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←Executive Committee · 2019-09-18 · 2019.EX8.3

The filed record

City of Toronto Investment Report for 2018 and the First Quarter of 2019 and Policy Update

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The decision

2019-10-02 · Toronto City Council · referred

As filed

City Council on October 2 and 3, 2019, referred Item EX8.3 to the Chief Financial Officer and Treasurer, and requested the Chief Financial Officer and Treasurer, in consultation with the Investment Board and the Toronto Atmospheric Fund, to report to the January 29 and 30, 2020 meeting of City Council on additional improvements to the investment policy including consideration of the following: a. Investment Beliefs -

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including a statement that consideration of environmental, social and governance factors, is expected to improve the risk/return profile of portfolios in the coming decades and, conversely, that not considering these risk factors may impair performance; Toronto will seek to reduce its exposure to these risks by limiting or fully restricting investments that will be potentially negatively affected by climate policy and regulations, in particular fossil fuel companies, and to increase its exposure to investments that contribute to keeping climate change under 1.5 degrees as per the Paris accord; b. Environmental, Social and Governance Integration - including a requirement that environmental, social and Governance factors will be central to the selection assets, vehicles and managers; when a prospective investment manager is assessed, or an existing Investment Manager is reviewed, for any/all asset classes and mandates, the Investment Board will consider the Investment Manager's environmental, social and governance policies, practices and outcomes, not just their policies; and c. Monitoring and Reporting - requiring regular reporting to City Council, as part of TransformTO on: 1. how climate risk is governed and addressed; and 2. how opportunities to invest in climate solutions are being addressed.

The vote

Refer Item · Carried, 19-2

For (19)Ana Bailão, Brad Bradford, Cynthia Lai, Frances Nunziata, Gord Perks, James Pasternak, Jaye Robinson, Jennifer McKelvie, Jim Karygiannis, John Filion, Josh Matlow, Kristyn Wong-Tam, Michael Ford, Michael Thompson, Mike Layton, Paul Ainslie, Paula Fletcher, Shelley Carroll, Stephen Holyday
Against (2)Denzil Minnan-Wong, Gary Crawford
Absent (5)Anthony Perruzza, Joe Cressy, John Tory, Mark Grimes, Mike Colle
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On the agenda

As the city filed it

The purpose of this report is to provide the following information: 1. Performance of the Funds - for the year of 2018 and for the first quarter of 2019 2. General Market Update and Benchmark Performance 3. Recommendations for Investment Policy Changes The City's investment portfolio that holds the City's working capital and the amounts designated for the City's reserves and reserve funds earned $156.5 million in 2018 and $39.4 million in the first quarter of 2019 (2.7 percent and 3.0 percent annualized respectively).

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The City's sinking funds portfolio that holds funds for future debt repayments earned $54.1 million in 2018 and $12.3 million in the first quarter of 2019 (3.2 percent and 3.1 percent annualized respectively). Since January 1, 2018, the City's investments have been managed by the Toronto Investment Board under a new Council adopted Investment Policy which is based on the prudent investor standard. This report also responds to Council direction to review and report on sections of the Investment Policy with regard to Environmental, Social, and Governance factors and makes recommendations to enhance these sections.

Staff recommended

The Chief Financial Officer and Treasurer recommends that: 1. City Council approve the following amendments to the City Council-approved Investment Policy and adopt the amended Policy as set out in Attachment 1: a. the Investment Beliefs (Section 2.2) be enhanced to include recognition of Environmental, Social and Governance factors as material to risk/return outcomes; b. the Environmental, Social, and Governance Factors (Section 6.6) be strengthened by having investment managers consider the United Nations' 17 sustainable development goals which includes climate change; and c.

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Section 3.2 (b) (v) Investments in Pooled Funds, Mutual Funds, and other similar products be added to allow the Chief Financial Officer and Treasurer, at the Chief Financial Officer and Treasurer's discretion, to accept minor variations of the City's Investment Policy when compared to the standard terms in the policies of these funds. 2. City Council request the Toronto Investment Board and the Chief Financial Officer and Treasurer to develop a process to verify that external investment firms are in compliance with the terms of the Investment Policy governing Environmental, Social and Governance factors and that compliance with such process be reported to City Council semi-annually with the other information on investment returns and compliance with the policy.

Considered

  • 2019-09-18 · Executive Committee · adopted

    Decision as filed

    The Executive Committee recommends that: 1. City Council approve the following amendments to the City Council-approved Investment Policy and adopt the amended Policy as set out in Attachment 1 to the report (September 4, 2019) from the Chief Financial Officer and Treasurer: a. the Investment Beliefs (Section 2.2) be enhanced to include recognition of Environmental, Social and Governance factors as material to risk/return outcomes; b.

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    the Environmental, Social, and Governance Factors (Section 6.6) be strengthened by having investment managers consider the United Nations' 17 sustainable development goals which includes climate change; and c. Section 3.2 (b) (v) Investments in Pooled Funds, Mutual Funds, and other similar products be added to allow the Chief Financial Officer and Treasurer, at the Chief Financial Officer and Treasurer's discretion, to accept minor variations of the City's Investment Policy when compared to the standard terms in the policies of these funds. 2. City Council request the Toronto Investment Board and the Chief Financial Officer and Treasurer to develop a process to verify that external investment firms are in compliance with the terms of the Investment Policy governing Environmental, Social and Governance factors and that compliance with such process be reported to City Council semi-annually with the other information on investment returns and compliance with the policy.

  • 2019-10-02 · Toronto City Council · referred

On the record

The item as the City filed it

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