Item - 2023.IB5.5

The Toronto Investment Board:

1. Directed that the confidential information contained in Confidential Attachment 1, Confidential Attachment 2, Confidential Attachment 3, and Confidential Attachment 4 to the report (November 24, 2023) from the Director, Capital Markets, remain confidential in their entirety, as they contain information that involves the security of property belonging to the City or one of its agencies or corporations.

The Toronto Investment Board (Board) has engaged MSCI Inc. (MSCI) and its subsidiary MSCI ESG Research LLC as the ESG Ratings Service provider in April 2023.  The agreement was in response to City Council's request to the Toronto Investment Board and the Chief Financial Officer and Treasurer to monitor and report on the performance of the external investment firms as hired by the Board with respect to ESG factors as per the terms of the Investment Policy.

In addition, the agreement also includes the MSCI Carbon Portfolio Analytics reporting package that is part of MSCI's Climate Lab Enterprise. Carbon Portfolio Analytics reporting from MSCI ESG Research helps investors understand, measure and manage carbon risk at the portfolio, sector, and company level.

Both of these MSCI products are provided on a managed service basis. This requires City staff to upload the portfolio information to MSCI via a secured portal and then MSCI will generate reports on each portfolio as well as on a consolidated basis for both the Long-Term Fund (LTF) and the Sinking Fund (SF). Comparison information against a benchmark index is also provided.

The information from MSCI is proprietary and confidential. There are a number of identifiable individual companies and governments in their detailed reports. The agreement with MSCI allows for the viewing and use of the information on a confidential basis by a limited number of City staff, the Board, and City Council. The contract does allow for the public use of general consolidated information on a limited basis.

Portfolio holdings as at September 30, 2023 were submitted to MSCI in November due to some technical difficulties with our custodian.  Preliminary results were received were received as at the date of this report. Staff are still reviewing the materials however some preliminary consolidated data is provided in this report as well as in Confidential Attachments 1, 2, 3, and 4.