ICPM Discussion Forum: June 2018 Toronto

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1 ICPM Discussion Forum: June 2018 Toronto June 10-12, 2018 Location: Moderator: Rob Bauer Sunday, June 10, Welcome Cocktails Location: Waterfall Garden, Sheraton Centre Hotel, 123 Queen Street West, Toronto, Canada 18: Welcome and Opening Remarks Rob Bauer, Executive Director, ICPM Keynote Address: Power of Pension Management to Drive Longterm Inclusive Value Creation Speaker: Lynn Forester de Rothschild, E.L. Rothschild Session Objective: Present principles and tools to turbocharge the influence of pension asset owners. Session Format: Presentation of minutes followed by a plenary Q&A onward Networking Dinner Monday, June 11, :30-8:30 Networking Breakfast Registration desk open, breakfast will be available. 8:30-8:45 Opening Remarks and Introduction of the Day Sudhir Rajkumar, Vice Chair, ICPM Rob Bauer, Executive Director, ICPM 1

2 Topic: Active Ownership 8:45-10:30 Active Ownership, Climate Change and ESG: Lessons for Institutional Investors Speaker: Laura Starks, Professor, Department of Finance, Red McCombs School of Business, University of Texas Session Objective: Professor Starks will discuss institutional investor engagement on environmental, social and governance (ESG) issues. The session will provide insights on the effectiveness of active ownership and governance. Professor Starks will also share the results of her ongoing work on the channels through which ESG engagement (in particular on the topics of climate change) can create value for investors. Session Format: Presentation by Professor Starks of minutes followed by a table assignment and a plenary Q&A. Moderator: Mike Simutin, Associate Director Research, ICPM 10:30-11:00 Networking Break Topic: Improving the Proxy Voting Process 11:00-12:15 Creating an Ethical Shareholder Proxy Voting Platform Speakers: Tamara Belinfanti, Professor of Law, New York Law School Session Objective: Professor Belinfanti is working on a project funded by the Ford Foundation to create an "ethical shareholder" proxy voting platform. Ethical Shareholder Initiative (ESI) is a non-profit organization that is creating a dedicated proxy service for collective ethical/esg shareholder voting in annual corporate board elections. Its dedicated service will allow foundations, non-profit organizations and other long-term minded and ethical shareholders to speak with a collective voice, greatly enhancing the influence of the (ethical) shareholding community and the profile of member organizations. As a membership organization, ESI will generate proxy voting guidelines by members, while allowing members the flexibility to opt out of particular issues. Their team has deep knowledge of the corporate governance system and the complexities of shareholder voting. They believe that amplifying the collective voice of ethical shareholders in annual board elections is an untapped and immensely powerful technique for influencing corporate behavior. ESI offers an impactful approach that synergistically supports and extends the reach of existing shareholder activism efforts in the ESG market place. Session Format: Presentation of 30 minutes followed by 45 minutes of plenary Q&A. We will ask Research Partners to share their experiences and investigate how ICPM can connect the implicit and explicit networks that exist in this area. 2

3 12:15-13:15 Networking Lunch 13:15-13:30 Walk to Ontario Municipal Employees Retirement System (OMERS), 100 Adelaide Street West, 21 st floor for afternoon offsite Proceed to reception on the 21st floor. Directions will be provided from there. Topic: Long Term Investing 13:30-14:45 Organizations for the Long Haul Speakers: Hans Rademaker, Chief Fiduciary Officer, APG, Jim Hwang, Managing Director Portfolio Research, CPPIB, Kevin Uebelein, Chief Executive Officer, AIMCo and Satish Rai, Chief Investment Officer, OMERS Session Objective: Key objective of this session will be to discuss the organizational challenges of investing for the long term: does the narrative still hold? Examples of questions that will be discussed: How is the organization set up to fulfil on long-term investing aspirations? What features allow your organization to weather inevitable periods of bad performance? Has the organization s structure changed over time and what are the key drivers for the change? How do operating environments of funds differ in terms of purpose, compensation, resourcing, regulation, and culture? How do these differences in context impact the long-term investment strategy, including the choice of managing public versus private investments? In particular, how do these differences in context impact how organization s go about fulfilling on their long-term investment strategy (including attraction and retention of talent)? Session Format: Sarah Owen (moderator) will open with a brief discussion of the key points from the paper on organizational design (Brandeis Institute) written by David Iverson, New Zealand Superannuation Fund and Geoff Warren, Australian National University, followed by a fire-side chat discussion with the panel members and a plenary Q&A. Moderator: Sarah Owen, General Counsel & GM Corporate Strategy, New Zealand Superannuation Fund 14:45-15:45 The Costs of Short-Termism to Organizations Speakers: Tima Bansal, Professor of General Management, Sustainability & Strategy, Ivey Business School, Western University, London, Canada 3

