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Pension giant says radical post-COVID changes to hit investments – BNN

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Canada’s largest pension fund says some of the “radical changes” in consumer behaviors enforced during the pandemic lockdown are here to stay.

The Canada Pension Plan Investment Board’s thought leadership lab sees permanent changes to consumer behavior as a result of the global pandemic. The era after COVID-19 will be defined by wider adoption of e-commerce among older consumers, as well as by long-term impacts on health-care and privacy policy, all of which will impact investment portfolios, it says.

“The world will be different after COVID-19. For long-term investors, this will mean both new risks and new opportunities as we transition to recovery,” CPPIB portfolio managers Caitlin Walsh and Ruby Grewal wrote in the report.

Gains in adoption of e-commerce have been patchy, according to the report. While the U.S. and Europe appear to be rapidly catching up to China, not all merchants are reaping the benefits with big players like Amazon.com Inc. and Walmart Inc. having enormous advantages over smaller retailers with more limited selections and unscalable infrastructure, Walsh and Grewal said.

The pandemic’s impact on different demographic groups will change how older and younger consumers approach the use e-commerce,

“Older consumers, anxious to avoid crowded public spaces for health reasons, now say they plan to increase e-commerce adoption across all categories, while younger consumers, restless after months of lockdown, indicated a building desire to return to stores for more discretionary categories,” they wrote.

Telehealth was also another notable pandemic-driven trend. A third of users in countries reviewed by CPPIB tried telehealth services for the first time during the pandemic. Longer-term uptake will depend, in part, on whether providers are able to improve the experience, the report said.

Work-from-home

Remote work, a slow-building trend before Covid-19, accelerated dramatically during the crisis, with roughly 50 per cent of workers in China, the U.K. and the U.S. working from home, up from five per cent or fewer before, according to the report.

CPPIB expects a long-term uptick in remote work, mostly in the form of flexible schedules that allow for a few days per week at home, rather than a wholesale abandonment of the office. In that sense, companies enabling remote work, for example collaboration and productivity tools, cybersecurity, cloud, automation, and sectors that focus on office sanitation are likely to gain a tailwind from the crisis.

A potential shift of populations away from the largest urban centers and changing mobility trends are also likely to have an effect. With greater geographic flexibility in employment, employees looking for more space should migrate further from city centers, which will likely accelerate the ongoing growth of so-called tier two cities in the U.S. and Europe.

Shifts in global supply chains should benefit providers of supply chain software and automation. CPPIB expects global supply chains will grow more complex, as the pandemic and chronic geopolitical tensions lead companies to diversify by turning to other countries or multi-sourcing. India, Southeast Asia, Mexico and Poland are best positioned to benefit from gradual, incremental supply chain diversification, according to the report.

CPPIB returned 5.6 per cent in the quarter ended June 30 as stock markets rebounded from a pandemic-induced selloff in March. The fund’s growth to $434 billion (US$330 billion) was attributed to gains in a broad range of asset classes, though a stronger Canadian dollar offset some gains. CPPIB holds $241 billion in public and private equities and 97 per cent are in the U.S. and overseas markets.

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Four trends in group retirement, investment programs – Benefits Canada

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The coronavirus pandemic is highlighting many trends in group retirement and investment programs, pushing the industry to be flexible and quick with some of the newer offerings.

As plan sponsors review their group retirement plans in the coming months, they may want to consider some, or all, of these four trends.

1. Financial wellness becoming a must.

A survey published by Manulife earlier this month found 80 per cent of U.S.-based employers are planning to offer a financial wellness program by 2023. Currently, fewer than half of these employers said they have a financial wellness program.

Read: How RBC is fitting debt payment into employees’ financial journeys

Employees are becoming more interested in employer assistance with their current financial situations as well as long-term retirement planning. In the short term, student debt is on the minds of many young employees. Manulife estimated about 40 per cent of students will have difficulty saving for retirement because of debt payments. Some record keepers are now offering plans that assist in paying down debt while contributing to group retirement at the same time.

Plan members are also asking about registered education savings plans offered through the workplace. Typically, insurance companies weren’t willing to offer a group RESP because of heavy administration. But recently, some have been able to overcome these hurdles and offer the option.

2. Investment choice assistance prevalent in these uncertain times.

Many plan members are uneasy about the uncertainty caused by the coronavirus. They’d like to speak directly with an advisor and appreciate feedback about risk tolerance and asset mix. This can be done alongside a review of investments in an employer-sponsored plan, which is available to most plan sponsors via their advisor or plan provider. 

3. Virtual offerings are a requirement during social distancing.

Virtual platforms have gained much traction over the last few months. During the pandemic, face-to-face meetings and member education sessions have been replaced by webinars, voiceovers and links to educational websites. In the recent past, many of these meetings were conducted in person out of respect and courtesy. But where it may have been an insult in the past to conduct a Skype meeting, the virtual mode is now preferred.

