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University of Toronto Asset Management Corporation (re University of Toronto Endowment)

PRI reporting framework 2018

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Asset class implementation gateway indicators

OO 10. Active ownership practices for listed assets

10.1. Select the active ownership activities your organisation implemented in the reporting year.

Listed equity – engagement

Listed equity – voting

Fixed income SSA – engagement

Fixed income Corporate (financial) – engagement

Fixed income Corporate (non-financial) – engagement

Fixed income Corporate (securitised) – engagement

Please explain why you do not engage directly and do not require external managers to engage with companies on ESG factors. 

          We do not engage directly and do not require external managers to engage with companies on ESG factors due to the relatively small exposure to this asset class as well as the difficulty of engaging when investments are in a securitized structure.

OO 11. ESG incorporation practices for all assets

Select the externally managed assets classes in which you and/or your investment consultants address ESG incorporation in your external manager selection, appointment and/or monitoring processes.
Asset class
ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes
Listed equity

Listed equity - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - SSA

Fixed income - SSA - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - corporate (financial)

Fixed income - corporate (financial) - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - corporate (non-financial)

Fixed income - corporate (non-financial) - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - securitised

Fixed income - securitised - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Private equity

Private equity - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Property

Property - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Infrastructure

Infrastructure - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Hedge funds

Hedge funds - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Cash

Cash - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

11.4. Provide a brief description of how your organisation includes responsible investment considerations in your investment manager selection, appointment and monitoring processes.

UTAM incorporates responsible investment considerations into investment manager selection appointment and monitoring processes through the inclusion of the following factors, where appropriate to the mandate:

Selection:

  • Issue ESG due diligence questions, review responses and follow up where appropriate.
  • Review the manager's responsible investment policies.
  • Meet with staff members who are focused on responsible investing in order to assess their skills and competence.
  • Discuss current governance and management of the firm's responsible investing activities.
  • Assess any collaborative initiatives or direct engagements with the management teams of companies in the investment portfolio.
  • Evaluate the quality of the manager's investment policy and its reference to ESG.
  • Assess how ESG implementation is enforced.
  • Review how the manager evaluates ESG materiality.
  • Examine the process for defining and communicating ESG incidents.
  • Review the manager's proxy voting policy and processes (in cases where UTAM would not direct voting).
  • Determine whether the manager is a signatory to the PRI and/or other relevant initiatives and organizations.
  • Review responsible investment reporting to clients and/or the public.
  • Communicate our expectations for future ESG reporting.
  • Evaluate the coverage and quality of the firm's ESG-related research.
  • Assess current strategies for incorporating ESG factors, as well as the manager's ability to identify and manage ESG-related issues.
  • Review ESG-related characteristics of the investment portfolio.
  • Investigate the impact of ESG factors on specific investment decisions and, where relevant, subsequent stock and portfolio performance.
  • Discuss securities in the manager's portfolio that appear to have material ESG risks.
  • Incorporate a review of ESG considerations in our internal manager recommendation memos, including rating the manager's ESG capabilities.

Appointment:

When appointing managers, we will seek to include relevant ESG considerations into the investment mandate. Where appointing a manager under an investment management agreement, we will include specific investment parameters where applicable, as well as reporting obligations. Where investing in a manager's commingled product, we will seek to include terms specific to disclosure and reporting in any side letter we negotiate where applicable.

Monitoring:

  • Issue ESG due diligence questionnaires annually, following up on the manager's responses where appropriate.
  • Include responsible investment as a standard agenda item at annual performance review meetings.
  • Highlight examples of good practices by other managers in the area of responsible investing.
  • Encourage the manager to join responsible investing initiatives or organizations, and to participate in collaborative projects with other investors.
  • Review the manager's responsible investment reporting.
  • Meet regularly with staff members who are focused on responsible investing to discuss current research and review any changes in the manager's approach since the last meeting.
  • Review ESG-related characteristics of the investment portfolio.
  • Request details of the integration of ESG factors in specific investment decisions.
  • Discuss securities in the manager's portfolio that appear to have material ESG risks.
  • Incorporate a review of ESG considerations in our internal manager review memos, including rating the manager's ESG capabilities.

OO 12. Modules and sections required to complete

12.1. Below are all applicable modules or sections you may report on. Those which are mandatory to report (asset classes representing 10% or more of your AUM) are already ticked and read-only. Those which are voluntary to report on can be opted into by ticking the box.

Core modules

RI implementation directly or via service providers

Direct - Listed Equity active ownership

RI implementation via external managers

Indirect - Selection, Appointment and Monitoring of External Managers

Closing module

12.2. Additional information. [Optional]

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