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By Ruth Saldanha |

NEI’s ESG themes for 2019

Reduced inequality, responsible consumption and production, and climate change are some focus areas in 2019, says head of asset management Fred Pinto

Ruth Saldanha : Recently NEI Investments released their 2019 corporate engagement focus list. The list highlights companies with whom NEI is engaging in ESG dialog and they are also a part of NEI funds. Across their funds NEI uses tools like dialog, proxy voting and public policy engagement to encourage positive change from an ESG perspective. With me to discuss some of the highlights from the list is Fred Pinto, Senior Vice President and Head of Asset Management at NEI. Fred, thank you so much for joining us today.

Fred Pinto : Thank you for having me.

Saldanha : You have four companies in the energy space on this list and energy is not something that's generally considered high on an ESG priority list. Tell us more about that.

Pinto : Well, it's a great question, Ruth. Actually, energy is very much of a focus of ours. Energy represents roughly 18% of the TSX index. And so, my question is, why wouldn't we engage with companies in that area. And certainly, from our perspective, what we are looking at doing is finding out how companies are approaching climate action which is one of the key objectives of the UN Sustainable Development Goals. And what we'd like to understand is what are their strategies for mitigating the energy footprint, how are they dealing with some of the risks associated with their energy footprint and importantly, at least from our perspective, what are their plans for creating innovative solutions to deal with the secular long-term trends of clean energy.

Saldanha : After the Johnson & Johnson controversy last year, there was a lot of negative light that was shed on pharmaceutical companies from an ESG perspective. What do you see as being the ESG risks for pharmaceuticals and how are you playing that theme in 2019?

Pinto : That's a great question. Certainly, the spotlight is on pharmaceutical companies and healthcare in particular. But there's a lot of positive that comes out of healthcare companies. They represent 15% of the S&P index in the U.S. and we find it important to engage with those companies. Now, certainly, there are risks associated with healthcare companies and pharmaceutical companies in particular such as sales practices and also the opioid crisis. The opioid crisis in particular resonates from an investor perspective because a lot of people may know someone who has been impacted with that. And so, certainly, that is top of mind for us and NEI was one of the first companies that actually engaged in a coalition with other institutional investors to further our shareholder engagement in this specific area.

Saldanha : Finally, what are some of the other sectors that you will be focusing on in 2019?

Pinto : Well, we focus on all sectors in Canada and the U.S. We have a focus on the UN Sustainable Development Goals. There are 17 of those goals. And as a part of our shareholder engagement, we have identified five broad-ranging themes that are especially impactful to our unitholders. Those themes would include reduced inequalities, responsible consumption and production and of course, climate change. So, from an NEI perspective, it's really not a sector-only issue. It's across all sectors in both Canada, the U.S. and in fact, globally.

Saldanha : Thank you so much for joining us with your perspectives, Fred.

Pinto : Thank you very much.

Saldanha : For Morningstar, I'm Ruth Saldanha.