Sun Life Financial Inc. (SLF-T) is on pace to meet its goal of $20 billion in new sustainable investments by 2025, the Toronto-based insurance and investing company announced in its 2023 sustainability report.

Holding $1.47 trillion in assets under management, Sun Life had built a $77-billion portfolio of low-carbon and social investments as of March 31, including green or sustainable buildings ($42.9 billion), renewable energy ($12.3 billion) and energy efficiency ($3.5 billion).

Its global operations across its offices, data centres and business travel was deemed carbon neutral through its use of carbon offsets, according to the CarbonNeutral certification.

As it aims for a net-zero target by 2050 covering its investments and operations, “engagement over divestment” will be one tool in Sun Life’s strategy for its investments, the largest source of greenhouse gas emissions according to Alanna Boyd, senior vice-president and chief sustainability officer.

According to a September 2023 report by Investors for Paris Compliance, Sun Life is one of Canada’s largest oil and gas investors.

“Through engagement, through conversations, we believe that’s a better approach than divesting from an asset,” she said.

Sun Life’s engagement on sustainable investments

The vast majority of Sun Life’s greenhouse gas emissions are sourced from Scope 3 investments, making up almost all of the 8,975,499 tonnes of carbon dioxide equivalent (tCO2e) of market-based emissions reported by the company.

Boyd said reaching its net-zero target for investments will be driven by engaging with its investees across many sectors. As an example, she said, Sun Life Capital Management, the institutional asset management arm of Sun Life, has met with leaders of a large North American transporter of fossil fuels about greenhouse gas emissions targets and methane emissions reporting.

Some of Sun Life’s asset management companies have committed to a 2050 net-zero target covering some or all of their managed assets, including MFS Investment Management, which is a member of Net Zero Asset Managers. Affiliated businesses BGO and InfraRed Capital Partners have also pledged to be net-zero by 2050.

In meeting its most recent $20-billion new investment goal, Sun Life has invested $17.6 billion toward sustainable assets, putting it 88 per cent of the way to the target. The company has focused on investing in renewable energy, energy efficiency projects and affordable housing, she said.

An example provided by Boyd is a five-year, $110-million funding commitment for 24 First Nations communities in Canada to energize 1,700 kilometres of electricity transmission lines. 

As part of its overall $77-billion portfolio to support the energy transition, Sun Life Hong Kong invested $34.2 million into a 600-megawatt offshore wind farm in Taiwan.

Additionally, Sun Life Global Investments launched the Acadian International Equity Fund and Net Zero Target Bond Fund in 2023, both with a net-zero focus. Its Group Retirement Services Core Investment Platform offers five fossil fuel-free funds and six sustainability focused investment options.

To draw its clients and investors toward ESG, Sun Life offers articles, videos and podcasts to educate people and figure out its clients’ sentiments on sustainable investing, she continued.

When asked if there was an increase in money going toward sustainable funds and products, Boyd highlighted the Sun Life KBI Global Dividend Private Pool. The $200.4-million fund invests in companies with an ESG framework and has grown by nine per cent since its inception in February 2020, with top holdings in Microsoft, Accenture and Lam Research Corp, she said.

The company’s second sustainability bond was offered in 2023, valued at $500 million. Sun Life has also just announced its third sustainability bond, valued at $750 million. That offering is expected to close on May 15.

Reaching net-zero operations

Efforts to make a 50 per cent reduction in absolute greenhouse gas emissions in its operations by 2030 and reduce overall environmental impact include:

• installing ENERGY STAR-certified equipment and waste management programs across its offices in Canada, the U.S. and Ireland;
• renovating its offices in Canada and the U.S with water-efficient toilets, faucets and fixtures, LED lighting, and implementing waste recycling and diversion strategies; and
• sourcing 32 per cent of its global electricity consumption from renewable sources in 2023.

Sun Life’s Toronto headquarters is LEED Platinum-certified.

The use of offsets to attain its carbon neutral status is not part of Sun Life’s long-term strategy, Boyd said.

While Sun Life has moved to cut greenhouse gas emissions at the property level, its operational emissions rose to 41,847 tCO2e in 2023, a 3.7 per cent increase from its 2019 baseline of 40,368 tCO2e.  

Boyd said the increase was largely attributed to business travel emissions that rose from 5,962 tCO2e in 2022 to 18,872 tCO2e in 2023, noting a spike in business travel in 2023. Sun Life is exploring alternatives such as video calls as a replacement for business travel, she added.

Fostering innovation and being transparent to its stakeholders are sustainability priorities for Sun Life, Boyd said.

The company is keeping evolving regulations in mind. Its climate transition plan, currently in the works, will adapt to Office of the Superintendent of Financial Institutions regulations for climate disclosure and management, Boyd said.

EDITOR'S NOTE: This article was updated to clarify several points. First, "engagement over divestment" is part of Sun Life's investment strategy, not all of the strategy. Second, that Sun Life Hong Kong's Taiwan offshore wind farm investment and Sun Life Global Investments' Acadian International Equity Fund and Net Zero Target Bond Fund are not part of its new $20-billion commitment. They are included in Sun Life's overall $77-billion portfolio of investments supporting the energy transition.