Sustainable investing can help us deliver on our Purpose, while making a measurable positive impact on the environment and society. Using our own investments we seek opportunities to drive the transition to a low-carbon and more inclusive economy.
Our approach
There are various approaches to sustainable investing. As outlined in the Definitions for Responsible Investment Approaches published by the CFA Institute, Global Sustainable Investment Alliance and Principles for Responsible Investment, approaches to consideration of environmental, social and governance (ESG) factors can include screening, ESG integration, thematic investing, stewardship and impact investing1. Sun Life's general account and certain asset managers, where relevant, may apply these approaches to support sustainable objectives in their investing. Refer to the websites of each asset management business for more details on their specific approach to sustainable investing2.
ESG integration:
Integration of material ESG factors in the investment process, such as research and due diligence, to inform investment decisions, which can enhance or protect long-term risk-adjusted returns.
ESG integration is core to our own investment approach and the foundation of sustainable investing at Sun Life. The way we integrate ESG factors into our investment decision-making varies across our range of asset classes, portfolios and asset management and wealth businesses, but it’s essential to our sustainable investing activity.
Screening:
Prioritize sectors, companies or investments due to values/preferences or material ESG factors. This is done in alignment with Client investment objectives for managed assets, or Sun Life objectives for owned assets. Examples include fossil fuel-free funds and tailored portfolio construction to exclude certain companies or sectors, or the bottom performers on ESG ratings, as well as targeting low greenhouse gas (GHG) emitters or top performers on ESG ratings.
Thematic and impact investing:
Thematic investing focuses on specific sustainability-oriented areas or themes that align or contribute to challenges or opportunities, such as renewable energy, waste and water management, sustainable forestry, agriculture and access to essential services. Impact investing is investing with an aim to generate specific, quantifiable, positive impacts and financial return.
We leverage expertise across some of our asset management and wealth businesses to develop, identify and offer sustainability-themed investments and products that also meet the specific sustainable investing goals of our Clients.
It's our duty to act in the best interests of our asset management Clients and policyholders. We work proactively with Clients to meet their ESG goals. Embedding ESG considerations into investment decisions helps ensure we are doing this.
Sustainable investing activities occur across three categories at Sun Life:
Asset owner – Where Sun Life is an asset owner, we have discretion over investment guidelines (as established within the requirements, restrictions and limitations set out in our Board-approved policies) to help meet our obligations to policyholders.
Asset manager – Our asset managers act as fiduciaries helping Clients achieve their investment objectives. Several of our asset managers have committed to the goal of investing aligned with net zero by 2050. These companies include: MFS Investment Management (MFS), SLGI Asset Management Inc (SLGI Asset Management), SLC Fixed Income (the investment grade fixed income business of SLC Management) and its affiliate businesses BGO and InfraRed Capital Partners (InfraRed). For details on each asset management business' approach to sustainable investing, refer to the more resources section.
Fund platform – Through our fund platforms, we offer investment options to Clients. Our fund platform businesses are in various stages of integrating ESG into their manager selection and monitoring process and/or offering sustainability focused or screened investment options.
Across these categories, the International Investment Centre (IIC), an internal investment research and consulting group, performs due diligence and monitoring of third-party managers. The IIC considers each third-party manager’s incorporation of ESG into its investment processes, as well as other relevant sustainability factors and monitors them on an ongoing basis.
The IIC also explores potential partnerships and stays abreast of developments in sustainable investing by meeting with existing and potential asset managers and other key players in the industry.
In many cases, we believe engagement can be more powerful than divestment. As a large asset management and wealth business, we can engage directly with companies and investment managers on ESG issues to better understand their approach to managing issues under consideration. We also engage through industry initiatives. Working alongside other institutional investors helps us better understand how our peers are thinking about common issues.
Our investment teams engage with relevant stakeholders in many ways through their investment processes. These stakeholders include:
As well, if an engagement is unsuccessful, we may escalate using the strategies above.
