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University of Toronto Asset Management Corp. releases Responsible Investing Report

lanthierj — Thu, 25 May 2017 15:11:32 +0000

University of Toronto Asset Management Corp. releases Responsible Investing Report

lanthierj Thu, 05/25/2017 - 11:11

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The University of Toronto Asset Management Corporation (UTAM), which oversees close to $9-billion in pension, endowment and other assets for the University of Toronto, has released its Responsible Investing Report.

The report gives an overview of the changes being made to more fully incorporate environmental, social and governance (ESG) factors into UTAM’s investment decision-making processes.

The first of what is to be an annual update, the report comes approximately one year after U of T President Meric Gertler released his report titled “Beyond Divestment: Taking Decisive Action on Climate Change.” Enhancing UTAM’s investment approach to more fully and systematically consider ESG factors was a cornerstone recommendation of that report as it pertained to the University’s role as an investor.

UTAM presented its Responsible Investing Report at the May 18 meeting of Governing Council and released it at the same time to the U of T community.

“We are excited to release our first-ever Responsible Investing Report and to share with the University community what we have done in this regard,” UTAM President and Chief Investment Officer Daren Smith said in an interview.

“We made significant progress in 2016 and have continued that momentum into 2017. We have joined a number of organizations with like-minded investors and have already participated in a couple of collaborative initiatives related to responsible investing and climate change and continue to seek out additional initiatives.”

As part of those efforts, UTAM signed the UN-supported Principles for Responsible Investment (PRI) last December. The PRI is designed to encourage and assist investors in integrating ESG factors into their investment processes. UTAM recently signed a PRI-sponsored letter along with more than 200 other global investors (managing more than $15 trillion in assets), urging the G7 to stand by the Paris Agreement to combat climate change and drive its swift implementation, Smith said.

UTAM has also become a signatory to the CDP, formally known as the Carbon Disclosure Project, a non-profit group that provides a way for companies, cities and regions to measure and manage their environmental impact. As part of that group, Smith said, UTAM has joined forces with other signatories to push specific companies to complete the CDP’s climate change questionnaire.

“We believe we can have a greater impact by joining together with like-minded investors,” he said.

UTAM does not typically buy and sell individual bonds and stocks itself but instead engages external managers to do that on its behalf. For that reason, UTAM integrates ESG considerations into its selection and monitoring of those managers, Smith said. Another significant change related to UTAM’s responsible investing initiative is that UTAM has taken back voting responsibility, where possible, from its external managers and has engaged Institutional Shareholder Services to vote according to its Sustainability guidelines. These guidelines were developed in consultation with the PRI for investors that wish to incorporate ESG considerations into their investment decision-making processes to a greater extent.

Smith said UTAM expects to sign the Montreal Carbon Pledge later this year, a move that commits UTAM to calculate and disclose the carbon footprint of the pension and endowment portfolios on an annual basis.

The actions outlined in the report show the progress made by UTAM in a short period, President Gertler said. “I have been following UTAM’s work closely. This is a complex and evolving area, and UTAM has made great strides in the past 12 months.”

In its efforts to increase the level of transparency provided to stakeholders, UTAM also has launched a completely redesigned website and significantly improved both the clarity and content of its recently released annual report.

“We feel it is important to be transparent with our stakeholders about who we are, what we do, and how we do it − and that’s why we have spent so much time and energy on the new website and the latest annual report,” Smith said.

For calendar year 2016, the pension and endowment funds returned 7.1 per cent, outpacing the university’s target return of 5.5 per cent. The returns were slightly lower than the benchmark used by the pension and endowment funds to evaluate UTAM’s performance, which had a return of 7.2 per cent in 2016. Over the past four years the pension fund returned 10.5 per cent and the endowment fund returned 10.7 per cent, outpacing the benchmark return for both portfolios of 8.1 per cent and adding more than $500 million of value, net of all fees and expenses, to the University of Toronto’s pension and endowment.

Read the full annual report

Read the Responsible Investing Report

Visit UTAM’s web site

Daren Smith takes charge at University of Toronto Asset Management

lavende4 — Fri, 02 Sep 2016 13:03:42 +0000

Daren Smith takes charge at University of Toronto Asset Management

lavende4 Fri, 09/02/2016 - 09:03

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Daren Smith is the new president and chief investment officer of University of Toronto Asset Management, leading a team that oversees close to $6.5 billion in pension and endowment funds for the university.

