Integrating ESG factors into your plan investments

Global events, from the climate crisis to the COVID-19 global pandemic, are challenging sustainability in many ways. And sustainability issues have become a critical factor in the investment process.

Companies that rank high on sustainability measures often outperform their peers. By factoring sustainability into the fixed income and equity investment process, investment managers can improve long-term returns and/or reduce risk.

We wanted to help you and your plan members factor in sustainability issues as they relate to your plan investments.

To do so, we launched our proprietary Environmental, Social and Governance (ESG) evaluation framework in July. And we’ll continue to ensure sustainability is front and centre in relation to plan investments.

Our sustainability plan also includes actions in two other areas for plan members: financial security and support for healthier lives. In 2020, our actions on these fronts included partnering to provide debt counselling, financial nudges from our digital coach Ella, support for mental health and the introduction of Lumino Health Virtual Care. 

We launched our proprietary ESG evaluation framework in July 2020 for our core investment platform. To start, this framework helps all of us identify the ESG leaders in each major asset category, such as target date funds, Canadian equity, global equity and fixed income.

More importantly, it can help you determine where your current managers and funds are on the ESG integration spectrum. You can then determine whether your current options align with your own sustainability objectives. It will also empower your plan members to make informed decisions that relate to their own sustainable investing goals.

The evaluation framework aligns to Sun Life’s corporate sustainable investment strategy. This strategy is built on three beliefs:

  1. Sustainable investing can improve long-term returns.
  2. ESG factors are incorporated in investment decisions to manage risk and identify opportunities.
  3. Engagement on ESG issues with corporations is more powerful than divestment.

Learn more on plan sponsor site

2021 preview

We’ll be discussing sustainable investing approaches, including the integration of ESG factors into fund lineups with plan sponsors in 2021 and engage with Investment Managers to improve their ESG integration and active ownership practices.

In addition, we’ll be developing the plan member experiences around sustainable investing ESG throughout the year. We are also expanding coverage of the funds we assess to include non-major asset classes, like Real Estate, Emerging Markets and Small Cap funds.