although decarbonization of the global economy is underway and must occur to reach our collective climate goals, it will not be a smooth or easy road.

They also demonstrate the complexities of ESG issues for investors. From capital deployment to working with portfolio companies, governments, and regulators around the world, active asset managers are playing a critical role in advancing ESG objectives within an increasingly nuanced and fast-changing environment, all while staying focused on fulfilling mandates to clients.

ADVANCING ESG AS AN ACTIVE MANAGER

At BCI, our strategy for success is to be deliberate and intentional about what we want to accomplish and how we do it in order to serve clients’ best financial interests.

We believe, as do our clients, that ESG matters make a difference and translate to meaningful distinctions in a company’s ability to generate long-term value for investors. As a result, we apply the same rigour and due diligence to evaluating ESG factors as we do traditional financial factors to maximize long-term performance. As an active asset manager, we use our influence, internal expertise, and governance rights to align interests with our stakeholders and pursue common ESG goals.

Importantly, we continue to take decisive actions to strengthen our ability to manage ESG risks and capitalize on opportunities. This includes putting in place effective ESG governance structures, expanding our in-house skills and expertise, and enforcing our ESG expectations with portfolio companies and external managers. Our key initiatives during the year continued to reflect these efforts.

> Together with BCI’s Board of Directors, we reviewed and revised our ESG Governance Policy, and established specific reporting and performance metrics to support the board's ongoing oversight.

> We released an update to our Climate Action Plan, reflecting progress made over the past four years and affirming our support for the global goal of reaching net-zero emissions by 2050.

> We developed the 11th edition of our Proxy Voting Guidelines, which substantially increased our expectations for public companies on key ESG matters like climate risk disclosure, board diversity, corporate governance roles, and shareholder rights.

> We appointed our first global head of ESG, a newly created role responsible for ESG across the portfolio, and hired additional senior ESG experts that brought our total ESG staff count to 16.

LEVERAGING OUR COMPETITIVE ADVANTAGE

Our size and influence as a global, active investor enable us to address ESG matters, notably climate change, through engagement and advocacy to bring about tangible change in our investment portfolio.

We are working closely with our private portfolio companies to advance decarbonization initiatives. In 2022, this included a carbon crediting project at Mosaic Forest Management, a British Columbia-based company held in our infrastructure & renewable resources program, which is anticipated to reduce greenhouse gas emissions by 20 million tonnes over the next 25 years. QuadReal, BCI's real estate equity and debt company, committed to net zero by 2050, building on more than a decade of carbon reduction initiatives within our real estate portfolio. To broaden our impact, we engaged general partners in our private equity program to join the ESG Data Convergence Initiative — the first major private assets ESG benchmarking project.

In public markets, we participated in collaborative engagements targeting nearly 2,300 companies on issues such as climate change, gender diversity, and sustainable finance, including our continued leadership with Climate Action 100+. Our teams also worked with regulators and governments to make recommendations, provide feedback, and define the ESG disclosure standards that will ultimately benefit capital markets participants over the long term.

MEETING OUR COMMITMENT TO CLIENTS

Preserving and growing long-term value for our clients remains the driving force behind our ESG commitments and decisions, particularly as the complexity of the investment landscape grows.

Our approach continues to be carefully crafted to accomplish this mandate and maintain the strong returns we have been able to generate. Our clients rely on our investment expertise and risk management skills to serve their constituents, including millions of hard-working British Columbians who need financial security now more than ever.

Gordon J. Fyfe

Chief Executive Officer / Chief Investment Officer

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