Smith joined UTAM in 2008 and takes over for Bill Moriarty, who retired earlier this year. His appointment follows a series of changes in recent years at UTAM aimed at reducing investment risk and making the asset manager more accountable to the university.

“UTAM and its staff are valued partners, managing the money that we rely on to help fund our academic mission and our pensions,” President Meric Gertler said. “Daren understands the importance of this role, and has built a strong track record as part of UTAM’s senior team. I want to welcome him to his new job.”

John Switzer, chair of the UTAM board who acted as an interim leader in the months since Moriarty’s retirement, said the fact the new president comes from within the organization is a sign of the strength of the UTAM team assembled over the past five years.

“I am delighted with this appointment and with the selection process,” Switzer said. “It will be a smooth transition.”

Gertler thanked Switzer for his leadership during the transition period and for his work on the selection of UTAM’s new president.

Smith said he looks forward to working closely with the university.

“Our main objective is to continue to generate strong value-added returns,” Smith said. “The only reason for an organization like UTAM to exist is if it can outperform its benchmarks.”

UTAM has made several changes to its approach to investing, he said, that include moving away from specific allocation targets for alternative investments such as hedge funds and private equity, and implementing what he described as a comprehensive system for evaluating investment risk.

UTAM also has worked, he said, to build a strong investment team with expertise in selecting asset managers and portfolio construction.

Changes to the governance structure of UTAM also are designed to bring it closer to the university while remaining as a separate organization.

The five-member board includes President Gertler as well as the university’s chief financial officer, Sheila Brown, a representative from the University of Toronto Faculty Association, an independent director and UTAM’s president. A new investment committee that reports to the university president, and is working closely with UTAM, is co-chaired by Geoffrey Matus and David Denison. There is also a separate pension committee that provides high-level oversight of pension investment policies and procedures.

In his role as president, Smith said he wants to raise awareness and provide more information about UTAM.

Over the past five years UTAM has consistently exceeded the returns of its benchmark portfolio for pension and endowment funds and has outperformed by more than 1.7 per cent per year over that period. “Although we are encouraged by these results, we know that it takes a lot longer than five years to demonstrate a truly successful investment process,” Smith said. “But we believe that we have the governance, team, infrastructure and culture in place to maximize the chances of outperforming in the future.”

“We have a responsibility to take decisive action on climate change”: University of Toronto president

sgupta — Wed, 30 Mar 2016 05:15:53 +0000

“We have a responsibility to take decisive action on climate change”: University of Toronto president sgupta Wed, 03/30/2016 - 01:15

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Gertler said U of T’s approach to the investment of its endowment and pension funds should be broadened to consider environmental, social and governance (ESG) factors when appraising the long-term performance of firms in which it holds direct investments.

Beyond Divestment also outlines a plan of decisive action that calls on every facet of the University – as a leader in research, teaching, and as an energy consumer – to join in the fight against climate change.

“We must take action to limit the rise in global temperatures if we are to avoid catastrophic impacts on the planet and humanity,” Gertler said. “Universities in particular have a crucial and unique role to play in helping to meet that challenge, and as a publicly supported academic institution, the University of Toronto has a responsibility to take decisive action.”

Beyond Divestment is a response to the President’s Advisory Committee on Divestment from Fossil Fuels. That committee, led by environmental engineering professor Bryan Karney, released its own recommendations last December. The committee recommended that the University adopt a strategy of targeted and principled divestment as well as a number of initiatives in the broader field of sustainability.

U of T’s $6.5 billion long-term investments, mostly in pension and endowment funds, are managed by the University of Toronto Asset Management Corporation (UTAM). Gertler said he will ask UTAM to:

Articulate principles that will enable consideration of ESG factors in undertaking direct long-term investments;
Initiate the process to become a signatory to CDP (formerly known as the Carbon Disclosure Project);
Evaluate signing onto the United Nations-supported Principles for Responsible Investment initiative;
Determine ways in which it can vote proactively and deliberately on shareholder resolutions aimed at reducing climate-related risk for firms in which they are directly invested;
Evaluate signing the Montreal Carbon Pledge, which commits investors to measuring and publicly disclosing the carbon footprint of their investment portfolios every year;
Report annually on its efforts to assess ESG factors in making its investment decisions.

