Ontario requires pensions to disclose ESG data

Amendments to the Ontario Pension Benefits Act require pension plans to file information about whether environmental, social and governance (ESG) factors are incorporated into their investment policies and procedures.

The new rules, which come into force January 1, 2016, do not require the pension plans to include ESG factors in their investment decision-making process, but rather to disclose whether or not ESG factors are considered when making investment decisions.

If ESG factors are part of the pension’s investment strategy then the plan must disclose, within its Statements of Investment Policies and Procedures (SIPPs) filing to the Financial Services Commission of Ontario (FSCO), how the ESG factors are incorporated.

Frustratingly for pension plans, regulators haven’t yet provided any guidance on what it considers to be “environmental, social, and governance,” and these terms are also not defined within the rules.

The ESG data must be filed with the FSCO within 60 days after January 1, 2016.