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Understanding investment exclusions at UPP
On this page
- Investments
- Reports and disclosures
- Investment exclusions
We are committed to delivering long-term value by actively managing risks that could affect the strength of the Plan, including financially material environmental and social risks. One tool we use to manage these risks is investment exclusions.
1. What are investment exclusions?
Investment exclusions are decisions to avoid investing in, or remove, specific holdingsThese could include financial instruments, companies, economic activities, governments, geographic exposures or specific asset types. from our portfolio when they meet clearly defined risk criteria.
For long-term investors, exclusions are one of several tools used to manage risk and protect long-term investment outcomes. Each organization establishes its own governance framework and criteria for determining when exclusions apply. They are applied selectively where analysis indicates that certain activities or exposures present risk to the portfolio.
Why does UPP exclude investments?
UPP generally prioritizes engagement and active ownership as the most effective way to influence corporate behaviour and manage risk.
In some cases, we determine that investing in a company or activity may pose risks that are not aligned with our long-term responsibilities. When that happens, as outlined in our Investment Exclusion Policy, UPP may choose to exclude a company from the portfolio where:
- There is evidence of severe environmental or social impacts that present
financially material risk
Financial, environmental, and social systems can impact the health of financial markets. If they negatively impact market stability, it can ultimately increase risk for the Plan and reduce long-term value for members.
; and - Engagement and other stewardship efforts have not, or are unlikely to be, effective in preventing or addressing that risk.
Exclusion decisions are made only after careful consideration of financial impact, legal and regulatory requirements, and UPP’s obligation to administer the Plan and invest its assets in the best financial interests of plan members.
In 2024, we enhanced our conflict-affected and high-risk area related risk exclusions process through a partnership with the Heartland Initiative to strengthen the depth and consistency of our analysis. More detail on this work is provided below.
2. How do investment exclusions work in practice?
How exclusions are determined and applied
UPP’s Investment Exclusion Policy outlines how decisions are made and applied. The policy is developed by Management and approved by UPP’s Board of Trustees. It has two components:
1. General Parameters
The General Parameters define the circumstances under which exclusions may apply to UPP investments. Under these parameters, UPP seeks to exclude:
- Tobacco companies
- Producers of weapons banned by international treaties signed by Canada
- Thermal coal companies
- Entities subject to Canadian sanctions
- Entities causing or contributing to severe adverse social or environmental harm
In line with our fiduciary obligations, exclusion decisions must be grounded in financially material risk and aligned with our responsibility to act in the best long-term financial interests of our members.
2. Excluded Entities
UPP identifies companies that meet the criteria set out in our General Parameters and restricts investment accordingly.
Our Responsible Investing team monitors any developments on an ongoing basis, drawing on detailed research and analysis. Any changes are reviewed through internal governance processes before being approved and applied across the portfolio.
The Board receives oversight reporting, including the rationale for individual exclusions.
Examples of investment exclusions
Thermal coal
Why is it excluded?
Thermal coal is one of the highest greenhouse gas-emitting fossil fuels and faces increasing financially material risks as energy systems transition and lower-emission alternatives become more widely adopted.
These factors contribute to long-term financial risks for our portfolio.
How do we apply it?
We work with a third-party data provider to conduct research and flag any companies that meet one or more of the conditions of the thermal coal General Parameter.
If a company meets this threshold, steps are taken through our governance process to add them to the Excluded Entities List and implement the exclusion across our investment portfolio.
Why coal but not oil and gas?
We do not apply categorical exclusions to oil and gas. Instead, we support a responsible, real economy transition to net-zero.
Our Climate Action Plan outlines the steps and tools we are using to meet our net-zero target and manage climate-related investment risks and opportunities, including:
- Evaluating all new investments using our Climate Transition Investment Framework.
- Investing at least $1.2 billion in climate solutions such as renewable energy and sustainable energy infrastructure to support decarbonization (with over $740 million committed as of 2025).
- Engaging with companies and policymakers to support credible, science-based transition plans.
At the end of 2024, UPP’s portfolio emissions intensity was 20 tonnes CO₂e per $M invested
- 59%
reduction from our 2021 baseline and well ahead of our 2025 target.
