In the keynote address at the Conference Board of Canada’s National CSR Conference being held today in Calgary, the CPP Investment Board announced that it will become a signatory of the Extractive Industries Transparency Initiative (EITI).

EITI is a coalition of governments, industries, investors, and others committed to enhancing governance and transparency in resource-rich countries in the belief that doing so can mitigate investment risk in the oil, gas and mining industries, and contribute to broad-based economic growth.

In his remarks, Donald Raymond, senior vp of public market investments, said, “Disclosure is the key that allows investors to better understand, evaluate and assess potential risk and return. Through enhanced transparency, we believe that companies that adopt the principles of EITI can reduce political and reputational risk and improve their prospects for delivering long-term value to their shareholders.”

Launched at the World Summit on Sustainable Development in Johannesburg in September 2002, the EITI has won the support of over 70 global investment institutions that collectively managed over US$12.3 trillion as of October 2006.

“At its core, our policy reflects the belief that responsible corporate behaviour with respect to environmental, social and governance (ESG) factors can generally have a positive influence on long-term corporate financial performance,” said Raymond.

The policy has three broad components: (1) engagement with companies in the CPP IB’ss portfolio; (2) helping to fund and conduct research into the long-term materiality of ESG factors; and (3) integrating these factors into the investment process.

The CPP IB also announced today that within its engagement program, it has identified three focus areas: the extractive industries (e.g. oil, gas and mining), climate change, and executive compensation.

“These are the areas we believe have the greatest potential to affect the long-term value of our portfolio holdings, and where we believe our engagement activities can have the greatest impact,” said Raymond.

During today’s speech, Raymond outlined how the CPP IB is engaging with companies indirectly through proxy voting and investor coalitions such as EITI, the Carbon Disclosure Project and the Canadian Coalition on Good Governance, among others, as well as through direct contact with the senior management and boards of directors of selected companies within its portfolio.

To date, the CPP IB has engaged directly with companies in a number of industries, including mining, tobacco, and energy to encourage improved disclosure and performance on ESG factors. In 2006, the CPP IB voted on 12,400 proxy resolutions.