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Alberta Investment Management Corporation

PRI reporting framework 2020

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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

          Expectations on firms' ESG practices
        
          Collaboration with other institutional investors
        

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

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

AIMCo's Investment Beliefs(Principles):

  1. Taking Risk Has A Persistent Long-Term Reward
  2. We Are Risk Managers
  3. Return And Risk Are Best Managed Across All Investments
  4. Our Comparative Advantages Are Cash and Patience
  5. Investment Strategies Must Respond to Change
  6. Good Governance Has A Return
  7. Our Easiest Return Is Money We Do Not Have To Spend
  8. Our Goals Should Align With Client Objectives

AIMCo's approach to managing investments on behalf of our clients is to combine an in-depth appreciation of their unique circumstances and objectives with the investment capacity of a large-scale institutional investor.  That means knowing when to apply traditional strategies and when to deviate to ensure consistent, strong risk-adjusted returns.  While how we earn those returns may change year over year, our investment beliefs remain constant.

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]

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

Climate change has emerged as one of the most pressing systemic risks of our time, with far reaching, global, ecological and socio-economic impacts and resulting investment implications. Climate change has been a key ESG focus area for AIMCo since 2015- we issued our ‘Strategic Position on Climate Change’ shortly after COP 21, and publicly endorsed G-7 and G-20 investor statements calling for policy action on climate change. We closely followed the work of the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD), contributed to TCFD consultations and publicly supported their recommendations.

As 194 countries attempt to deliver on their respective COP 21 commitments to reduce GHG emissions, AIMCo is doing our part to evaluate climate risks and opportunities, to protect and enhance investment returns for our clients and their beneficiaries— all Albertans.

AIMCo has been monitoring the absolute emissions and emissions intensity of our public equity holdings since 2016. A key AIMCo objective is ‘Doing Business the Right Way’ – we believe it is important to adopt an accounting of the CO₂e emissions of our portfolios that is relevant, comparable, decision-useful and consistent over time. We continue to assess and monitor the CO₂ emissions profile of our equities portfolio relative to the emissions profile of financial benchmarks to analyze the emissions trajectory,  identify top company and sector contributors, carbon risk, investment opportunities, degree of alignment with sustainable development scenarios and to meet our TCFD and client reporting obligations.  

We have conducted a carbon footprint of our domestic real estate assets and we have adopted key metrics & targets- energy and water efficiency per square ft. & waste diversion from landfill & invest primarily in LEED & BOMA BEST buildings in our domestic real estate portfolio-77% have a green building certification.

As data becomes available or can be proxied, we will expand our carbon footprint analysis to other asset classes. Our processes for identifying climate-related risks and opportunities across asset classes continues to evolve. AIMCo has tested three methodological approaches and finds that each method has validity, with some having more relevance depending on the asset class in scope. Each carbon accounting method (GHG Protocol, Weighted Average Carbon Intensity, Financed Emissions) provides a different view of emissions-related risk which we continue to analyze.  

We encourage companies to disclose their GHG emissions and to begin the process of adopting the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD) recommendations. This will serve to inform their internal business processes and provide quality, relevant disclosure to investors. We are currently working alongside other like-minded investors as part of the Investor Leadership Network (ILN) to tackle a significant challenge in this area — accelerating the implementation of uniform and comparable climate-related disclosures from global corporations and investors alike. This is an important step that we believe will help us make the best investing decisions on behalf of our clients. 

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

Our process in identifying climate-related risks and opportunities across asset classes continues to evolve. The TCFD recommends conducting a scenario analysis to assess the likelihood and impact of climate risks; however, scenario analysis is highly complex, relying on varying inputs for discrete factors such as the probability of natural catastrophic weather events, chronic weather pattern changes, changes in consumer demand, technological advances and regulatory responses, all with varying sensitivities across the portfolio, across geographies and across time. We found the 2 Degrees Investing Initiative (2Dii) PACTA tool useful as a starting point. It demonstrates whether a portfolio’s sector allocation and distribution are aligned with a range of global warming scenarios, including a 2-degree warming scenario over a 5-year time horizon. However, the tool's limitations are that it is specific to public equities and focuses only on the most carbon intensive sectors relative to its own proprietary benchmark. Given our highly diversified investment strategy and increasing exposure to renewable energy beyond public equities, it will be important to focus on total fund positioning rather than on relative fund exposure to carbon-intensive sectors in public equities alone.

