The University of Toronto Asset Management Corporation (UTAM) recently released the first series of its Principles for Responsible Investment (PRI) assessment reports. The United Nations-supported PRI is “the world’s leading proponent of responsible investment” and it “encourages investors to use responsible investment to enhance returns and better manage risks.” The assessment reports grade indicators in three modules: strategy and governance, its indirect equity, and its direct equity. Indirect equity is assessed based on UTAM’s external portfolio managers’ selection, appointment, and monitoring.
UTAM is a non-profit organization under Canada’s Income Tax Act that was incorporated in 2000 by Governing Council. UTAM is responsible for overseeing funds, which includes the university’s endowment and pension funds, and it hires financial managers to buy and sell individual bonds and stocks on its behalf. U of T is the only university in Ontario to own a distinct not-for-profit for investment management organization; other universities rely on their governance committees and staff members.
The assessment reports’ scorecards summarize the PRI assessment UTAM achieved under various indicators per module, on a range from 0–3 stars. On average, UTAM received three-star ratings, which were then aggregated to performance bands ranging from E to A+. UTAM received an A+ in both strategy and governance and indirect equity, and an A in direct equity. UTAM earned 29 out of a possible 30 stars from 10 indicators in strategy and governance; it earned 108 out of a possible 111 stars from 37 indicators in indirect equity; and 69 stars out of a possible 75 stars from 30 indicators in direct equity.
UTAM defines responsible investing as an approach that aims to incorporate environmental, social, and governance (ESG) factors into investment decisions to better manage risk and generate sustainable, long-term returns. The corporation committed to the PRI in December 2016. As a signatory, UTAM has committed to PRI’s six responsible investing principles. These investing principles are incorporating ESG issues into investment decisions, being active owners and incorporating ESG issues into ownership policies and practices, seeking appropriate disclosure on ESG issues, implementing the principles within the investment industry, working to enhance principle implementation effectiveness and reporting on activities and progress toward implementing the principles.
UTAM has undertaken numerous processes and programs to ensure responsible investing, including signing the Montréal Carbon Pledge in 2017. In 2016, UTAM also regained proxy voting from external investment managers and adopted an ESG-aligned voting policy. Proxy voting had allowed a third party to engage in voting on UTAM’s structure.
UTAM has also become a member of the Intentional Endowments Network (IEN). The IEN is a membership organization of like-minded institutions of higher education that collectively seek to advance consideration and implementation of their individual responsible investing initiatives.