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

PRI reporting framework 2020

You are in Direct - Listed Equity Active Ownership » Engagement

Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.2. Indicate whether your organisation plays a role in the engagement process that your service provider conducts.

02.3. Indicate the role(s) you play in engagements that your service provider conducts on your behalf.

02.4. Additional information. [Optional]

One of the pillars of a best-in-class active ownership approach is engagement with the management and boards of equity and fixed income issuers on ESG considerations. The objectives of engagement include seeking to better understand a company's position on various issues and communicating our views, with the goal of improving the management of ESG risks and opportunities at portfolio companies as well endeavouring to influence ESG practices and to promote enhanced disclosure and transparency. We believe that sound management of ESG risks and opportunities is essential for long-term outperformance.

Given our size and the fact that we invest through third-party investment managers, we typically undertake engagement activities as part of collaborative groups, and though an engagement service provider. We believe that the combined influence of like-minded investors with substantial combined holdings will typically lead to better outcomes than we could achieve on our own.

We participate in formal engagement collaborations through memberships in various organizations, by teaming up with other like-minded investors, and by using service providers to engage on our behalf. We have a consultative process managed by our Responsible Investing Committee to determine in which collaborations to participate. In order to identify and prioritize collaborative engagements, we use a number of criteria including our ability to add value to the collaboration, the materiality of the specific ESG risks to be addressed, and the potential impact on client portfolios.

Our service provider, EOS at Federated Hermes, offers quarterly service review meetings and opportunities to influence the engagement selection process as well as ad-hoc engagement progress discussions and direct participation in engagements where appropriate at our request. In practice, we conduct regular discussions with them on engagement priorities, key objectives, progress in meeting those objectives and outcomes achieved. We endeavour to participate selectively in their engagement activities from time to time. Our service provider systematically makes stewardship activity reports available to us via its EOSi client portal, which is regularly updated, enabling a company-level view of engagement objectives and issues and activity.

We monitor all of our collaborative engagement activities to assess their effectiveness.

We regularly report on the progress of collaborative engagements both internally and externally to stakeholders and we may share insights from engagement activities with external investment managers where relevant.


LEA 03. Process for identifying and prioritising engagement activities

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

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal staff engagements

Individual / Internal staff engagements

Collaborative engagements

Collaborative engagements

Service-provider engagements

Service-provider engagements

specify

          Our service provider, EOS at Federated Hermes, further considers the potential incremental benefit and impact of its engagement as well as the feasibility of engagement.
        

03.3. Additional information. [Optional]

Our strategy and approach to engagement is described in our Responsible Investing Policy and our annual Responsible Investing Reports published on our website at https://www.utam.utoronto.ca/responsible-investing/

Given our size and the fact that we invest through third-party investment managers, we typically undertake engagement activities as part of collaborative groups. We believe that the combined influence of like-minded investors with substantial combined holdings will typically lead to better outcomes than we could achieve on our own.

Under some circumstances, we may initiate engagements on our own.


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements

04.2. Additional information. [Optional]

Our service provider EOS at Federated Hermes conducts engagements using specific milestone-driven objectives for most companies in its engagement program.


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements
Indicate whether you do any of the following to monitor and/or review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service-provider engagements

05.3. Additional information. [Optional]

As we mainly either participate in collaborative engagements or service provider engagements, we either receive or develop progress reports on each engagement identifying actions, progress and outcomes against the objectives stated at the outset or as they evolve over time.


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

Our service provider EOS at Federated Hermes continually reviews the progress of its engagements and considers whether to intensify efforts and escalate the engagement or modify the objectives as the situation requires. Our service provider keeps us informed of the progress through quarterly reporting as well as a client portal. For collaborative engagements, escalation would be determined on a case by case basis.


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation`s engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

Service-provider engagements

07.2. Indicate the practices used to ensure that information and insights gained through engagements are shared with investment decision-makers.

          Investments decision-makers, specifically the Chief Investment Officer, participates in select engagements and shares insights with other members of the investment team.
        

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

Service-provider engagements

07.4. Additional information. [Optional]

In some engagement efforts, confidentiality is required, however where outcomes from engagements are or can be made public, we may highlight these to our stakeholders through an update to our website. We also include in our annual Responsible Investing Reports case studies of engagements that we participate in collaboratively or through our service provider on our behalf. We actively monitor and review the activities of our service provider EOS at Federated Hermes through quarterly calls and regular reports. EOS at Federated Hermes provides a client-facing portal that allows us to refer to the full history of engagement with each company and track progress.


LEA 08. Tracking number of engagements

08.1. Indicate whether you track the number of your engagement activities.

Type of engagement
Tracking engagements
Individual/Internal staff engagements​

Collaborative engagements

Service-provider engagements

08.2. Additional information. [Optional]

We track engagement activities based on reports provided by collaboration groups and service providers, reporting to our stakeholders annually on an aggregated basis and providing examples of engagements undertaken. This reporting is available on our website at https://utam.utoronto.ca/. EOS at Federated Hermes' regular reporting provides full disclosure on the number of engagements conducted on our behalf.


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