Item - 2017.EX29.6

The Executive Committee recommends that:

1.  City Council approve the Statement of Investment Policies and Procedures attached as Attachment 1 to the report (November 15, 2017) from the Acting Chief Financial Officer.

2.  City Council request the Interim Chief Financial Officer, in consultation with the Investment Board, to report to the Executive Committee in the second quarter of 2018 on the selected Investment Manager's Environmental, Social and Governance (ESG) polices, and other developments related to Environmental, Social and Governance (ESG) factors.

This report recommends a revised Investment Policy for Council's consideration.  The proposed Policy responds to amendments made by the Province through Ontario Regulation 360/15 ("the Regulation"), under the City of Toronto Act, 2006 that allow the City to invest its general and sinking funds, according to the "Prudent Investor" standard. This standard commonly guides pension and endowment fund investing in Ontario and other jurisdictions. Under this standard, the City will have considerably greater flexibility in the types of investments that it can make but the City must, according to the new regulation, "exercise the care, skill, diligence and judgement that a prudent investor would exercise" in making these investments.

This authority will come into effect on January 1, 2018.  Prior to that date, the City is required to complete the following two steps:

1.  establish an Investment Board (which was the subject of a report that was adopted by Council at its meeting held on March 28 and 29, 2017) to which Council delegates its investment powers; and

2.  approve an Investment Policy that will direct the Board's activities by establishing the City's requirements with respect to:

a.  Return on Investment;

b.  Risk Tolerance; and

c.  Liquidity.

At its May 16, 2017 meeting, Executive Committee directed staff to consult with the Investment Board regarding the proposed Investment Policy prepared by staff.

Staff have considered changes recommended by the Board and incorporated them into a revised Policy that is attached to this report.

The Board is required by regulation to develop an Investment Plan and strategy to be used to implement the Investment Policy.  Their Plan will define the methods and means that the Board will use to manage the City's investment portfolios within the parameters of the Policy.