Fondation Lucie et André Chagnon

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The Foundation

Investment policy

Maintaining our capacity for support over the long term

Excerpt from the Investment Policy

Preamble

The Investment Policy (the "Policy") governs the management of the investments (the "Fund") of the Lucie and André Chagnon Foundation (the "Foundation"). Its provisions reflect the instructions of the Board of Directors (the "Board"). All persons involved in managing the Fund, including trustees and Foundation employees, are required to comply with these provisions. The Fund is managed in accordance with all applicable laws. In the event of conflict, the latter take precedence over the Policy.

Fund
objectives

Since the effects of social change can take generations to become apparent, the Foundation is intent on ensuring the continuity of its social action. To make certain that preventive, concerted action remains a central priority of Québec society, the Foundation's goal is to generate sufficient investment income to maintain its 2012 capacity for support until 2052, adjusted for inflation.

The Foundation has determined that its financial capital is one of the levers it has at its disposal to achieve its mission. To actively ensure that its external managers invest its capital in a responsible and sustainable fashion, the Foundation encourages and supports them in adopting best practices based on environmental, social and governance (ESG) criteria.

The Investment Department is particularly careful to avoid investing in investment products that contravene its mission or that could be negatively perceived by stakeholders in the sectors it supports.

The investment managers who manage the Foundation’s public-equity portfolios on a segregated basis are also specifically instructed not to invest in companies in the non-renewable energy sector or whose activities are largely connected with tobacco or cannabis.

The Foundation’s objective is to focus particularly on funds that invest in low-carbon assets or that are working on innovative solutions for generating clean energy.

The Foundation believes that shareholder engagement is an effective tool for encouraging companies to prioritize sustainable practices. To obtain as positive an effect as possible on the conditions needed to develop young people’s full potential (in connection with its mission), the Foundation works with a specialized firm to establish a strategy for shareholder engagement with some of the companies in its portfolio.

Management
structure

The Fund must be managed through healthy portfolio diversification, whether by applying different management strategies or using several investment managers. With the exception of a few activities, management of the Fund is entrusted to external managers.

Governance and responsibility

The Governance section of the Policy describes the responsibilities of the various Fund stakeholders, including the Board, the Investment Committee, the Investment Department, external managers and the custodian.

Although the Board delegates overall management of the Fund to the Investment Committee, it retains certain responsibilities, including:

  • Appointing the members of the Investment Committee and the Vice-President - Investments (ensuring that the Audit Committee Chair also sits on the Investment Committee)
  • Establishing Policy guidelines
  • Validating the strategic management of the Fund with respect to socially responsible investing and integrating ESG factors
  • Approving the Policy.

The main responsibilities of the Investment Committee are:

  • Ensuring the Fund's activities comply with the rules set out in the Policy

  • Evaluating the strategic orientations of the Fund with respect to responsible investment

  • Periodically reviewing the proxy voting policy

  • Periodically reviewing the Policy and recommending its adoption to the Board

  • Approving the choice of external managers based on recommendations from the Investment department.

The Investment Committee has delegated management of the Fund and implementation of the Policy to the Investment department, which is also responsible ensuring the sound implementation of the Policy. The Investment department provides support, transmits all relevant information, reports on its activities and makes recommendations to the Investment Committee.

Risk

The primary long-term risk is the potential inability to generate the income needed to achieve the Fund's objectives. An asset allocation policy has been adopted to manage this risk. The asset allocation policy is the element that should have greatest impact on Fund return and volatility.

Since it is currently not possible to create a risk-free portfolio that would achieve the fund's sustainability objective, a certain degree of additional risk is unavoidable. Although investments in equities, bonds, credit and other real assets should generate sufficiently high returns over the long term, they result in greater short-term variability.

Benchmark
portfolio

Asset class / Target allocation

Money market and Canadian bonds / 5%
Credit / 18%
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Fixed income / 23%

Developed market equities / 38%
Emerging market equities / 8%
Private equities / 12%
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Variable income / 58%

Real assets / 19%

Conflicts of interest

Members of the Board, the Investment Committee, Investment Department and any other person with discretionary power in managing the Fund must take the necessary measures to avoid being in a situation of real or apparent conflict of interest between their interests and those of the Fund.

Review

Once a year, the Policy is reviewed by the Investment Committee, which takes into account any major changes in the following areas:

  • Fund objectives
  • Its expenditure policy
  • The Foundation's risk tolerance
  • Long-term market perspectives

The Policy is reviewed in depth at least once every five years.

Every modification to the Policy is recommended by the Investment Committee to the Board for its approval.

(Excerpts from the Investment Policy adopted September 26, 2018, and revised March 23, 2022)










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