Item - 2019.IB2.1
Tracking Status
- This item was considered by Toronto Investment Board on May 10, 2019 and was adopted with amendments.
IB2.1 - Investment Policy - Environmental, Social, and Governance Review
- Decision Type:
- ACTION
- Status:
- Amended
- Wards:
- All
Board Decision
The Toronto Investment Board:
1. Requested the Executive Director, Corporate Finance, to incorporate the following comments in the Executive Director's upcoming report to City Council on the Investment Policy - Environmental, Social, and Governance Factors Review:
a. Include Environmental, Social, and Governance factors as material to risk/return outcomes in Section 2.2 (Investment Beliefs) of the Investment Policy;
b. Ensure that the focus of Section 6.6 (Environmental, Social, and Governance Factors) of the Investment Policy is all-inclusive and considers the United Nations' 17 sustainable development goals which includes climate change;
c. Exclude direct investing in Toronto's economy as a separate asset class in the Investment Policy, as it is falls outside the Toronto Investment Board's mandate, responsibilities, and resources and these types of investments are direct policy decisions for City Council through its Budget Process;
d. Maintain the current Section 6.6 (Environmental, Social, and Governance Factors) of the Investment Policy at this time and request Corporate Finance staff to monitor and update it regularly to reflect evolving Environmental, Social, and Governance principles that are aligned with the mandate of this Policy; and
e. Ensure the policy recommendations support and advance the City's commitment towards carbon reduction targets.
Decision Advice and Other Information
Julia Langer, Chief Executive Officer, The Atmospheric Fund and Hyewon Kong, Member, Investment Committee, The Atmospheric Fund gave a presentation on City of Toronto Investment Policy: Embracing Best Practices, Minimizing Downside Climate Risk, and Maximizing Upside Value from Climate Solutions.
Brian White, Partner, Aon Hewitt gave a presentation on Key Considerations for Responsible Investment.
Origin
Summary
City Council has directed the Executive Director, Corporate Finance, to review sections of the Statement of Investment Policy and Procedures for the City of Toronto Investment Funds (Investment Policy) pertaining to Environmental, Social, and Governance factors and to consult with a number of relevant industry stakeholders, including the Toronto Investment Board, and report back to the Executive Committee in the first quarter of 2019.
The purpose of this report is to summarize the Environmental, Social, and Governance provisions contained in the Investment Policy and to solicit advice from the Board and other stakeholders on how these provisions can be enhanced.
Background Information
https://www.toronto.ca/legdocs/mmis/2019/ib/bgrd/backgroundfile-132447.pdf
Attachment 2 - Statement of Investment Policy and Procedures for the City of Toronto Investment Funds
https://www.toronto.ca/legdocs/mmis/2019/ib/bgrd/backgroundfile-132448.pdf
Attachment 3 - Key Considerations for Responsible Investing Initiatives (Meredith Jones, Aon)
https://www.toronto.ca/legdocs/mmis/2019/ib/bgrd/backgroundfile-132449.pdf
Presentation from Julia Langer, Chief Executive Officer, The Atmospheric Fund, and Hyewon Kong, Member, Investment Committee, The Atmospheric Fund on City of Toronto Investment Policy: Embracing Best Practices, Minimizing Downside Climate Risk, and Maximizing Upside Value from Climate Solutions
https://www.toronto.ca/legdocs/mmis/2019/ib/bgrd/backgroundfile-132451.pdf
Presentation from Gary Hawton, Senior Director, Clients Relations, North America, Sustainalytics on Application of Environmental, Social, and Governance and Carbon Research
https://www.toronto.ca/legdocs/mmis/2019/ib/bgrd/backgroundfile-132450.pdf
Communications
https://www.toronto.ca/legdocs/mmis/2019/ib/comm/communicationfile-93930.pdf
(May 9, 2019) Submission from Brian White, Aon Hewitt (IB.New.IB2.1.2)
https://www.toronto.ca/legdocs/mmis/2019/ib/comm/communicationfile-94485.pdf
Motions
That the Toronto Investment Board request the Executive Director, Corporate Finance, to incorporate the following comments in his upcoming report to City Council on the Investment Policy - Environmental, Social, and Governance Factors Review:
a. Include Environmental, Social, and Governance factors as material to risk/return outcomes in Section 2.2 (Investment Beliefs) of the Investment Policy.
1. That the Toronto Investment Board request the Executive Director, Corporate Finance, to incorporate the following comments in his upcoming report to City Council on the Investment Policy - Environmental, Social, and Governance Factors Review:
b. Ensure that the focus of Section 6.6 (Environmental, Social, and Governance Factors) of the Investment Policy is all-inclusive and considers the United Nations' 17 sustainable development goals which includes climate change.
1. That the Toronto Investment Board request the Executive Director, Corporate Finance, to incorporate the following comments in his upcoming report to City Council on the Investment Policy - Environmental, Social, and Governance Factors Review:
c. Give preference to investment managers that are United Nations' Principles of Responsible Investing Signatories in the search, evaluation, and hiring process for the Toronto Investment Board's investment managers and require that the successful investment managers incorporate the United Nations' Principles of Responsible Investing Signatories into their investment processes.
Vote (Amend Item) May-10-2019
| Result: Lost (tie) | Majority Required |
|---|---|
| Total members that voted Yes: 3 | Members that voted Yes are John Crocker (Chair), Mary Robinson, Heather Taylor |
| Total members that voted No: 3 | Members that voted No are Matthew Flynn, Tanya Lai, Pamela Steer |
| Total members that were Absent: 1 | Members that were absent are Sharon Ranson |
1. That the Toronto Investment Board request the Executive Director, Corporate Finance, to incorporate the following comments in his upcoming report to City Council on the Investment Policy - Environmental, Social, and Governance Factors Review:
d. Emphasize that "negative screening" is a rare practice in the investment industry and may be contrary to the Prudent Investor Standard.
1. That the Toronto Investment Board request the Executive Director, Corporate Finance, to incorporate the following comments in his upcoming report to City Council on the Investment Policy - Environmental, Social, and Governance Factors Review:
e. Exclude direct investing in Toronto's economy as a separate asset class in the Investment Policy, as it is falls outside the Toronto Investment Board's mandate, responsibilities, and resources and these types of investments are direct policy decisions for City Council through its Budget Process.
1. That the Toronto Investment Board request the Executive Director, Corporate Finance, to incorporate the following comments in his upcoming report to City Council on the Investment Policy - Environmental, Social, and Governance Factors Review:
f. Maintain the current Section 6.6 (Environmental, Social, and Governance Factors) of the Investment Policy at this time and request Corporate Finance staff to monitor and update it regularly to reflect evolving Environmental, Social, and Governance principles that are aligned with the mandate of this Policy.
1. That the Toronto Investment Board request the Executive Director, Corporate Finance, to incorporate the following comments in his upcoming report to City Council on the Investment Policy - Environmental, Social, and Governance Factors Review:
g. Ensure the policy recommendations support and advance the City's commitment towards carbon reduction targets.