In Canada, we’re a financier of private sustainable infrastructure, providing long-term private capital to support construction, operation and maintenance. We work with governments, other businesses, local communities and Clients to help bring such projects to fruition and ensure they achieve strong sustainable value. We'll continue to invest in sustainable assets as defined by leading market standards, while establishing and regularly monitoring our internal investment targets. These investments help support the transition to a low-carbon and more inclusive economy and play a role in supporting the United Nations Sustainable Development Goals.
As part of this investment focus, Sun Life has issued two sustainable bonds (in 2019 and 2023). The proceeds are used to finance or refinance, in whole or in part, new and/or existing green or social assets that meet the eligibility criteria set out under Sun Life's 2019 Sustainability Bond Framework.
Sun Life has also set a goal of achieving net-zero GHG emissions by 2050 for both its investments and operations, with interim targets established or under development for our asset management businesses and for Sun Life’s general account. Refer to our Net Zero by 2050 report and Climate change for more details.
Our asset managers strive to work with companies we invest in to enhance their disclosures, including their plans to address the material effects of climate change on their businesses, to improve data availability and to share key learnings with management through participation in investor-led initiatives.
For example, SLC Fixed Income is a Founding Participant and Contributor in Climate Engagement Canada (CEC). This finance-led initiative, created in 2021, aims to drive dialogue between the financial community and Canadian corporations to promote a just transition to a net-zero economy.
As part of our approach to engagement and education, Sun Life pledges to work with investee companies across sectors through its transition to net zero. Many people associate sustainable investing with the divestment of fossil fuels. We don’t believe this is the optimal approach. These companies currently play an important role in the economy and provide livelihoods to millions of people. We support these companies as they work to transform their business models to transition towards a lower-carbon economy. Importantly, when an equity or bond holding is sold, it may be purchased by someone who doesn’t engage or care about its climate impact. That’s why our engagement is so important. Read more about how we use engagement in our approach to investments in coal.
Sun Life is helping to lead industry efforts to advance opportunities to invest in a sustainable manner. Long-term investors face a lack of high quality and reliable sustainability-related data (including GHG emissions). Improved access to data helps long-term investors like Sun Life to better account for the risks and opportunities from climate change and direct capital to businesses that are leading the transition to net zero. Through our public policy and regulatory activities, we advocate for internationally-aligned, consistent and economy-wide disclosure of climate-related data from both public and private companies.
In addition, we encourage Canada’s governments to design or introduce policies that facilitate opportunities to invest in sustainable infrastructure.
Transparency is one of our guiding principles for all disclosures including those related to sustainable investments. We believe in transparency and reporting on our progress, learnings and challenges. In addition to our Sustainability Report, some of our asset management businesses publish their own sustainable investing reports and annual reporting aligned to the recommendations of the Task Force on Climate-related Financial Disclosures.
Sun Life and several companies in our Asset Management business group are signatories to the Principles for Responsible Investment (PRI). Signatories are required to report on their sustainable investment activities to the PRI annually. Sun Life is the largest insurance asset owner signatory in Canada by AUM.
$20 billion in new sustainable investments from 2021-20253
In progress - $17.6 billion invested since 2021, with $3.3 billion invested in 20233
Net-zero greenhouse gas (GHG) emissions in our investments by 2050. We set a net-zero goal across our global operations as well – refer to Climate change.
In progress – several interim targets established or under development for our asset management businesses and for Sun Life’s general account. The general account interim targets for 2030 (relative to 2019 base year) include:
Refer to our Net Zero by 2050 report for the latest updates
Learn more about our progress and performance in our 2023 Sustainability Report and ESG Performance Tables.
Sun Life is addressing a critical need in our communities by financing two emergency shelters in the U.S.
Sun Life Assurance Company of Canada received a four-star rating in the latest Principles for Responsible Investment assessment8 for the Policy, Governance and Strategy module. Sun Life also received three-star ratings for the Indirect-Fixed Income-Active and Confidence Building Measures modules.
