Canadian Lawyer

44 M A Y 2 0 1 6 w w w . C A N A D I A N L a w y e r m a g . c o m ension savings that are both ethical and safe: These goals can be at odds, especially in a world of declining mar- ket returns and rising pub- lic debate about what is, and is not, socially responsible investing. New rules in Ontario are designed to at least partly address both of these challenges. So far, the changes relating to socially responsible investing have received the most attention. Known as ESG — for environmental, social, governance — the new rules do not mandate ESG investments, but they do require pension plan sponsors, generally employers, to file pension invest- ment statements that detail whether ESG factors have been incorporated into a pen- sion fund's investment policies. Kathryn Bush, a partner at Blake Cas- sels & Graydon LLP in Toronto, says public awareness of ethical investing has been rising. "Whatever you are doing, it's other people's money that you are holding. And there has been pressure from those people — the beneficiaries — questioning how those monies should be used. The question may be armaments, or pollution, but people are saying, 'You're taking my money and I don't like what you're doing with it.'" At the same time, pension regulators in Ontario are taking steps to increase the oversight of defined-contribution pension plans, which are growing in popularity as the number of defined-benefit pension plans continues to shrink. New rules in this area, notes Mary Picard, a partner at Dentons LLP in Toronto, are putting some welcome "backbone" into the oversight of DC plans, especially for smaller and medi- um-sized employers. These steps should help improve the monitoring of these funds, notes Picard, with positive results for both sponsors and plan members. The tool being used by Ontario to accomplish these aims is the "Statement of Investment Policies and Procedures" or SIPP. While plan sponsors were previ- ously required to maintain a SIPP, they now have to file this document with the pension regulator. The new rules came into force Jan. 1, with statements to be filed by March 1 (extensions have been granted in many cases). The SIPP must include information on whether the spon- sor has given consideration to ESG fac- tors when it chooses investments. And, with DC plans, several categories of new information will have to be included, most importantly additional, non-ESG- related details about how investments are chosen, monitored, and communicated with members. In the case of the new ESG rules, spon- sors will not be required to include such L E G A L R E P O RT \ P E N S I O N S HUAN TRAN New era of pension regulation Rules in Ontario designed to address challenges of pension savings that are both ethical and safe. By Patricia Chisholm P

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