4 Session Objective: Short-termism contributes to under-investments in research and development, employees, and infrastructure, which jeopardize corporations ability to withstand shocks and survive in the long term. The implications to long-term investors, such as pension funds, are profound. Organizations that appear to be performing well in the short term may be doing so at the cost of the long term. In this session, Tima will offer insights from her research. This session will offer evidence of the costs of short-termism to organizations, and ultimately investors, and describe the types of actions that firms committed to the long term take, which will help investors to identify corporations committed to long-term, steady returns. Session Format: Presentation of minutes followed by a plenary Q&A. 15:45-16:15 Networking Break Topic: Climate Change 16:15-17:30 Update of the ICPM Climate Change Working Group Speakers: Jaap van Dam, Chair of the Climate Change Working Group, Principal Director Investment Strategy, PGGM and Barbara Zvan, Chief Risk & Strategy Officer, Ontario Teachers Pension Plan Board Session Objective: Led by Jaap van Dam, the Climate Change Working Group will present a 10-step practical guide for asset owners to integrate climate change in the investment process. Jaap will also share the research questions that emerged out of the Working Group s meetings which can serve as input for future ICPM research projects. Barb Zvan will discuss a leadership initiative related to climate change reporting that will leverage the expertise of ICPM s climate change working group. Session Format: 60-minute presentation by Jaap van Dam will include audience group discussions and report backs, followed by a 15-minute discussion led by Barbara Zvan 17:30-17:45 Further Thoughts and Suggestions for Future Action 17:45 Cocktails/Dinner Location: Royal Canadian Yacht Club, Island Ballroom, Toronto Islands Dress Code: In general terms, guests are asked to wear smart looking attire including collared shirts and trousers. Not permitted are blue denim, athletic wear, beach wear or shorts/skirts shorter than 3 inches from the knee. Click here for more details. Shuttles will be arranged for transit from OMERS. Pick up will be on York street, west of OMERS. Shuttle drop off is at 150 Cherry Street, where a ferry will transfer the group to the historic RCYC Clubhouse for dinner. Return shuttles will drop at the Sheraton Centre at 9:45pm. 4

5 Tuesday June 12, :30-8:30 Networking Breakfast Registration desk open, breakfast will be available. 8:30-8:45 Opening Remarks, Update from Research Committee and Introduction of the Day Rob Bauer, Executive Director, ICPM Onno Steenbeek, Co-Chair Research Committee, ICPM Topic: ICPM Research 8:45-10:30 ICPM Research Award Presentations Speakers: Elroy Dimson, Chairman, Centre for Endowment Asset Management, Cambridge Judge Business School and Joshua Rauh, Professor of Finance, Stanford University Session Objective: Showcasing ICPM research award winners. Winners were announced in April Session Format: Two presentations by prize winners of minutes followed by a plenary Q&A. 10:30-11:00 Networking Break Topic: Sustainable Development Goals 11:00-12:30 Integrating Sustainable Development Goals (SDGs) in Long Term Investing Speakers: Fiona Reynolds, Managing Director, UNPRI, Jeroen de Munnik, Chief Institutional Business, PGGM, and Herman Bril, Director of The Investment Management Division, United Nations Joint Staff Pension Fund and Carl Liederman, Project Lead of the S-Force project of the Ford Foundation Session Objective: Pension funds increasingly use the SDGs as a reference point in their investment policy and reporting. How do they invest in line with the SDGs? Does this make sense at all? How and whether to report on impact of the 5

