Question and answers
The purpose of this document is to give some clarification about the ESG Championship RFP that has been released on February 9, 2022. Asset managers had until February 16, 2022 to send their questions. All of them have been carefully reviewed and then categorized within different themes.
About the ESG Championship Process
One of the objectives with this competition is to promote Canadian-based asset managers integrating a robust ESG methodology. We are seeking Canadian-domiciled entities, with Canadian-domiciled funds, that are registered with at least one of Canada’s provincial and territorial securities regulators or eventually seeking registration from these authorities. We are open to structures using subadvisors as long as the structure meets these criteria. If you are a UNPRI signatory, but not Canadian listed, and you are domiciled in Canada and registered with at least one of Canada’s securities regulators, you can qualify to submit a proposal.
The $75M investment mandate will not be aggregated into one master trust nor pooled into a single mandate. Each co-investor’s organization will invest separately following their own investment policy and governance process. The final amount invested could vary pending each co-investor’s decision, it could be less than $75M, but it could also be more as it is possible that others join the group of investors.
Here are the different steps that will lead to winners’ identification and assignment:
- Once proposals are received on March 9, 2022 – a first ESG screening will be done by Millani and a first financial screening will be done by Normandin Beaudry.
- The top proposals will then be reviewed by the Advisory Committee (i.e. one representative from each of the co-investors’ organization and representatives from our two consulting firms, Normandin Beaudry and Millani).
- The finalists, who will be invited to pitch at the public event, will be selected by the Advisory Committee.
- During the event, three high profile experts in the responsible investment community, will act as judges and give live feedback to the finalists. This feedback will help inform the Advisory Committee’s final decision.
- The Advisory Committee will then regroup to identify the winners.
- Once the winners are identified, Normandin Beaudry will lead the financial due diligence and Millani the ESG due diligence.
- Co-investors will then proceed to their own legal review and governance process to assign the investment mandates. The amount of capital and categories selected are individual decisions of each co-investor’s organization.
Our intent is to identify one winner per category, with the exception of category #1 (equities and/or fixed income), where there is a possibility of nominating two. Co-investors could also potentially award special mentions. As we are building a robust communication plan for the championship including media outreach, social medias and CRM, our hope is to help promote firms competing by giving public visibility opportunities targeting asset owners as well as the wider investment Canadian community. However, as clearly mentioned in the RFP, “The Co-investors reserve the right to reject any and all proposals, with or without cause, and accept proposals that are considered most favorable. Nothing in this RFP, the qualification to submit, nor the proposal submission shall obligate the Co-investors to complete negotiations with respondents even if awarded as the champion of a category.”
It is only possible to bid for one strategy by category. For category #1 (equities and/or fixed income), a bid including both equity and fixed income would be considered as a single strategy. It is possible to bid for more than one category, except for the combination of categories #1 (equities and/or fixed income) and #3 (multi-assets). For further clarity, the combination of categories #1 (equities and/or fixed income) and #2 (alternatives) or the combination of categories #2 (alternatives) and #3 (multi-asset) are possible. It is your responsibility to decide which categories and which of your strategies you want to bid for. Proposals with more than one strategy per category will be automatically discarded as well as proposals combining categories #1 (equities and/or fixed income) and #3 (multi-asset). The idea is to have only the best proposals and ensure different managers will have a meaningful chance of winning in each category.
Co-investors have not identified a target number of asset managers for each category. However, as indicated above, our intent is to identify one winner per category, with the exception of category #1 (equities and/or fixed income), where there is a possibility of nominating two.
Your proposal will be reviewed by the ESG Championship Advisory Committee whose members are: one representative for each of the co-investors’ organization and representative from our two consulting firms, Normandin Beaudry and Millani. These representatives are independent from asset management firms, have no potential conflict of interest and abide to strict ethical standards from their respective organizations. Proposals will not be shared as public information. During the public event, finalists will be invited to do a 10-15 minutes pitch to present the outlines of their strategy in front of an audience of other like-minded asset owners (e.g. university or hospital foundations, community foundations, responsible investment networks, etc.). Similar to the Dragon’s Den concept, a judge panel will give their feedback on the presentation to help inform the co-investors’ decisions. The three judges will be high-profile and credible experts from the investment community, and we will ensure they have no potential conflict of interest with asset management firms.
We do not have any preference between English and French. Proposals can be submitted in either language.
This is an open format RFP (not by invitation). Please note that a Word version of the document will be made accessible for asset managers. There is no page limit, but we ask asset managers to be as concise as possible and to focus on answering to the questions identified in the RFP.
Proposals will be evaluated on the elements asked in the appendices A and B of the RFP. No further details about evaluation criteria and weighting will be shared.
For capacity reasons, it might be difficult or even impossible to commit on giving individual feedback for each proposal received. However, a general report will be published at the end of the process about the ESG Championship’s key learnings including an overview of the strengths and gaps of the proposals received.
Please note not all Co-investors have an IPS. The Trottier Foundation doesn’t have a formal IPS, but all information on its investment strategy can be found on the “Investment” section of its website.
