Investing Sustainably at Ontario Teachers' Pension Plan

Description

In early 2014, the senior vice-president of the Ontario Teachers' Pension Plan is considering two investment opportunities in the oil and gas industry brought forward by his team. He is trying to understand how to ensure that the principles underpinning responsible investing are incorporated in the decision about which to choose. Each investment looks very attractive, but a growing stream of controversies surrounding oil sands extraction, pipeline safety and environmental protection has raised concerns. He faces multiple questions: How can the impact of these environmental, social and governance issues be quantified precisely? Can they be translated into an informed investment decision that the organization’s stakeholders will accept? What approach to responsible investing is appropriate for a pension fund? What alternative methods of incorporating these issues into the investment decision process should be considered?

Learning Objective

The case was developed for undergraduate, graduate and executive education levels. It allows students: ·To understand and assess several major challenges related to responsible investing and sustainability within the specific context of oil sands development. ·To introduce the Principles for Responsible Investment approach to responsible investing. ·To explore how incorporating environmental, social or governance information can lead to more comprehensive analysis and risk-adjusted returns over the long run. ·To consider the trade-offs faced by companies between short- and long-term financial performance when addressing environmental or social issues.

Keywords

canada investing investment analysis Oil and Gas operational risk Sustainable Development