Auditor General Briefing Notes
Overall
-
We
found no significant deficiencies in the corporate management practices or
management of investments and operations of the Public Sector Pension
Investment Board (PSPIB).
-
Even though we identified areas for improvement,
the corporation maintained reasonable systems and practices for accomplishing
its mandate.
Governance
- We looked at 4 systems and practices
in governance and concluded that PSPIB had good systems and practices.
- In board appointments, we noted that
4 of the 11 members on the board had expired terms; however, they plan to
remain on the board until they are replaced. Subsequent event: As of 1 February
2021, 3 of the 4 expired terms were filled and 1 position remained vacant.
- Oversight over subsidiaries: In
governance, we looked at board oversight over the corporation and at governance
practices related to subsidiaries. We noted that the board received and
reviewed information frequently related to the governance of subsidiaries and
their performance. Internal audits were also performed at an appropriate
frequency on the governance of subsidiaries.
Strategic
planning and performance monitoring and reporting
- We looked at 3 systems and practices
in strategic planning and noted areas for improvements in performance
measurement and performance monitoring and reporting.
- Performance measurement weakness:
The corporation did not have specific targets for some of its non-investment
performance indicators for measuring progress on achieving its strategic
objectives.
o
Examples
of performance indicators with no specific targets: Branding as a global
pension investment manager; talent and the prioritization of inclusion and
diversity
- Performance monitoring and
reporting: The corporation did not consistently report to the board on some of
its non-investment performance indicators and on progress toward its targets.
Risk
management
- We looked at 4 systems and practices
for risk management and noted areas for improvements in risk mitigation and in risk
monitoring and reporting.
- Risk mitigation weaknesses:
o
In
its risk appetite statement, PSPIB did not establish risk appetite metrics,
thresholds, or limits for some significant non-investment risks to set the
degree of risk that the corporation is ready to accept.
o
Examples:
Staff turnover ratio, work diversity, systems management
o
PSPIB
had not fully implemented a risk-based compliance program to ensure that the corporation
does not inadvertently contravene a law or regulation.
o
PSPIB
had a model validation procedure, but it did not include a model risk
assessment methodology and other model risk management procedures. Having a
complete model risk validation procedure would provide consistency in model
governance and model risk management activities.
- Risk monitoring and reporting
weakness:
o
The
corporation provided the Risk and Control Self-Assessment Report to senior
management and the board only once a year, but this report did not include
timelines and deliverables for every mitigation measure. It also did not
include an update on the progress on implementing risk mitigation measures,
making it difficult for management and the board to track progress.
Investment
management
- We looked at 4 systems and practices
for investments and operations management and found that PSPIB had good systems
and practices (including practices related to responsible investments).
Responsible
investments
- We found that PSPIB integrated
environmental, social, and governance risks when making decisions and managing
its investments.
- PSPIB established a portfolio-wide
climate change approach that integrated climate considerations into investment
management.
Sustainable
development goals
- PSPIB investment operations
indirectly addressed 3 of the Sustainable Development Goals: gender equality
(goal 5), affordable and clean energy (goal 7), and responsible consumption and
production (goal 12).
- There is an opportunity for PSPIB to enhance its reporting on the sustainability impact of its investment activities.
- Appointment of board members: No new board appointments were made since February 2021 (date of the subsequent event where 3 members were appointed). Therefore, there is still 1 vacant position on the PSPIB board.