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Mark Machin Mark Machin President CEO Canada Pension Plan Investment Board

Pushing for Radical Diversity

Diversity, efficiency, and responsibility are essential to the long-term success of any investment firm, especially the largest retirement organization in Canada.

Mark Machin, President and CEO of the Canada Pension Plan Investment Board, is ensuring that success daily for the body’s beneficiaries and it’s $366.6 billion in assets.

Machin is a believer in diversity, not just across asset classes, but in the boardroom as well. This year, the firm’s sustainable investing team put board effectiveness as a major focus area for its goals, which also include climate change, water, human rights, and executive compensation. That means more women and people of color on company boards, and better corporate governance structures to help keep those companies running —and growing— for years to come.

“While there’s much talk about companies bringing broader perspective to the boardroom, it’s not consistently accompanied by action,” he wrote in an opinion piece in the Globe and Mail titled “How CPPIB is advocating for more women on boards.”

“It’s crucial for companies in which we invest capital to assemble boards that reflect the full range of talent available,” Machin said in a recent statement. “If companies don’t take the required action to achieve the board effectiveness that today’s business environment requires, it falls to investors to provide a nudge, and when necessary, a push.”

The fully funded CPPIB is committed to urging those companies to rigorously evaluate their directors, including their gender makeup,” he wrote, adding that the plan believes companies with diverse boards are “more likely to achieve superior financial performance.”

Last year, Machin and staff helped push for change at 45 Canadian companies that it invested in, which had no female directors. Almost half of those companies have added women to their director seats since. The same was done earlier this year for 22 other companies, where the organization voted against six nominated chairs, and against the entire board slate for seven more.

“By signaling that board effectiveness is a core topic of engagement for us, CPPIB urges other large institutional investors to send similar messages that they, too, believe the pace of change must accelerate,” he said in the newspaper column.

This CEO has a 98% approval rating on job and recruitment site Glassdoor. That’s not an accident. Machin remains staunchly committed to the Canada Pension Plan Investment Board’s goals of long-term sustainable companies.

Some of his investment decisions include considerable private equity ventures and green initiatives to keep the risk as low as possible. This year, the firm became the first pension fund in the world to issue green bonds, and announced plans to expand its renewable energy portfolio by more than $3 billion. The fund takes a direct investment approach to private equity and real assets, and is long on these vehicles.

“Our intention is to hold direct equity investments for several years—and even decades in the case of infrastructure or energy investments,” it said in its report.

The organization’s assets are well-diversified, both by assets and region, as only 15% of that $366.6 billion stayed in Canada. Its asset mix, as of March 31, was 38.8% public equities, 20.3% private equity, 12.9% real estate, 11.1% government bonds, cash, and absolute return strategies, 8% infrastructure, 6.3% credit investments, and 2.6% in other real assets.

As for global diversification, 37.9% of those assets were in the US, 20.4% Asia, 13.2% Europe (excluding UK, which had a 5.6% allocation), 3.5% Latin America, 3.1% Australia. The remaining 1.2% was scattered across other parts.

In fiscal 2018, the Canada Pension Plan Investment Board returned 11.6%, slightly down from 2017’s 11.8%, but still impressive. Over the past 10 years the fund has returned 8%, and 12.1% over the last five.

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