6 investment portfolio? Many more questions to be asked here. Reynolds, de Munnik and Bril will comment on these and other questions from the perspective of asset owners. Liederman will contribute by introducing the Ford Foundation s S-FORCE project which aims to harness the power of analytic technologies to provide institutional investors with high-quality big data sets and sophisticated risk models to integrate ESG information (including impact on SDGs) into investment decision making at both the portfolio and the asset level. Session Format: A short introduction by each speaker followed by a fireside chat and a plenary Q&A moderated by Rob Bauer. We invite ICPM Research Partners to share their views on integrating and reporting on SDGs in the investment process of asset owners :30 Networking Lunch Topic: Managing Pension Fund Leverage :00 How and Why Do Pension Funds Use Leverage? Speakers: Barbara Zvan, Chief Risk & Strategy Officer, Ontario Teachers Pension Plan Board, and Mike Simutin, Associate Director of Research, ICPM and Associate Professor of Finance, Rotman School of Management Session Objective: Pension funds use leverage for many purposes. In this session, we would like to get practical examples and academic feedback on the use of leverage by pension funds: Why do pensions funds use leverage? How to manage risks related to leverage in all its dimensions? Which implications does the use of leverage have for setting benchmarks and reference portfolios of asset owners? Barbara Zvan will discuss the topic from the perspective of an asset owner. She will especially highlight the risk oversight function in the context of managing the leverage activities of an asset owner. Mike Simutin will share his thoughts from an academic perspective. Session Format: Two presentations of 20 minutes followed by a plenary Q&A Networking Break News on October 2018 ICPM Discussion Forum Fernando Larrain, AAFP Chile 6

7 Topic: Share Your Research :15 Share Your Research! Speakers: Will Sandbrook, Strategy and NEST Insight Director, NEST, Alex LaPlante, Managing Director, Research, Global Risk Institute, and Eric Bouyé, Lead Investment Officer in the Quantitative Solutions & Analytics Department, World Bank and Svetlana Klimenko, Lead Financial Management Specialist, World Bank Session Objective: In this session, three Research Partners and Rotman will share their research with the ICPM community. Will Sandbrook: Automatic Enrolment has brought many lower-income workers into retirement saving for the first time. But for many, this is the only regular savings they do, and they remain vulnerable to short-term financial shocks and lack emergency liquidity. NEST is working with the Behavioural Insights Group at Harvard to conduct a field trial of an emergency savings add-on account, linked to the pension, contributed to through payroll deductions. He will present the basis for the idea, initial findings from qualitative work with potential enrollees and describe the parameters of the trial which will go live later in Alex LaPlante will introduce the National Pension Hub for Pension Knowledge and Research along with two of its inaugural projects. The first focuses on the valuation of private market investments in pension fund portfolios. This project plans to assess the risk of private market investments and to analyze how these investments can be used to improve funds risk-return trade-offs. The second investigates the impact of population aging on equity returns and pension plan finances in Canada. This project will show the importance of considering the impact of changing population structures in setting the asset allocation for defined benefit pension plans, and of tailoring communications to plan members of defined contribution arrangements. Eric Bouyé and Svetlana Klimenko introduce a new initiative focused on promoting long-term sustainable investing that the World Bank is currently working on in collaboration with the G20. In that context they will provide also a brief summary of results from a survey conducted with long-term institutional investors, asset managers and insurance companies on this topic Session Format: Three presentations of minutes followed by a plenary Q&A. Research Partners are invited share their organizations efforts on the presented topics. 17:15-17:30 Further Thoughts and Suggestions for Future Action 17:30 Farewell Networking Reception Location: Waterfall Garden, Sheraton Centre Hotel, 123 Queen Street West, Toronto, Canada Program subject to change 7

ICPM Discussion Forum: June 2018 Toronto

ICPM Discussion Forum: June 2018 Toronto June 10-12, 2018 Location: Moderator: Rob Bauer Sunday, June 10, 2018 18.00-18.50 Welcome Cocktails Location: Waterfall Garden, Sheraton Centre Hotel, 123 Queen