The Championship aims to assess ESG integration within the investment process and active ownership activities. While there is no preference towards impact-focused strategies, the evaluation process will include an assessment of what investment managers are doing to achieve ESG objectives through the investment process, positive screening or exclusions, and stewardship activities, including engagement and proxy voting. There will also be a consideration of how investment managers track and report information to demonstrate that they have been working towards achieving its ESG objectives.
Asset managers and funds will not be evaluated according to focus on specific ESG themes or sustainability outcomes versus others, as each investor has different investment strategies and objectives. Top performers (both from an ESG integration and a financial perspective) will be awarded based on the asset class and the ability to accommodate, as needed, the co-investors’ specific requirements, including exclusions and sustainability outcomes.
There are no specific objectives or priorities on climate or diversity, but the organization’s performance on these topics and how investment managers showcase that they meet certain ESG-related targets will be taken into consideration as part of the evaluation. Investment managers will be awarded funds based on how their strategies and investment objectives align with the ones of co-investors.
A Firm-level policy on responsible investing is a qualifying criterion. However, please also provide the fund-specific investment policy if there are additional ESG considerations outlined at a fund-level for the strategy you put forward.
Adherence to the IFC OPIM is not a qualifying criterion. The Championship focuses on ESG integration within the investment process and active ownership activities. The evaluation process will include an assessment of how investment managers track and report information to demonstrate that they have been working towards achieving its ESG objectives through its stewardship activities, including engagement and proxy voting.
The intention for the RFP is not that only exclusionary mandates should apply but positive and negative screening mechanisms will be evaluated, if applicable. As part of your application, please include a description of how closely you align with the IFC exclusion list and describe your approach and process toward exclusions, if applicable. Firm-level exclusions will be evaluated. However, please also provide a list of additional exclusions considered at a fund-level for the strategies you put forward, if applicable.
The evaluation includes an assessment of reporting activities to investors, which do not necessarily have to be publicly available. Active ownership activities, including information related to engagements, showcasing activities and outcomes will be considered as part of the evaluation. Please include in the attachments any examples of reporting to clients on responsible investment activities.
About Financial Considerations
Co-investing has not been determined at this stage. This will be an individual decision for each co-investor’s organization. Please keep in mind that the purpose of this competition is to make ESG investment solutions accessible for institutional investors and to foster the development of Canadian-based companies, financial and investment ecosystems.
We will accept all proposals, without any constraint. Although the track-record and minimal AUM are not our first consideration, you will have to demonstrate how your strategy can be successful in achieving its objectives. The important is to have a clear understanding of your investment and ESG integration strategies.
Although we are looking for financial returns, we have not identified a precise target. We are hoping to find a balance between ESG integration and financial considerations.
The $75M investment mandate will not be aggregated into one master trust nor pooled into a single mandate. Each co-investor’s organization will invest separately following their own investment policy and governance process. It is too early at this stage to determine the amount that will be allocated in each category by each Co-investor. However, please indicate if there is a minimum ticket applicable to your strategy as it will be considered by the Co-investors later in the process. Please keep in mind that the purpose of this competition is to make ESG investment solutions accessible for institutional investors.
Although there are no restrictions neither a minimum amount of capital to be invested in Canada, please keep in mind that one of this competition’s objectives is to promote Canadian-based asset managers integrating a robust ESG methodology and foster the development of Canadian-based companies, financial and investment ecosystems.
Category #1 (equity and/or fixed income): Traditional investments in the publicly traded markets, i.e. Canadian equity, global equity, Canadian bonds, etc.
Category #2 (alternatives): all asset class that doesn’t fall into category #1, i.e. real estate, infrastructure, hedge funds, private debt, private equity, etc.
Category #3 (multi-assets): a strategy that combines multiple asset classes
Note: Although private dept is presented under category #1 in section 3.5.2 of the RFP, it falls under category #2. We are sorry for the confusion.
Co-investors do not have any preference at this stage of the process for any investment vehicle (individual investment or pooled fund), but please indicate if there is a minimum ticket for one or the other.
All co-investors are long-term, purpose-driven investors and are open to any strategy including ones with liquidity constraints (presuming there will be an associated liquidity premium). Please note that all proposals selected will be subject to further review by the co-investors before any assignment. Also, keep in mind the purpose of this competition is to make ESG investment solutions accessible for institutional investors.
Although we cannot commit on any specific timing at this point, please keep in mind that the purpose of this competition is to make ESG investment solutions accessible for institutional investors.
Although there is no preference for fundamental or systematic strategies, please keep in mind that one of this competition’s objectives is to promote Canadian-based asset managers integrating a robust ESG methodology and foster the development of Canadian-based companies, financial and investment ecosystems.
If the tables presented in the RFP do not cover all the information you would like to share, please do not hesitate to modify them, add tables or share any additional portfolio characteristics you think are relevant.
One of this competition’s objectives is to promote Canadian-based asset managers integrating a robust ESG methodology and foster the development of Canadian-based companies, financial and investment ecosystems. Keeping this mind, USD currency funds are accepted, as long as they can easily be handled in a Canadian-domiciled structure. Co-investors want to ensure it won’t bring additional complexity with their custodian accounts.