Whether through direct engagement with portfolio companies and external managers, proxy voting or collaborative engagement with our peers, we aim to use our influence to promote strong ESG practices, particularly in our ESG priority areas, because we believe that companies with strong governance practices and more climate-friendly and inclusive strategies are better positioned to succeed.
Board structure, diversity, and independence
Bringing diverse perspectives to our portfolio company boards
In 2021, IMCO made a direct equity investment alongside Kohlberg & Company in OB Hospitalist Group (OBHG). OBHG is the largest dedicated obstetric hospitalist group in the United States, providing 24/7 onsite obstetric coverage for hospitals through OB/GYN clinicians. As part of the investment, IMCO and Kohlberg identified greater board diversity as a priority. As a result, IMCO appointed a highly qualified senior female executive to the board of OBHG. She brings decades of healthcare industry experience and a diverse perspective that will support and improve decision-making at OBHG.
Building strong sustainability strategies
Since 2018, IMCO has been an investor in euNetworks Group Limited, a European bandwidth infrastructure company. The company owns and operates fibre networks in 17 cities as well as a long-haul network spanning 15 countries. Since our investment, IMCO has engaged with our co-shareholders and the board to elevate the ESG agenda at the company. This includes integrating regular reporting and robust discussion on ESG topics at board meetings, supporting management’s work on carbon footprinting, and deepening the company’s commitment to diversifying its talent base, including at the senior management level. Notably in 2021, Paula Cogan joined as President and Katherine Alexakis joined as Chief Financial Officer. Cementing the company’s commitment to its ESG agenda, the company issued a sustainability-linked loan with terms linked to the achievement of specific environmental and diversity targets.
Holding companies accountable for performance through proxy voting
COVID-19-related pay adjustments led to an increase in the overall number of votes against say on pay resolutions. In the case of RioCan Real Estate Investment Trust, multiple one-time awards granted to the trust’s CEO in the last few years resulted in a significant misalignment between pay and performance (relative to RioCan’s peers) over a three-year period. As such, we voted against the trust’s say on pay resolution at the 2021 annual meeting. The message from shareholders was clear, with 76% of votes cast against the resolution. In October 2021, RioCan announced significant changes to its executive compensation program, including an end to special awards to named executive officers.
Partnering with climate change pioneers
In 2021, IMCO was one of the anchor investors in the Brookfield Global Transition Fund co-led by Mark Carney, Brookfield Vice Chair, former governor of the Bank of Canada and Bank of England, and UN Special Envoy for Climate Action and Finance. The fund targets investment opportunities that reduce energy consumption and greenhouse gas emissions and increase low-carbon energy capacity and sustainable solutions. The fund aims to produce both strong risk-adjusted returns and positive environmental outcomes. The investment supports IMCO’s wider infrastructure strategy, providing increased exposure to clean energy assets and supporting IMCO’s net- zero commitment.
Supporting innovation in sustainable building materials
WPT Capital Advisors, an IMCO real estate partner, is piloting the use of a concrete alternative in an industrial development project in our portfolio. PrimX is a jointless composite floor that incorporates steel fibres and proprietary expansive material to require significantly less concrete. PrimX estimates it will avoid 3.3 million pounds of carbon emissions, which is equivalent to taking 324 passenger vehicles off the road for a year. With successful implementation, WPT will adopt the product as an alternative to traditional concrete in future U.S. industrial development projects.