Want to find it in our policy? See General Parameter #3.
Severe adverse social or environmental impacts
What does it mean
UPP may exclude companies that cause or contribute to severe adverse social or environmental impacts that present financially material risks to our portfolio.
These impacts may include serious human rights violations, environmental harm or other activities that expose companies, and their investors, to heightened long-term risk.
Why is it excluded?
Companies causing or contributing to severe adverse social or environmental impacts often face heightened legal, regulatory, and operational risk. This can, in turn, create heightened financially material risk across UPP’s investment portfolio.
When these risks are significant and unlikely to be mitigated through engagement or other stewardship activities, exclusion may be considered to protect the long-term strength of the plan.
How do we apply it?
Our Responsible Investment team conducts ongoing research, analysis and monitoring to identify financially material risks across the portfolio, drawing on credible third-party data and internal capabilities.
Where potential risks are identified, they are evaluated against the General Parameters outlined in our Investment Exclusion Policy to determine the appropriate course of action.
We also monitor companies where concerns have been identified but do not yet meet exclusion thresholds, allowing us to track developments and reassess risk over time.
Want to find it in our policy? See General Parameter #5.
Applying exclusions across different investments
Exclusions apply across the portfolio, but implementation varies by investment type.
Public markets
Public markets include publicly traded stocks and bonds. These investments provide broad, cost-efficient access to global markets and are a significant part of UPP’s portfolio.
We invest in public markets primarily through two structures: segregated mandates and pooled funds. These structures differ in the level of control we have over proxy voting and the application of exclusions.
Pooled funds combine assets from multiple investors into a single investment vehicle. While pooled funds provide diversification and efficient market access, they can limit our ability to apply exclusions and proxy voting policies directly, as they are generally not structured to accommodate screens or restrictions specific to a single investor.
Segregated mandates are funds managed exclusively for UPP, which allows us to apply our proxy voting standards and Investment Exclusion Policy directly.
How exclusions are applied in public markets
When updates are made to UPP’s General Parameters or Excluded Entities List, they are communicated to all investment partners.
In segregated mandates, exclusions can generally be applied directly in line with UPP’s guidelines. In pooled funds, investment exclusions, if any, are up to the investment manager and are implemented for all clients in the fund.
In either case, partners must confirm alignment or report any exposure to excluded companies so that appropriate action can be taken.
Where we do not have direct control, we exercise strong oversight. We evaluate managers’ stewardship practices; advocate for better integration of material environmental, social, and governance factors; and actively monitor portfolio holdings.
Transparency and alignment with our policies remain priorities across all public market investments.
Strengthening direct oversight
We have transitioned a substantial portion of our public equity portfolio from pooled funds to segregated mandates to gain greater visibility into holdings and direct implementation oversight. Today, more than:
- 80%
of our public portfolio is held in segregated mandates, allowing direct application of UPP’s exclusions policy and stronger control over portfolio guidelines.
Private markets
Private market investments, such as infrastructure, private equity, or real estate, are typically long-term commitments spanning a decade or more. They are usually held in pooled funds but unlike public markets, we can often negotiate the application of some exclusions.
How exclusions are applied in private markets
When making these investments, partners generally agree to apply UPP’s General Parameters in place at the time of investment.
Because of structural and contractual considerations, updates to UPP’s General Parameters are not always applied, but we engage with partners to promote continued alignment over time.
Monitoring our exclusions
As part of our ongoing risk management approach, UPP regularly works with investment partners to ensure that our portfolio remains aligned with our investment strategy and standards, and evolving legal and regulatory requirements.
3. How has UPP’s approach evolved?
At a glance
Approximately 4% of global listed companies are excluded under our framework
Over 700 companies excluded across all UPP General Parameters, representing hundreds of millions of dollars
Tens of millions of dollars in additional exclusions applied following strengthened human rights and conflict risk analysis
Top exclusion categories are: thermal coal, adverse social and environmental impacts, weapons,* and tobacco
*Exclusions related to both treaties and adverse impacts
Deepening influence and control among public companies
At inception, UPP’s public market assets were dominantly held in pooled funds. While these offer efficient market access, they limit an individual investor’s ability to apply its responsible investing policies. We have fundamentally restructured our portfolio to increase direct ownership and oversight, including transitioning more than:
- 80%
of our public portfolio to segregated mandates, where UPP’s Responsible Investing policies directly apply.
