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CAPSA Consultation on ESG, Leverage, Cyber and Risk Management Guidelines for Pension Plans

July 11, 2022

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Written By Jordan Fremont and Jaspreet Kaur

On June 9, 2022, the Canadian Association of Pension Supervisory Authorities (CAPSA) published consultation drafts of pension plan guidelines covering environmental, social and governance (ESG) considerations, as well as cyber and leverage. CAPSA also announced that it is contemplating the establishment of a separate, principles-based risk management guideline, but is inviting comments on whether to instead prepare a single document that combines all of these items into an inclusive risk management guideline.

Comments on the consultation drafts and the matter of whether to combine ESG, cyber and leverage related guidance into a single, inclusive risk management document are to be provided to CAPSA by September 15, 2022.

Draft Guidelines

ESG Considerations in Pension Plan Management

The draft guideline sets out three principles, which provide that a plan administrator should:

Additional commentary provides guidance as to how a plan administrator might apply these principles in certain circumstances.

Cyber Risk for Pension Plans

The draft guideline reviews cyber related risks and related actions that plan administrators should be considering, including the following:

Leverage and the Effective Management of Associated Risks

The draft guideline identifies a number of practices that plan administrators should consider respecting the management of risks associated with the use of leverage in pension plan investments, including the following:

The draft guideline also presents three illustrative metrics for measuring leverage and its effects.

The Bennett Jones Pensions & Benefits Group are monitoring progress of the draft guidelines.  Please contact a member of group if you have any questions respecting the draft guidelines or if you would like assistance respecting CAPSA's consultation. 

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