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

We recognize the business imperative of integrating climate change into our investment strategies and view the physical, regulatory and reputational risks of climate change as material to our clients’ objectives, especially over medium and long-term investment horizons.

The investor community is still in the early stages of addressing climate change risks and opportunities, given significant data limitations and the forward-looking nature of climate-related risk assessments. We believe that companies exhibiting better disclosure of their climate change mitigation strategies, emissions performance and related material environmental metrics are likely to demonstrate better risk-adjusted performance over the long run.

Considering the current climate-related disclosure landscape, we are committed to the following active management strategies in alignment with our commitments as a PRI signatory:

  1. To exercise shareholder voice by voting to promote climate-related disclosure
  2. To engage with investee companies and promote climate-related disclosure
  3. To advocate with policymakers, regulators and stock exchanges to encourage climate-related disclosure guidance
  4. To take an active role in collaborative research regarding appropriate management of key elements such as carbon, plastics, methane and water, and promote best practices and benchmark firms’ performance on these metrics over time

In November 2018, an internal cross-functional TCFD working group was formed to identify climate-related risks, opportunities and financial impacts, address carbon footprint methodologies and inform our approach to the TCFD recommendations. The effort is led by the RI team, with representation from the CFO office, Economics & Fund Strategy and Risk. Our TCFD working group will continue to identify assumptions, plausible and relevant scenarios and related trends across portfolios. These efforts will continue to inform AIMCo’s climate-related reporting and any implications for investment strategy.

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

specify

          Annual responsible investment report
        

SG 02. Publicly available RI policy or guidance documents

 

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

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

02.3. Additional information [Optional].

AIMCo has asset-specific sustainability guidelines which are available at the request of our clients.


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.

Alberta Investment Management Corporation ("AIMCo") was established as a Crown Corporation to provide investment management services in accordance with the Alberta Investment Management Corporation Act ("The Act"). In providing investment management services to designated entities ("our clients"), AIMCo acts in the best interest of our clients as AIMCo is, for all purposes, an agent of the Crown in right of Alberta. AIMCo provides investment services to our clients only and is restricted from providing investment management services to any other person or entity or in respect of any fund not designated in The Act.

AIMCo's Board of Directors (the "Board") has implemented a Conflicts of Interest Policy covering the members of the Board and AIMCo's Executive Committee which complements and is in addition to the provisions of the Conflicts of Interest Act (Alberta), AIMCo's Code of Conduct and Ethical Standards, and other relevant policies. In order to maintain the trust of AIMCo's stakeholders and the public, and to ensure that AIMCo continues to implement its core values, AIMCo takes a conservative approach to identifying and dealing with actual, potential and perceived conflicts of interest.

03.3. Additional information. [Optional]

Employees are required to avoid any relationship, influence, or activity that in fact, or by appearance, may impair one's ability to make objective and fair decisions impacting job performance. If a conflict of interest or a potential conflict arises, individuals are required to report it to the Chief Compliance Officer as soon as possible so that steps may be taken to resolve the situation. As a term of employment at AIMCo, all employees sign an agreement stating they will abide by the Code of Conduct and pass a test to ensure familiarity. The Compliance department is responsible for overseeing and administering the Code of Conduct.

AIMCo directors and officers, upon joining AIMCo and anually thereafter, are required to sign and deliver to the Chief Legal Officer a Declaration of Key Management Personnel Transactions for Financial Reporting in order to assist in identifying relationships that could result in a conflict of interest. If an AIMCo director or officer suspects that an actual, potential or perceived conflict of interest exists in a specific situation, he or she must promptly provide written disclosure of the matter to the Chief Legal Office, the Chief Compliance Officer or the Chair of the Governance Committee of the Board. 


SG 04. Identifying incidents occurring within portfolios (Private)


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