This shift provides greater visibility and control while materially strengthening our ability to apply our stewardship standards consistently across the portfolio.
Segregated mandates also allow us to tailor investment strategies with the needs of the Plan and align fees more closely with performance, supporting better long-term outcomes for members.
Enhanced human rights and conflict risk analysis
In 2024, UPP strengthened its human rights and conflict riskOf specific focus are conflict-affected and high-risk areas (CAHRAs).* These are regions experiencing heightened risks or harm due to armed conflict, widespread violence, political instability or weak governance. Operating in these environments can increase the likelihood of severe adverse impacts, including human rights abuses and violations of national or international law.
*OECD (2011). OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and HighRisk Areas. review process through a partnership with the Heartland Initiative, an independent research organization specializing in conflict-affected and high-risk areas.
This partnership, among the first of its kind for a Canadian pension plan, enables us to incorporate structured risk analysis, spanning more than 60 target regions globally, directly into our investment diligence and review processes. It improves our ability to identify companies exposed to elevated legal, operational, or reputational risks and assess alignment with UPP’s General Parameters and fiduciary responsibilities.
As a result of this strengthened analysis, UPP has excluded millions of dollars in additional investments across multiple conflict-affected regions. Beyond our own portfolio, we are sharing elements of this approach with external managers and industry peers to contribute to stronger risk practices across the broader investment community.
4. Who makes and oversees decisions?
UPP’s Board of Trustees approves the policies and parameters that guide exclusion decisions. Management applies those policies through structured research, internal analysis and assessment, and formal review processes in accordance with legal and governance requirements.
Potential exclusions are assessed using defined criteria, including financial impact, legal and regulatory exposure, long-term return implications, and alignment with UPP’s General Parameters and relevant international standards.
This governance framework helps ensure decisions are consistent, evidence-based, and aligned with the long-term interests of members.
Frequently asked questions
Why doesn’t UPP report its excluded entities?
While we disclose our exclusion criteria and governance framework, we do not publish the names of specific excluded entities.
Publishing company-level lists can create market sensitivity and contractual considerations that may not serve members’ best interests. Leading industry practice is to disclose standards rather than company-by-company lists.
We can confirm that exclusions have been applied across all General Parameters.
Does UPP have exposure to companies on its Excluded Entities List?
UPP does not have exposure to excluded companies through direct investments or through indirect investments held in segregated mandates.
Where assets are held in pooled funds, exclusion policies are determined by the fund provider. We continue to engage with pooled fund managers on responsible investing standards while transitioning assets where possible to strengthen direct stewardship and control.
How does UPP handle evolving exposures, such as new sanctions or emerging risks?
All UPP investments must comply with the Plan’s fiduciary duty and Canadian law. UPP actively monitors developments that may impact the portfolio, including sanctions and financially material risks.
Where risks become significant, prompt and appropriate action is taken in accordance with our governance framework.
Are Joint Sponsors involved in exclusion decisions?
Investment decisions, including exclusions, are made by UPP’s independent Board of Trustees and Management team in accordance with their legal and fiduciary duties.
The Joint Sponsors establish the Plan’s core terms and appoint the Board of Trustees, but do not direct investment decisions.
Do members influence UPP’s investment exclusions?
Member motions and feedback are reviewed carefully and inform ongoing research and risk assessment through a structured internal process, with findings shared with executive leadership and the Board.
Investment decisions must be made independently by the Board and Management in the best long-term financial interests of all members. For that reason, member motions do not automatically result in a specific trade or divestment decision. This framework ensures decisions are applied consistently across the Plan.
Related policies and reports
Investment exclusions are one tool within UPP’s broader responsible investing approach. They are applied selectively, grounded in defined parameters and rigorous analysis, to manage financially material risk in support of the Plan’s long-term strength.
To understand how exclusions fit within UPP’s overall investment strategy, governance framework, and reporting, explore our Responsible Investing policies, Investment Strategy page, and related reports and plans.