4. The rise of socially responsible investments.

With social issues at the forefront of our minds and demographic changes in the workforce, we’re seeing a rise in the demand for socially responsible investments in fund lineups. Some insurance companies have started developing their own socially responsible pooled funds, as well as adopting third-party funds to fill the needs of contemporary investors. For many, the rate of return is no longer the only issue of interest; they are interested in how those investments reflect the values of current societal pushes.

Read: Most pension funds barely scratching surface on sustainable investment

The development and adoption of some of the above offerings is accelerating due to the current extraordinary social climate. While many of these offerings have been available for some time, they weren’t being offered by plan sponsors as quickly as the market thought they might be. But that’s now changing and I’d encourage plan sponsors to consider these industry trends.

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Unpacking the finance sector's climate related investment commitments – NewClimate Institute

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First analysis of financial sector climate-related investment pledges

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Financial institution’s climate-related investment targets have rapidly grown in recent years. In this report, we provide insights into the magnitude and ambition of these targets, and investigate their relationship with GHG emissions in the real economy. Specifically, this report maps out the financial sector’s climate-related investment targets against a range of indicators, such as monetary investments in ‘green’ projects, and required ‘green’ investments and GHG emission reductions. It thereby considers both climate-related investment pledges made by individual financial institutions as well as those made by major finance-related international cooperative initiatives (ICIs).


Main Findings:

Financial institution’s climate-related investment targets have rapidly grown in recent years. We find financial institutions with cumulative assets of at least USD 47 trillion under management are currently committed to climate-related investment targets. This represents 25% of the global financial market, which is around USD 180 trillion. The number and growth of such targets is significant and represents considerable momentum – even if the individual targets vary in their ambition and do not cover all assets under management.

While the trend and efforts of the financial sector are promising, it should be noted that financial institutions do not have full control over their investees’ emissions. Reducing the carbon intensity of a portfolio by divesting, with the objective of aligning it with the Paris Agreement, does not necessarily always lead to emission reductions in the real economy, as others can invest in the emission intensive assets that were sold. Only if a large share of the financial sector sets and works to actualise robust climate-related investment targets and effectively implements them, investees have to react and reduce their emissions. Currently, most financial institutions that have set such targets are located in Europe, the United States of America, and Australia. To align all financial flows with the Paris Agreement temperature goal, it is crucial that institutions in other parts of the world also commit to ambitious investment targets.

We distinguish between three main types of climate-related investment targets – or mechanisms – that financial institutions can use to influence global GHG emissions: divestment, positive impact investment, and corporate engagement. These mechanisms influence the actions investee companies must take – and correspondingly, global GHG emissions – in different ways (see Figure).

Cause effect relation between the different mechanisms, investee companies and global GHG emissions.

We identified a number of factors at the financial institution, company, and country level that can increase the likelihood that a climate-related investment targets will have an impact on actual emission levels. These include for example the size of a financial institution (measured by assets under management) and whether the targeted investee company has previous experience with ESG. The more these factors point in the right direction, the more likely that investment targets will lead to emissions reductions.

The factors play out differently per asset class and per target type. For example, a divestment target related to a government bond share may produce a different outcome than a divestment from a corporate bond; and corporate engagement is usually more effective if there is direct access to investee’s management.

Insights into the factors or impact conditions may support financial institutions in setting potentially more effective targets, policymakers to consider effective regulation and the scientific community, and the wider public, to better assess financial sector targets.


Contacts for further information: Katharina Lütkehermöller, Silke Mooldijk

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$90 million investment into connectivity infrastructure across B.C. – CKPGToday.ca

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Photo Courtesy: ID 180348991 © Michael Nesterov | Dreamstime.com

By Veronica Beltran

connecting B.C.

Sep 22, 2020 5:00 AM

VICTORIA—The Province is investing $90 million in connectivity to encourage a rapid expansion of high-speed internet access and drive regional economic development in rural areas, Indigenous communities, and along B.C.’s highways.

The one-time $90 million investment is part of B.C.’s Economic Recovery Plan for the Connecting British Columbia program and will target connectivity infrastructure projects for a new Economic Recovery Intake.

“Rural and Indigenous communities are an essential part of the province’s economic engine. Now is the time to invest in modern infrastructure so people living outside the city can also benefit from today’s technologies.”—Anne Kang, Minister of Citizens’ Services

“Ensuring people have the connectivity they need to be successful is a key part of our recovery from the COVID-19 pandemic. This investment will bring real and lasting benefits to families, workplaces and communities throughout B.C., ensuring the province emerges stronger than ever,” adds Kang.

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