In an unprecedented move, some of Canada’s largest institutional investors have banded together to ask companies for more rigorous disclosures of environmental, social and governance factors, an effort they say is meant to promote more sustainable and inclusive economic growth.

A group of eight pension funds, which together manage a total of about $1.6 trillion in assets, called on corporations in a joint statement Wednesday to standardize their disclosures of so-called ESG factors to help them in their investment decision-making and better assess and manage their risks.

“How companies identify and address issues such as diversity and inclusion, human capital, board effectiveness and climate change can significantly contribute to value creation or erosion,” the funds wrote.

The group of eight funds includes global investment heavyweights such as the Canada Pension Plan Investment Board, the Ontario Teachers’ Pension Plan, and the Caisse de Depot et Placement du Quebec.

Richard Leblanc, a professor at York University who specializes in corporate governance, said the funds’ statement will put even more pressure on companies to disclose how well they perform relative to international benchmarks for ESG factors, which, Leblanc said, amount to 75 per cent of the risks facing businesses.

“This is signalling to capital markets that 1/8 the funds 3/8 are taking this very seriously,” Leblanc said. “At the end of the day, boards take their marching orders from investors.” Fund managers around the world have been increasingly looking at environmental, social and governance issues when evaluating investments. In doing so, investment managers examine performance on the environment and other sustainability issues along with financial results.

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