Investment Policy Update

This report also responds to Council direction to review and report on sections of the Investment Policy with regard to Environmental, Social, and Governance (ESG) factors and makes recommendations to enhance these sections. The Chief Financial Officer and Treasurer (CFO&T) along with other City staff have consulted with several stakeholders and subject matter experts with regard to ESG and climate change. Additional consultations were made with the Toronto Investment Board (TIB) and The Atmospheric Fund (TAF) following the direction by Council in October 2019. This report makes a recommendation to add a section to allow for the CFO&T to accept minor variations of the City's Investment Policy when compared to the standard terms in the policies of pooled funds (and other types of funds). These funds are allowed by the current legislation and would be reviewed and selected by TIB. The report makes a recommendation to the Real Assets section of the Investment Policy to allow for the Real Estate sub-component to change its geographic focus to a North American/Global basis. This change would provide greater liquidity and transparency. In addition, widening the geographical scope provides more options and flexibility to improve the risk and return profile.

Long Term Fund and Sinking Fund Long Term Constraints (Section 3.2 (b)) to add a subsection named "Investments in Pooled Funds, Mutual Funds, and other similar products", to allow the Chief Financial Officer and Treasurer, at their discretion, to accept minor variations of the City's Investment Policy when compared to the standard terms in the policies of these funds; d. Asset Mix Guidelines (Section 2.4 (b)) and Real Asset Portfolio Constraints (Section 3.2 (b)(iii)) such that references in the Real Assets sub-category to "Canadian Core" and "Global Core" be replaced with "North American/Global Core"; and e. References to the Chief Financial Officer (CFO) updated to reflect the current title of Chief Financial Officer and Treasurer (CFO&T). 2. City Council request the Toronto Investment Board and the Chief Financial Officer and Treasurer to develop a process to monitor and report on external investment firms hired by the City are compliant with the terms of the Investment Policy governing ESG and that the information and data regarding climate change risk from these reviews be reported to City Council semi-annually.