BGO marked 13 consecutive years of excellence and industry leadership in ESG in the 2023 GRESB Real Estate Benchmark. BGO’s North American funds received 100% on the management component, highlighting the firm’s robust ESG practices and process. Sun Life achieved 4 Stars in the 2023 GRESB assessment for standing investments and ranked second in the Development module, increasing its position by one from 2022.
BGO’s Prime Canadian Property Strategy received the 2023 Pension Real Estate Association (PREA) Open-End Fund ESG Award. This award recognizes PREA members at the forefront of ESG within real estate investing and provides the industry with examples of best practices in ESG.
1 CFA Institute, Global Sustainable Investment Alliance and Principles for Responsible Investment. "Definitions for Responsible Investment Approaches". 2023.
2 This information is provided for educational purposes and may not speak to the approach of each individual asset manager. Each of our asset managers have their own approach to managing Sun Life and third-party assets.
3 General account and certain third-party Clients, where relevant. More information on AUM methodology, including asset managers and criteria included in the calculation, is available upon request. Client asset values included represent a non-IFRS financial measure. Investments counted toward Sun Life's sustainable investment goal meet one or more of the criteria for investments based on ICMA Green Bond Principles, ICMA Social Bond Principles, ICMA Sustainability Bond Guidelines, GRESB Real Estate Benchmark, and PRI Impact Investing Market Map. Where issuers do not obtain a third-party opinion or provide an internal opinion on their issuance, our investment professionals apply judgment to assess whether the use of proceeds meets the standards set out in the ICMA principles. Assets included may not align with criteria in the Sun Life Sustainability Bond Framework. Does not include all holdings in companies that may be defined as sustainable under other taxonomies.
4 Financed emission values are calculated in alignment with the Partnership for Carbon Accounting Financials (PCAF), Part A Financed Emissions 2nd Edition (2022). Note this figure is not externally assured and may be adjusted in future publications due to changes in the organizational portfolio in addition to improvements in availability, controls, and quality of data. Values are impacted by rounding. The unit tCO2e refers to metric tonnes of carbon dioxide equivalent.
5 Material sectors include utilities (electric, multi, and gas); oil, gas, and consumable fuels; aviation; chemicals; construction materials, and mining. Alignment metric is the Paris Aligned Investment Initiative’s Net Zero Investment Framework.
6 Interim target and baseline emissions for commercial real estate associated with those of the Sun Life BGO Real Estate Equity Fund. Interim target developed using the SBTi methodology and has been submitted and accepted by the Net Zero Asset Managers initiative (NZAM). Note this figure is not externally assured and may be adjusted in future publications due to changes in the organizational portfolio in addition to improvements in availability, controls, and quality of data. Values are impacted by rounding.
7 An amount equivalent to the net proceeds from the offering will be used to finance or refinance, in whole or in part, new and/or existing green or social assets that meet the eligibility criteria set out under Sun Life's Sustainability Bond Framework.
8 For copies of Sun Life Assurance Company of Canada’s 2023 PRI Transparency and Assessment reports, contact sustainability@sunlife.com. For more information on the assessment, visit the PRI website.
9 MFS, SLC Fixed Income, BGO, InfraRed and SLGI Asset Management Inc. are signatories to NZAM.
10 Logo used with permission from Climate Engagement Canada (CEC). CEC is a finance-led initiative that drives dialogue between the financial community and corporate issuers to promote a just transition to a net-zero economy. For more information, please visit the CEC website. SLC Fixed Income is a Founding Participant and Contributor in CEC.
11 SLC Management, Sun Life Canada and SLGI Asset Management Inc. are members.
12 SLC Fixed Income, MFS and SLGI Asset Management Inc. are members.
13 Sun Life and MFS are members.
14 SLC Fixed Income joined the Partnership for Carbon Accounting Financials in 2022. Sun Life Financial joined in 2024.
Refer to Sustainability Data Scope.
