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

PRI reporting framework 2018

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, and how they consider ESG factors and real economy impact.

UTAM's sole purpose is to manage certain assets of, or under the administration of, the University of Toronto. Our entire focus is on managing these assets prudently and in accordance with our client's objectives and constraints. As part of this process, a benchmark portfolio (aka the Reference Portfolio) has been created (see https://utam.utoronto.ca/reference-portfolio/). The Reference Portfolio serves as an objective benchmark to measure the value gained or lost by UTAM's active management activities.

In our investment of the university's assets, we are committed to a responsible investing approach because we believe that material ESG factors can have a significant impact on long-term investment returns. Therefore, we have incorporated ESG considerations into our investment analysis and decision-making processes, particularly with respect to our selection and monitoring of investment managers. As outlined elsewhere in this report, we have developed a comprehensive set of questions and activities that we undertake when selecting and monitoring investment managers. In addition, we've developed ways to engage with companies, to help ensure ESG-related risks are effectively managed. We also cast proxy votes, where possible, applying an ESG-focused policy. We believe that taking this broader perspective will result in better outcomes for our client.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Over the past two years, UTAM has worked with the University of Toronto leadership to strengthen and formalize our shared commitment to responsible investing.

As we balance prudent risk management with our efforts to generate sustainable returns, we also take a broader view of the managers we invest with - because we believe that material environmental, social and governance (ESG) considerations can have a significant impact on investment performance. We've therefore incorporated ESG considerations into our investment analysis and decision-making processes as part of our long-term strategy, as well as our day-to-day management of the university's pension, endowment and short-term working capital assets.

We define responsible investing as the incorporation of environmental, social and governance (ESG) factors into investment decision-making processes, active ownership - through proxy voting and engagement - and disclosure. UTAM pursues a responsible investing approach because we believe that material ESG factors can have a significant impact on long-term investment returns. ESG considerations are part of our investment analysis and decision-making processes, particularly in our selection of investment managers. We've developed ways to engage with companies, both directly and with other like-mind institutional investors, to help ensure ESG-related risks are effectively managed. We cast our proxy votes, where possible, applying an ESG-focused policy. Moreover, we disclose our responsible investing activities on a regular basis, via an annual responsible investing report (https://utam.utoronto.ca/utams-new-responsible-investing-report-is-now-available/) and through other updates published on our website (https://utam.utoronto.ca/news/). We believe that taking this broader perspective allows us to make better-informed decisions and ultimately results in better outcomes for our client.

The PRI framework guided us in crafting our comprehensive Responsible Investing Policy (https://issuu.com/utam/docs/utam-responsible-investing-policy?e=29566501/59442745), which was published in December 2017 and applies to all assets under our management. The six Principles also underpin the deliberations of our Responsible Investing Committee, which meets regularly to consider all matters relating to the development and implementation of our responsible investing practices. Although we have generally taken an integration approach to ESG considerations, our client has directed us to exclude certain tobacco-related securities in our investment universe within certain parameters. That is the only exception to our standard responsible investing approach.

Putting our principles into action

PRI Principle #1: We will incorporate ESG issues into investment analysis and decision-making processes.

UTAM Actions

  • Evaluate ESG-related risks across all portfolios.
  • Integrate consideration of ESG factors into our investment and operational due diligence policies, and into other policies where relevant and material.
  • Incorporate ESG considerations into our manager selection and monitoring processes, where relevant and material.
  • Support development of ESG-related tools, metrics and analyses.
  • Encourage academic and other research on ESG integration.
  • Provide and promote ESG training for our investment professionals.

PRI Principle #2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

UTAM Actions

  • Adopt a proxy voting policy that is ESG-focused and apply this, where possible, to all public equity segregated account mandates, as well as to public equity funds in which the university's Pension and Endowment portfolios are the only investors.
  • Encourage managers to adopt ESG-focused voting policies, where relevant.
  • Support corporate and regulatory proposals that contribute to improved governance practices and more effective boards.
  • Participate in collaborative engagement initiatives.

PRI Principle #3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

UTAM Actions

  • Discuss ESG risks in managers' portfolios and in relation to particular securities those managers hold.
  • Ask managers to undertake and report on ESG-related engagements with companies in their portfolios.
  • Ask managers to report on ESG incidents in their portfolios.
  • Support collaborative initiatives promoting ESG disclosure by companies.

PRI Principle #4: We will promote acceptance and implementation of the Principles within the investment industry.

UTAM Actions

  • Encourage managers to become signatories to the PRI.
  • Communicate our ESG expectations to managers.
  • Support the development of tools for benchmarking ESG integration.
  • Support regulatory or policy developments that enable implementation of the Principles.

PRI Principle #5: We will work together to enhance our effectiveness in implementing the Principles.

UTAM Actions

  • Support and participate in networks and information platforms in order to share tools and pool resources.
  • Address relevant emerging issues collectively with other asset owners and managers.
  • Identify and support appropriate coalitions whose beliefs are aligned with the Principles.

PRI Principle #6: We will each report on our activities and progress towards implementing the Principles.

UTAM Actions

  • Disclose how ESG issues are integrated within our investment process.
  • Disclose active ownership activities (e.g., voting, engagement and policy dialogue).
  • Communicate with stakeholders on ESG issues and the Principles.
  • Report on progress and achievements relating to the Principles.
  • Make use of reporting to raise awareness among a wider group of stakeholders.

SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

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02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

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02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

The University of Toronto Funds Investment Policy has provisions addressing the management of potential conflicts of interest in the investment process and more broadly arising from other relationships and activities in the management of university investment assets.

UTAM has provisions within its Code of Ethics to identify actual or potential conflicts of interest between its staff and its client. Controls are prescribed for the disclosure, mitigation, or avoidance of such conflicts. In the investment management process, actual or perceived conflicts of interest that an external investment manager may have with UTAM and/or its client (ultimately, the investor) are addressed in both the investment and operational due diligence processes before investment and in ongoing monitoring following initial investment.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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