The celebration of Sun Life Financial of Canada’s 150th anniversary this year is an opportunity to reflect on the role of ethical governance in our corporate journey.
From a second-storey office in Old Montreal managing 900 insurance policies and C$150 thousand in assets, we have grown into the 16th largest publicly-traded life insurance and wealth financial institution in the world, serving 37 million people in 26 countries and with more than C$800 billion in assets under management.
Sun Life Financial of Canada has long recognised that our business is based on trust: our customers’ trust in our ability to honour long-term financial promises to them and our shareholders’ trust in the long-term value we create for our customers. We earned that trust by making business ethics and prudent governance guiding values for our operations, culture and growth as a company. As early as 1887, our managing director Robertson Macaulay introduced a rule barring Sun Life Financial of Canada from investing in any company in which a board director had a sizeable financial interest. He knew such practices, common at the time, were neither prudent nor ethical.
Good governance has allowed Sun Life Financial of Canada to weather challenging economic downturns, world wars and the recent global financial crisis in solid shape. It has earned us a bright reputation and our stakeholders’ trust. It reinforces Canada’s sterling brand of financial prudence – prudence we apply across our operations in Canada, the United Kingdom and the United States and we also ‘export’ to our growing operations in Asia. It supports our sustainability – as the only North American life insurer in the Global 100 Most Sustainable Corporations in the World listing.
We are appreciative of the resulting public recognition: our second-place ranking for strong governance practices among 240 Canadian companies by Canada’s leading national newspaper The Globe and Mail and Ethical Boardroom Magazine’s recognition of Sun Life Financial of Canada for Best Corporate Governance – Financial Services – North America 2015.
Under the leadership of our board, chaired by Jim Sutcliffe, and our chief executive officer Dean Connor, we have rolled up our sleeves for the work that lies ahead. The board will continue shaping and approving corporate strategy, as it did for our current four-pillar growth strategy, focused on: financial protection and wealth solutions in Canada; global asset management (anchored by our Boston-based subsidiary MFS, whose second largest office is located in London); US group benefits and international high net worth solutions; and our operations in Asia – even as we continue to provide excellent service to our 700,000 UK customers with in-force life and pension policies. The board will also build further on the key elements of our ethical governance model, including ethical governance practices and behaviour, diversity, disciplined risk management and responsible and responsive disclosure.
Firstly… We will aim to continue fostering good corporate governance practices and ethical behaviour in our operations, growth strategy and culture.
That starts at the top, with the expertise and experience that our directors bring to the board and rigorous observance of board-sanctioned practices and behaviours by the executive level, down to every employee.
Today, 10 of our 11 board members, including the chair, are independent. They provide guidance to Sun Life Financial of Canada’s senior management teams and assess and respond to new ideas and opportunities. The board assures risk management policies and practices are in place and it verifies that business decisions are in line with our corporate strategy and risk appetite.
Board oversight ensures our processes and practices are consistent with governing statutes, regulations and guidelines in Canada and internationally, notably those upheld by our primary regulator, the Office of the Superintendent of Financial Institutions (OSFI) and the rules governing the public stock exchanges on which we are listed. We also endeavour to pre-empt issues before they materialise, for example, by appointing a ‘customer advocate’ in our UK operations to serve as the voice of the customer.
Our board focuses on governance for the approval of incentive plans, to ensure compensation is aligned with the long-term interests of our shareholders and customers. The board also has several committees that help ensure the effectiveness of our corporate governance guidelines and processes, while also keeping these up to date.
Secondly… We will persist in promoting diversity and inclusion. Sun Life Financial of Canada is a global company headquartered in Toronto – one of the world’s most multicultural cities, whose customers and shareholders are men and women of many different nationalities, countries of origin, ethno-cultural backgrounds and sexual orientations. We believe reflecting that diversity in ourselves – our talented employees, executive leadership and board of directors – brings us a wealth of ideas, outlooks and innovative approaches.
Our board has therefore adopted a diversity policy that includes provisions relating to the identification and nomination of female directors. Its objective is to ensure the board includes a diversity of skills, experience and outlooks that are relevant to the company’s business, in order to appropriately fulfil its mandate. The board has set the target of having at least 30 per cent female directors, which exceeds Catalyst Canada’s 2017 target. We are pleased to have surpassed this target, with four women (36 per cent) counted among our directors. This diversity policy governs women in executive leadership positions as well.
Thirdly… We will continue pursuing disciplined risk management – the foundation of our strength and stability through both good and turbulent economic environments.
At Sun Life Financial of Canada, we operate according to a robust risk management framework that optimises risk return and protects and enhances value creation for our stakeholders.
This forward-looking framework is integrated and aligned with our corporate strategy and business objectives and is embedded within the business management practices of every business segment. Over the years, the framework has evolved through a number of determined steps taken by the company, which include: reinforcing the integration of risk appetite with strategic business planning processes; updating our risk appetite framework to align with OSFI guidance; aligning compensation programmes with risk management practices; and adopting a ‘three lines of defence’ model. The ‘three lines of defence’ model provides a consistent, transparent and clearly documented allocation of accountability and segregation of functional responsibilities, to support effective decision-making through independent risk governance and assurance practices.
Our leadership in enterprise risk management practices is reaffirmed by external rating agency Standard and Poor’s, which rates our programme as ‘strong’.
Finally… We will strive to build further on responsive and responsible disclosure. We have disclosure policies, controls and procedures in place that are designed to ensure our senior management leaders are able to take well-informed, appropriate and timely decisions with respect to the information we publicly disclose.
Our board reviews and approves the content of all major disclosure documents. We strive to be responsive to the disclosure needs of our shareholders and the investment community, our regulators and other stakeholders and to provide timely, consistent and accurate information to the investing public in meeting our disclosure obligations.
Looking ahead to an even brighter future for Sun Life Financial of Canada, I am reminded of a statement from one of our earliest annual meetings, that “the prudent course pursued by (Sun Life Financial of Canada’s) directors will commend itself to the approval of both the shareholders and the insured”. That statement holds true today: the course of good, prudent and ethical corporate governance under our board has earned the approval of our stakeholders and led the company to success.
We will stay and strengthen that course as we continue to grow, sustainably, for another 150 years.
About The Author:
Melissa J. Kennedy is Executive Vice-President, Chief Legal Officer & Public Affairs of Sun Life Financial. Ms. Kennedy has responsibility for the Company’s enterprise legal, compliance, corporate secretarial and corporate and public affairs functions.
Ms. Kennedy joined Sun Life in 2014 with a breadth of experience spanning private practice, regulatory and in-house roles. Prior to Sun Life, she was Senior Vice-President, General Counsel and Corporate Affairs of Ontario Teachers’ Pension Plan, one of Canada’s largest pension funds, a position she held since 2009. Ms. Kennedy started her career in private practice followed by roles as head of the prosecution team at the Ontario Securities Commission and as Vice-President, Associate General Counsel at a major Canadian bank. Ms. Kennedy has a Bachelor of Arts (Economics) from Carleton University and a Bachelor of Laws from the University of Toronto. She was called to the Ontario Bar in 1989 and is a graduate of the Institute of Corporate Directors. She is also a member of University of Toronto’s Law Alumni Association Council, is on the Executive Committee of the Legal Leaders for Diversity and Inclusion and received the Arbor Award from the University of Toronto for her volunteer work.