UTAM is pleased to announce the publication of our 2022 Integrated Annual Report, titled Together. This report integrates our regular annual review of UTAM’s investment activities, governance, risk management and portfolio performance with analysis of how environmental, social and governance (ESG) factors inform our investment decision-making and stewardship activities.

Responsible investing has long been embedded in all of UTAM’s activities; merging the key content of our past annual reports and stand-alone responsible investing reports reflects that approach. “Integrated reporting represents an emerging best practice in investment communications, reinforcing UTAM’s commitment to ensuring our stakeholders have easy access to clear information,” explains UTAM’s President and Chief Investment Officer, Chuck O’Reilly.

The 2022 Integrated Annual Report is part of a suite of reports released together, including UTAM’s Financial Statements, Carbon Footprint Report and TCFD Report. All of these complementary publications, along with reports from past years, are available to view and download at utam.utoronto.ca/reports.

Just as we have integrated UTAM’s reporting, our website has also been refreshed and restructured, to bring together and highlight UTAM’s continued commitment to responsible investment and ESG considerations in conjunction with our disciplined, long-term approach to investing.

2022 Investment returns

“The picture this year’s report presents is one of short-term challenges,” O’Reilly writes, “set against the broader backdrop of UTAM’s long-term investment approach and proven track record.”

In 2022, the Endowment portfolio generated a return of -8.9% (net of all fees and expenses). This exceeded the benchmark Reference Portfolio return of -13.0% for the same period. More importantly, the returns UTAM has achieved over a longer time span remain strong.

On an absolute basis, actual net returns for the Endowment have been 8.2% (annualized) over the past 10 years. And on a relative basis, the Endowment’s annualized 10-year return has exceeded the University’s target return and the Reference Portfolio benchmark return by 1.8 and 1.9 percentage points, respectively.

In 2022, the Expendable Funds Investment Pool (EFIP), which represents short-term working capital of the University, returned -2.9% (net of all fees and expenses), outperforming its target return by 0.1 percentage points.

Over the past 10 years, EFIP has generated an annualized return of 1.4%, outperforming its target return by 0.3 percentage points per annum (net of all fees and expenses).

Responsible investing

We are pleased to report continuing progress towards reaching important climate goals. In conjunction with the 2021 commitment to net zero emissions in the Endowment portfolio by 2050, UTAM joined the UN-convened Net Zero Asset Owner Alliance. Consistent with the Alliance’s Target Setting Protocol, in 2022 UTAM established interim targets with respect to emissions, engagement and transition financing.

Our new carbon footprint target for the Endowment portfolio, announced in October 2022, is a 50% reduction by 2030, using 2019 baseline levels. This is an interim target on the way to net zero by 2050. In 2022, our carbon footprint was 37.8 tonnes of carbon dioxide equivalent per million dollars invested (tC02e/$M), representing a 41.3% reduction since 2019.

UTAM is committed to divesting from investments in fossil fuel companies in the Endowment portfolio. In 2022, we fully divested from direct investments in fossil fuel companies. While eliminating indirect exposure is a more challenging goal, we have made progress and are confident we will meet this target on time, by 2030.

While our divestment commitment focuses on the Endowment portfolio, we have eliminated all material indirect exposure to fossil fuel companies in EFIP. (EFIP did not have any direct exposure to fossil fuel companies, and this continues to be the case.)

We’ve also made progress on our third climate commitment, to allocate at least 10% of the Endowment portfolio to sustainable and low-carbon investments. At December 31, 2022, 4.1% of the Endowment was invested in such strategies – and we’re confident we will meet our commitment ahead of the 2025 target date.

Q&A with President Gertler

UTAM’s 2022 Integrated Annual Report also features a wide-ranging Q&A with U of T President Meric Gertler, in which he discusses some of the challenges of divestment and carbon reduction, and how UTAM’s contribution fits into the University’s vision. UTAM’s ability to support the University’s impact, he says, “is perhaps most evident through student scholarships, endowed faculty chairs and innovative learning and research programs.” UTAM also “fuels the University’s vital role in civil society, as a place where promising ideas are discussed, challenged and improved” and helps advance U of T’s ongoing commitment to sustainability.

Read and download the 2022 Integrated Annual Report, UTAM’s 2022 Financial Statements, Carbon Footprint Report and TCFD Report.