The Canada Pension Plan Investment Board is taking steps to ensure its portfolio companies stay out of trouble and address ESG standards. 

Canada’s largest pension fund said Thursday it will consider voting against all directors at companies where there are oversight failures related to climate change, board gender diversity and deficient corporate governance. The decision would affect companies with so-called classified boards, those in which only a subset of directors are up for election. 

The change follows allegations of management deficiencies at Axel Springer SE and Orpea SA, an operator of nursing homes. The fund owns stakes in both companies. 

CPPIB, with $550.4 billion (US$430.5 billion) in assets, also updated its proxy voting principles Thursday for classified boards, saying they “actively inhibit the rights of shareholders to hold specific directors to account annually.” Given that view, a vote against all directors will be considered where votes against one or more directors who are not up for re-election are warranted, the fund said.

On the ESG front, CPPIB said portfolio companies must identify, quantify and integrate into their strategy climate risks and opportunities. Directors who preside over “material ESG failures should be asked to resign promptly,” the fund said.

CPPIB also extended the 30 per cent threshold for board gender diversity to South Africa and New Zealand.