Finally, given the growing recognition of the importance of climate-related risk, the University should give serious consideration to extending a similar ESG factor-based approach to its indirect investments.

Gertler thanked Karney and the committee for their work.

Karney welcomed Beyond Divestment. “It is a thoughtful, ambitious, transparent and practical report, which certainly creatively takes our essential principles and works them out for the University. Significantly, the report calls on every part of the University to join in the fight against climate change and creates principles and approaches that will intelligently guide us to be progressively more sustainable in the future,” he said.

While the divestment committee chaired by Karney had concluded a “a blanket divestment strategy would be unprincipled and inappropriate” it had recommended that U of T divest immediately from fossil fuels companies that show “blatant disregard” for the 1.5 degree C threshold that forms the basis of the Paris Agreement.

Gertler confirmed that the University does not hold direct investments in any of the companies cited by the committee but he also said that U of T should broaden its focus beyond fossil fuel companies, since such companies only account for a quarter of Canada’s greenhouse gas emissions, with the balance produced by other sectors such as transportation, housing and manufacturing.

“An approach that considers ESG factors – including climate-related risk – as they pertain to all sectors of our economy would seem to offer the best chance of success in meeting the challenge of climate change, while fulfilling our fiduciary duties” to the University’s pension and endowment fund beneficiaries, the president argued. Such an approach would allow U of T to direct its investments actively, in a targeted and dynamic way, appraising the long-term performance of individual firms in a manner that accounts for their ESG practices, including climate-related risk. It could also take into consideration social considerations, such as the rights and wellbeing of Indigenous communities.

Read the report of the President’s Advisory Committee on Divestment from Fossil Fuels

Read the president’s response, Beyond Divestment: Taking Decisive Action on Climate Change

Although the Karney committee had recommended that U of T develop its own method of evaluating fossil fuels companies to determine whether they have disregarded the 1.5-degree threshold, Gertler concluded it would be more effective for the University to work with third-party organizations that have already developed tools and metrics by which to assess the ESG practices of firms. In considering a broader advocacy and leadership role for the University, he argued that it would be most effective for U of T to join with other groups promoting broader disclosure of carbon use and the adoption of measures to promote a low-carbon economy.

In particular, U of T would have more clout if it joined global coalitions such as the United Kingdom-based CDP, which “aims to inform investor decision-making, facilitate shareholder engagement, and encourage corporations to manage their carbon emissions more effectively.” Several of Canada’s largest pension funds, such as the Canadian Pension Plan Investment Board, are already CDP signatories and U of T would show leadership by becoming one of the first Canadian universities to become involved with the group, he said.

John Switzer, who chairs the UTAM board of directors, agreed that U of T should become a CDP signatory. “UTAM believes it is fitting that Canada's leading research-intensive University intends to become a signatory and we will work with the University as it becomes one of the first Canadian universities to join this organization.” He said that UTAM agrees that consideration of ESG-based factors is an important component of prudent investment management. “Although UTAM already incorporates many of these factors in its management of the University’s pension and endowment assets, we will work closely with the University to fully implement the President’s vision.”

Tessa Hebb, the director of the Ottawa-based Carleton Centre for Community Innovation, also endorsed signing on to the CDP. “When the CDP first started in Canada only a handful of Canadian companies responded,” Hebb told U of T News. “Our big investors then began to ask them to respond and now these companies are taking such requests seriously.”

Hebb said U of T’s ESG approach would be more effective in the fight against climate change than divestment.

“Divestment is not an effective strategy in the case of fossil fuel, it is a blunt instrument that doesn’t indicate what we want companies to do in order to achieve the 1.5 threshold,” Hebb said. “Our very largest institutional investors in Canada use an ESG approach – CPPIB, Ontario Teachers' Pension Plan, Caisse de Depot – to name a few. The approach being recommended here has the potential to be far more meaningful than selling a stock that someone else will buy.”

