May 08, 2009
TD Asset Management Announces Sustainable Investing Policy for all Operations
by Robert Kropp
Investment firm will incorporate ESG criteria across all investment mandates, and launches Global
Sustainability Fund that includes corporate sustainability leaders.
In 2008, TD Asset Management, an
investment management firm with over $134 billion in assets under management, became a signatory of
the Principles for Responsible Investment
(PRI), a program of the United Nations that provides a framework for the incorporation of
environmental, social and corporate governance (ESG) issues into investment analysis.
In 2009, TD Asset Management's parent
company, the Toronto-Dominion Bank, was named to the Global 100 Most Sustainable Corporations in the World. The
Global 100 companies are recognized as having displayed the ability to identify and effectively
manage material environmental, social and governance (ESG) factors in their approaches to corporate
risks and opportunities.
In keeping with its commitment to PRI, TD Asset Management
recently issued a Sustainable Investing Policy, which extends the firm's global sustainability
strategy to include all of its investment mandates, where to do so is consistent with its mandate
otherwise permitted. The policy covers investment decisions made regarding public equity
securities and corporate fixed-income securities, and extends to both its Canadian and US
operations. TD Asset Management operates in the US as TDAM USA.
According to the policy,
"Sustainable investing means helping our clients who have a shorter time horizon achieve their
financial objective in a way that does not compromise our ability to help clients who have a longer
time horizon achieve their financial objective too." The incorporation of ESG factors into
investment decision-making will be the same for both sets of clients.
In order to ensure
that its investment analysis includes ESG factors, TD Asset Management intends to develop a
sustainability matrix that utilizes both internal and external sources of ESG data. The firm's
decision-making process will include close attention to risk management, ensuring proper
disclosure, and active ownership. The firm's active ownership policy includes engagement, proxy
voting, and if necessary, litigation.
Divestment, according to TD Asset Management, "Is
not an option for mandates where we are required to hold all of the securities in an index. It is
an option of last resort for other mandates."
TD Asset Management has established internal
committees on active ownership and environmental matters to ensure that its Sustainable Investing
Policy is implemented in its decision-making.
In advance of its announcement of its
Sustainable Investing Policy, TD Asset Management launched the TDAM Global Sustainability Mutual
Fund for institutional investors. The Fund includes "Companies recognized for their leading
approach to building sustainable businesses, as well as companies that are developing interesting
solutions for today’s pressing environmental problems," according to Robin Lacey, Managing
The Fund selects companies from the Dow Jones Sustainability World Index (DJSI
World). The DJSI World Index tracks the performance of global sustainability leaders, and measures
general as well as industry-specific sustainability criteria. The index consists of approximately
the top 10% of companies in terms of sustainability, according to TD Asset Management.
portion of the Fund's portfolio will be comprised of emerging specialists in environmental
technology. According to TD Asset Management, the emerging environmental specialist portion of the
Fund will include companies whose innovative approaches to pressing environmental problems are
either their core business or a significant and growing part of their business. The major themes of
this part of the portfolio include clean water, resource efficiency and alternative energy.
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