Investment managers are monitored quarterly by the Investment Pool Committee in accordance with the policies and procedures approved annually by the Board of Governors. With McMaster’s adoption of TCFD, a historical record of past investment managers is captured in each Annual Financial Report.

The Investment Pool uses both pooled and segregated Investment Manager products. The pooled products often provide access to large portfolio products that would not be accessible directly using a segregated account. While pooled products provides greater access to investment opportunities, the risk associated with pooled products is that McMaster does not have discretionary direction or control over the companies selected by the Investment Manager. Instead the Investment Manager of a pooled product is hired for alignment to the McMaster’s policy and will assess each company added or removed from its product using its ESG-integrated approach reviewed and accepted by the Investment Pool Committee.

Segregated or discretionary funds can be directed by the Investment Pool Committee, however if asset classes are removed from a product the performance benchmark used to evaluate the investment manager may need to be changed at the same time.

The current investment managers and products used are listed below with links to the company’s website for further information.

The weighted average carbon intensity measures the Investment Pool’s exposure to potential carbon-intensive companies, expressed in tons greenhouse gas converted to carbon dioxide emissions using the greenhouse gas protocol per million sales, written as tCO2e/$Sales. This metric is recommended by TCFD after global consultations involving over 1,100 organizations.

The weighted average carbon intensity (“WACI”) for the Investment Pool as at April 30, 2022 is 148.9tCO2e/$MSales based on 78.7% data availability, as measured by MSCI. The Investment Pool’s WACI is 15.4% lower than the WACI measure for the All-Country World Index (ACWI) ex-Fossil Fuel Benchmark.

The weighted average carbon intensity for the public equity and public infrastructure is 152.9/tCO2e/$Sales based on 94.8% data availability. The Investment Pool’s public equity and public infrastructure WACI is 13.2% lower than the WACI measure for the ACWI ex-Fossil Fuel Benchmark.

Where data is not available, Scope 1 and 2 carbon emissions are estimated using MSCI’s proprietary carbon estimation model.

The Investment Pool includes holdings that offer clean technology solutions. MSCI measures the weight of these solutions based on sales across the following categories: alternative energy, energy efficiency, green building, pollution prevention, and sustainable water. The Investment Pool weight of companies offering clean technology solutions is 24%, and across pubic equity and public infrastructure holdings the weight is 31%.

The Investment Pool initiated a decarbonization strategy in 2018 aligned with the United Nations Principles for Responsible Investing. The Investment Pool tracks the weight of publicly traded holdings owning fossil fuel reserves and specific high impact fossil fuels such as coal, oil sands, shale oil and shale gas that are more exposed to stranded asset risk. Coal is by far the most intensive fuel emitting twice the emissions per kilowatt hour than natural gas. Stranded asset risk has focused on thermal coal, which is mainly used in power generation. While both thermal and metallurgical coal have a high carbon content, metallurgical, or coking coal is used in steel making and has few substitutes, so many investment managers believe thermal coal is more vulnerable to stranding whereas there will still be a future need for metallurgical coal since substitutes such as natural resources are insufficient in supply and durability.