Advancing sustainable investing

We’re committed to ESG integration. We believe that looking at investments through an ESG lens leads to superior financial results over the long term. Integrating ESG factors helps us manage risks in our investment portfolios. It also helps us identify opportunities. ESG issues are dynamic, interconnected and multi-faceted, and must be deliberately assessed to uncover risks and opportunities. 

To support robust ESG integration, investment teams use a range of tools and data to help them identify ESG risks and opportunities. Each business takes a tailored approach to developing expertise. That may mean hiring dedicated experts, building expertise within the broader investment team, or training staff. 

Sun Life and the companies in our Asset Management business group are all signatories to the Principles for Responsible Investment (PRI). Sun Life is the largest insurance asset owner signatory in Canada by AUM. Refer to the websites of each asset management business for more details on their specific ESG integration strategies. 

Our investment teams engage with relevant stakeholders in many ways through their investment processes. These stakeholders include:

• Fund managers: Investment teams have direct interaction with management to gain a deeper understanding of how they embed ESG considerations into their investment decision-making process.
  
  
• Investees: We review and confirm ESG information of companies we invest in and advocate for plans to address their ESG risks. For example, if a high GHG emitting company does not have a robust plan to be more sustainable, then we may work with their management team to provide guidance. We may discuss elements for developing a robust and transparent plan designed to disclose and deliver on their carbon transition goals consistent with industry standards. We evaluate and influence company actions in three ways:
  • Proxy voting as an equity holder (each investment team has their own proxy voting policy)
  • Direct engagement with management
  • Industry collaboration
    
    
• Clients (retail and institutional): We educate our Clients on the benefits of sustainable investing. Education is critical to helping our Clients be more informed and make good investment decisions. We also offer sustainable investment solutions. Our Clients increasingly want to know their investments are sustainable and look to work with providers who are leaders in this space.  

In Canada, we’re one of the biggest financers 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 will 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. 

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 businesses in our asset management pillar and for Sun Life’s general account. Refer to our Net Zero by 2050 report and Climate and Environmental Action for more details.   

We 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.

Examples of these initiatives include: 

• SLC Management’s, Crescent’s and MFS’ membership in Climate Action 100+. This investor-led initiative enables us to engage with the world’s largest corporate GHG emitters to encourage them to act on climate change.  
  
  
• SLC Management’s role as 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. CEC is engaging with 40 of the country’s highest GHG-emitting corporations. Participants work collaboratively to engage with these companies and encourage leading practices with respect to climate change risks and opportunities and a just transition. 

As part of our approach of stewardship, engagement and education, Sun Life pledges to work with investee companies across all 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 stake 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.  

We are helping to lead industry efforts and collaboration to advance the field of sustainable investing. Data challenges persist in terms of getting high quality and reliable sustainability-related data (including GHG emissions) from both public and private companies. Through our public policy and regulatory activities, we advocate for increased and more robust, standardized disclosure of climate-related data. 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 those businesses that are leading the transformation. In addition, we encourage Canada’s governments to design sustainable infrastructure programs in ways that attract long-term investors.   

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. They also report on sustainable investing in Client reporting and dashboards. Sun Life and some of its asset management businesses also publish annual reporting aligned to the Task Force on Climate-related Financial Disclosures.