Western University
PA-9: Sustainable Investment

The investments in sustainable industries are those made by investment managers of the Operating & Endowment Fund. Sustainable industries can be defined as those that promote energy efficiency, resource conservation to meet the needs of future generations, safe and skill-enhancing working conditions, low waste production processes, and the use of safe and environmentally compatible materials. The Socially responsible mutual fund with positive screens (or the equivalent) is managed by Aberdeen Asset Management and is available as an investment option that members of the defined contribution pension plan can choose to invest their pension account.

4.1 Introduction The Investment Committee recognizes that environmental, social and governance (“ESG”) factors may have an impact on corporate performance over the long term, although the impact can vary by industry. The Investment Committee has a fiduciary obligation to invest funds for the benefit of the University in the interests of endowment funds/donors. The University leaves the decision to exclude a stock to the investment managers hired to manage a portion of the portfolio, as they possess the necessary expertise and information to make the decision that is in the best interest of the Fund. 4.2 Engaging Companies and External Investment Firms Given the relatively small size of the Fund and the fact that most investments are held in pooled vehicles, it is not practical for the University to directly engage individual companies on ESG related issues, either through dialogue or by filing shareholder resolutions. Instead, the University will engage the external investment managers it hires to manage the Fund. The engagement will involve increasing the level of scrutiny on ESG factors. The University will maintain a registry, to be updated on an annual basis, with ESG related information on its external investment managers. The information may include, but is not limited to: • the incorporation of ESG factors into the firm’s investment process; • the firm’s target allocation for climate change related investments; • the presence of a committee on sustainable investment; • the portfolio’s exposure to fossil fuels, sustainable industries and high impact sectors; and • details about the firm’s proxy voting policy. 4.3 Advocacy and Collaboration The University endeavours to remain up to date on sustainability investing issues and the impact of ESG factors on its Fund. In order to maintain its knowledge of the field of sustainability investing and to contribute to its development, the University will liaise with other institutional investors and industry associations to discuss key issues.

3.13 Proxy Voting The exercise of voting rights acquired through any investment is delegated to the investment managers with the instruction to vote in favour of any proposal which, in their opinion, will accrue and enhance the investment value of the relevant security, and against any proposals which will unduly increase the risk level or reduce the investment value of the relevant security to the detriment of the Fund. However, when it would be in the University’s best interest to do so, the University reserves the right to exercise its voting rights. If the investment management firm, or any employee or associate of the investment management firm, has any direct or indirect pecuniary interest in any matter on which the Fund has a right to vote, it must be brought to the attention of the Committee which has discretion to: i) instruct the investment manager to exercise the voting right in line with the principles described above, on the grounds that the relevant pecuniary interest is not material; or, ii) instruct the investment manager how to cast the Fund's vote, having considered the principles described above; or, iii) authorize the Fund's custodian/trustee to exercise the voting right in line with the principles described above.

The University will maintain a registry, to be updated on an annual basis, with ESG related information on its external investment managers. The information may include, but is not limited to: • the incorporation of ESG factors into the firm’s investment process; • the firm’s target allocation for climate change related investments; • the presence of a committee on sustainable investment; • the portfolio’s exposure to fossil fuels, sustainable industries and high impact sectors; and • details about the firm’s proxy voting policy.

The University is a member of the Pension Investment Association of Canada (PIAC). PIAC’s membership includes Canadian pension plans (both defined benefits and defined contributions) as well as endowments and foundations. Through attendance at PIAC’s semi-annual conferences and through submissions to various regulatory bodies, the University has been involved in discussions about best practices on how to integrate ESG factors into the investment process and on how to engage investment managers and companies on the subject. Western University is also part of CAUBO. Founded in 1937, CAUBO is a non-profit professional organization representing the interests of administrative and financial officers in Canadian universities and affiliated colleges. CAUBO offers a wide array of programs and services aimed at the many players in university administration.