In 2013, when CPP Investments and McKinsey & Company launched the Focusing Capital on the Long Term initiative to advance practical actions to focus business and markets on the long term, we had no way of knowing that it would take on a life of its own and that in 2021, we would be celebrating the fifth anniversary of FCLTGlobal.
Investment organizations work together to develop Long-Term Portfolio Guide
As part of the Focusing Capital on the Long Term initiative, CPP Investments led a working group of over 20 investment professionals from institutional investment organizations around the world to develop the Long-Term Portfolio Guide to “reorient portfolio strategies and investment management to focus capital on the long term.”
This early working group was an embodiment of the work that FCLTGlobal does today in bringing together different members of the investment value chain to discuss and solve common strategic challenges. The Long-Term Portfolio Guide did not take a “one size fits all” approach. It encouraged institutional investors, within the context of their own unique situations, to evaluate, adapt, and adopt an organizationally appropriate mix of these ideas to enhance the long-term value they create for their beneficiaries.
CPP Investments develops Investment Beliefs via a Fund-wide consultation process
A key recommendation of the Long-Term Portfolio Guide was for institutional investors to clearly articulate investment beliefs, with a focus on their portfolio consequences, to provide a foundation for a sustained long-term investment strategy.
As a result, CPP Investments developed our first set of Investment Beliefs in 2019. We underwent a Fund-wide consultation process, where all employees across the organization were asked to participate in working sessions to help draft our Investment Beliefs. Our Investment Beliefs are core to our strategy and serve as a guide for our day-to-day investment decisions. These beliefs serve as a foundation for our long-term investment goals while ensuring that we make consistent investment decisions and mitigate risk. The Investment Beliefs provide clarity and consistency to CPP Investments’ decision-making, a guide to evaluate and select appropriate investment strategies globally, and a compass to stay the course.
Example: Incorporating non-market factors into decision-making creates more sustainable value
For example, one of our Investment Beliefs is that ‘incorporating non-market and emergent factors into decision-making creates more sustainable value’. This belief that corporations and organizations that better identify and appropriately manage environmental, social and governance factors and other long-term strategic issues are more likely to endure, and create greater value over the long term, than those that do not, is integral to how we invest and is reflected in investment processes, including our proxy voting principles and guidelines.
Today, we remain an active member of FCLTGlobal and are engaged on issues that will shape our industry and capital markets for years to come. These include research projects on climate change, risk management, and equity, diversity, and inclusion in PE-controlled company boards.