RPIA SUSTAINABILITY REPORT 2022
OVERVIEW FIRM
25
INVESTMENT MANAGEMENT
How We Leverage ESG
1
Integration
We consider ESG factors when making investment decisions for all the strategies we manage as we believe it is important to asses ESG risks alongside traditional financial metrics and fundamental analysis. It is critical to link these analytical frameworks together to fully understand management’s commitments and goals as standalone targets and in the context of the respective company’s sector and/or region. The integration process does not imply or include investment restrictions – we can and do invest in issuers who may be working on or are in the early stages of improving or adapting their ESG profiles for various reasons. However, we approach this in a similar way to assessing fundamental risks, where we would likely require an additional yield or spread enhancement to compensate for the higher risk profile of that company or sector. We believe that considering ESG factors in our relative value discussions and decisions is a requirement in today’s fixed income markets.
2
Targeted Portfolios
In 2022, we created a targeted portfolio at the request of our university client, University of Toronto. Designed to align with the university’s investment and ESG objectives, we developed a bespoke fossil fuel exclusion strategy, RP Broad Corporate Bond (Fossil Fuel Exclusion), in collaboration with the University of Toronto Asset Management Corporation (UTAM) and FTSE Russell. The strategy aims to outperform the FTSE Canada All Corporate Ex Fossil Fuels Enhanced Bond Index by 100 bps annually. It combines RPIA’s investment process with a transparent, rules-based approach to remove fossil fuel exposure from the portfolio. Targeted portfolios are available to investors who require a more bespoke investment solution that goes one step further than our existing product offerings. To learn more about how we developed this targeted portfolio, go to page 32 of this report .
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