Ben Caldecott, the director of the Sustainable Finance Programme at the University of Oxford’s Smith School and a member of Oxford’s Socially Responsible Investment Review Committee, also endorsed the strategy outlined by Gertler, describing it as forward-looking. The U of T strategy, he said, “takes account of the latest work on how environment-related risks, including climate change, could affect investment portfolios. It will allow the University of Toronto to actively engage with and adopt new investment practices and products as they become available.”

The Karney committee report also recommended that U of T increase its commitment to environmental research and teaching and to promoting sustainability in the University’s own operations. In response, Gertler pledged that U of T will strengthen its support for environmental research, innovation and teaching, and will continue its efforts to make University operations more sustainable.

Read about U of T’s leading environmental research and teaching

Read about U of T’s sustainability leadership

“The University’s most valuable and effective contributions to the global effort to avert and mitigate the consequences of climate change will flow from our fundamental role as an institution of research and education,” Gertler said. Among the initiatives he proposed are:

a tri-campus clean-tech challenge to encourage environment- and energy-related entrepreneurship;
$750,000 distributed over three years for climate-change related research and education initiatives;
prioritizing climate change-related themes in selected programs and curricula;
increasing the Utilities Reduction Revolving Fund by 50 per cent (from $5 million to $7.5 million) to encourage more extensive implementation of energy-saving retrofits;
formally adopting substantially more rigorous energy efficiency standards for capital projects;
pursuing opportunities to use our campuses as test beds for environmental and sustainability research and best practices;
investigating the potential for development of other renewable energy projects.

Gertler also said he will establish a new university-wide committee on the environment, climate change and sustainability with a mandate to coordinate and advance U of T’s environmental research, innovation, education and energy consumption initiatives.

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William Moriarty retiring from University of Toronto Asset Management Corporation

sgupta — Mon, 21 Mar 2016 09:15:00 +0000

William Moriarty retiring from University of Toronto Asset Management Corporation sgupta Mon, 03/21/2016 - 05:15

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After eight years at the helm, William W. Moriarty is retiring from the University of Toronto Asset Management Corporation.

“Timing is never an easy decision in the investment management business but I believe that the time is now right for me to step down from my job as President and CEO of UTAM,” Moriarty said March 21.

“I have thoroughly enjoyed this challenging and rewarding position and am proud of the results that we have achieved and the team that we have built.”

UTAM is a separately incorporated investment management entity governed by a board of directors which is elected by its members. UTAM manages the assets of the University’s Endowment Fund, its Pension Master Trust Fund and the University’s short-term investment pool. Total assets under UTAM management were $8.1 billion at the end of calendar 2015.

U of T President Meric Gertler thanked Moriarty (pictured at right) for his contributions to the University, especially during the time of turbulent market conditions and ever-changing economic conditions.

“Over the past five years the returns generated by Bill and his team have meaningfully exceeded the University of Toronto benchmark and targets,” Professor Gertler said. “They have demonstrated an ability to consistently add value and for this we are truly grateful.”

John Switzer, the chair of the UTAM Board, also thanked Moriarty and commended him for the leadership he has given to UTAM over the past 8 years.

“Bill leaves UTAM with the knowledge that his legacy is one of solid returns achieved through disciplined manager selection and risk management systems and processes, all applied by a team of skilled and capable people -a team Bill assembled.”

Before assuming the role of president and CEO of UTAM, Moriarty was a vice-chair of RBC Capital Markets. In addition, he has served on several community, industry and public boards. He holds a BA from the University of Toronto, an MA from the University of Chicago and he is a Chartered Financial Analyst.

His retirement is effective April 15, 2016. The UTAM Board and the University are working together to ensure continuity and a smooth transition to a successor.

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Asset Management Corporation, U of T (UTAM)

sgupta — Thu, 07 Jan 2016 20:47:21 +0000

Asset Management Corporation, U of T (UTAM) sgupta Thu, 01/07/2016 - 15:47

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University of Toronto Asset Management Corp. releases Responsible Investing Report

Daren Smith takes charge at University of Toronto Asset Management

“We have a responsibility to take decisive action on climate change”: University of Toronto president

William Moriarty retiring from University of Toronto Asset Management Corporation

Asset Management Corporation, U of T (UTAM)

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