Hard clock has always been
a forum for public figures,
thought leaders and decision
makers to share their ideas.
Here we offer access to dynamic political,
business and public personalities.
We are dedicated to encouraging debate
on the issues that matter to the city,
this province and this country.
Canadian club is one of the most
important podium anywhere in the world
that a Canadian can speak to tell
Canadians what it is that they think,
develop those thoughts.
And so I want to thank you
for that very, very much.
Please join me in thanking
our esteemed panelists today.
Through our programs and events,
including our youth and young leaders
programs, our diversity partnerships,
our joint events,
and our media and social media opportunities,
we offer you access to dynamic political,
social and business figures from
abroad and right here at home.
The platform from which the eloquence
of Canada has flowed all of that time,
whether it be business, education,
politics, sports, arts and culture.
If someone wants to say something
to Canadians about this country and
about the future of this country,
this is the venue you choose.
Good afternoon,
Canadian club members and guests.
My name is Joseph Lowe, president of
Canadian club Toronto, and I am so,
so excited to be your host today,
especially for our season opening event.
So on this first week of school in Ontario,
I appreciate you joining us for an
exciting electric new season of the
Canadian club as we continue to celebrate
125 years of speaking to Canadians.
Today we have many guests joining
us digitally as well as, of course,
here in the room in person.
But no matter where you are,
please do engage with us.
You'll find hashtags on your tables and
you'll see those on your screens as well.
As children in Ontario return to the
classroom and a new academic year this week,
many of us might have been
transported back to a cherished
back to school memory of our own.
I know that I was.
That shiny new lunch box
that we were carrying.
The coolest new runners that
we've been saving all summer.
A fresh notebook with all those
multi colored tabs ordered just so.
Just saying hi to the teachers.
Who would become her favourites
and would in fact make all the
difference to us in our lives?
Like many of you,
my wife and I were helping our 11
and 12 year old pack for their first
day of school a couple days ago.
Let me tell you, their notebooks were
emblazoned with apples and androids.
Not so much my coloured stickers.
So my question to all of us is this.
When we think about pensions and retirement.
Has innovation in that space kept
pace with the innovation that
we'll find in my kids backpacks?
Seriously, has it.
Well, this afternoon we're going to find out.
Our speaker is, after all,
entrusted with expanding the retirement
horizons of Ontario teachers,
330,000 members.
As he shares his remarks,
let's pay particular attention to how
he intends to lean in on innovation,
international expansion and impact in
today's complex investing environment.
As a global investment powerhouse
with almost $250 billion in
assets under management.
Ontario teachers operates in more
than 50 countries across 5 continents,
managing over 100 private investments today.
Joe Taylor,
OTP's president and CEO,
will share his vision and strategy with us to
grow the pension fund to 300 billion by 2030.
Our conversation will be moderated
today by none other than Andrew
Willis from The Globe and Mail.
And so if you have any questions for Joe
through the course of the conversation,
please jot it down.
You'll find the Q&amp;A cards right on the table.
And if you're online,
you can hit the submit a question,
submit a question button at anytime.
We'll get your questions that way as well.
Now I'd like to acknowledge
our sponsors for today.
PwC represented by Ryan Couvrette.
Anne McCarthy Tetro represented
by Scott Bell.
We very much appreciate your support.
So now it's my pleasure to invite
Ryan to the podium to introduce our
speakers today. Ryan, over to you.
Thank you, Joe. It's amazing that
we're actually here in person.
It took me 5 seconds from the time the
chicken was delivered to dip my tie
in it and get it all over my shirt.
So if you're taking the photo,
this side is better right now.
Thank you. As Joe mentioned,
my name is Ryan Couvrette.
I'm a partner private equity and pensions
leader in the GTA at PwC Canada.
I'd like to extend a thank you to Joe Lowe,
President of the Canadian club.
My colleague at PwC who invited
us to participate in this event.
It is my absolute pleasure.
To introduce Joe Taylor,
the President and CEO of
Ontario Teachers Pension plan.
And our moderator, Andrew Willis.
Business columnist at The Globe and Mail.
Joe was appointed President and CEO.
Of teachers in 2020.
With the goal of reshaping
teachers brand to be bolder.
Bigger and more entrepreneurial.
Joe and his leadership team recently
announced a total fund net return of 1.2%
for the six month period ended June 30th,
2022.
And a one year total fund net return of 8.3%.
Delivering positive returns for
its members at a time of immense
uncertainty and volatility.
Andrew Willis,
as we've mentioned,
is a business columnist for The
Globe and Mails report on business.
Andrew has been in journalism for 30
years and is a former SVP Communications
at Brookfield Asset manage.
Today's session,
we'll explore the macro shifts that
are influencing the global investment
landscape and how teachers is navigating
the investment opportunities and
challenges during this difficult
social and economic and economic climate.
At PwC,
we recently launched the Trust Road map.
Which seeks to address the growing
trust deficit that individuals and
organizations are experiencing today
in light of these challenging times.
It is our purpose at PwC to build trust
in society and solve important problems.
Which we believe is crucial
during times like these.
Thank you.
And I'll now turn it over to Joe
to offer his opening remarks.
Joe will then sit down with
Andrew for what promises to be
a very engaging discussion.
Thank you.
Well, thank you, Ryan,
and it's my pleasure to be with you
all today and thanks to the Canadian
Club of Toronto for the invitation.
Before I started talking,
I had that classic speakers moment of.
Vanity over accuracy.
So I'm talking without glasses,
so I really stumbled badly.
It's because vanity took over my approach.
22 really helpful introductions
made already by by Joe and Ryan,
but I did think I'd just take a few minutes.
To share a few words about Ontario
teachers for those of you who are
a little less familiar with us.
As has already been said,
it's really our role to invest to
deliver retirement security for over
330,000 active and retired teachers.
Who are predominantly based
in the province of Ontario.
We also administer their pensions.
And make sure that we can provide
a high mix of service to deal with
their issues and their concerns.
And has already been said over
the last 30 years we have grown
to be a global investor.
With around $242 billion in net assets.
And our investment portfolio spans
everything from airports in Europe.
Apple orchards in the US and
autonomous vehicles in Asia.
And this and that so many of you will
know we also own Cadillac Fairview,
which is a well known local operator of
shopping malls and office buildings,
which is now looking to expand
beyond Canada into different
segments of real estate.
Now, unlike most pension plans,
we manage 80% of our assets in-house.
And we're very engaged with all of
the businesses that we work with.
We have a team of over 400
investment professionals who sit
on our company boards and work
towards moving them to be both more
profitable but also more sustainable.
And this active approach is critical
for our ability to pay pensions.
And the reason for that is that our
member and employer contributions account
for only 20% of our funding sources.
The remaining 80% we have to
generate through investment returns.
And adding to this challenge,
we have the demographics of our plan.
Our members, on average,
work for longer than they pay into the plan.
And this means that pension payments
far exceed contributions.
Now unlike many of our peers,
we navigate a multi billion dollar
funding gap each year and that's
going to widen in the coming years.
So given all of these realities,
one thing stands out.
We really can't afford to make
too many mistakes.
So this leads me to my remarks
and I'd like to highlight some
of the challenges that I've faced
personally over the last three years.
Some of my learnings to date and
then also a brief look into the
opportunities for the future.
Then as you heard already,
I'll be able to have a chat with
Andy over Q&amp;A and I do hope you
get the chance through that to
post some of your questions.
So when I started as CEO teachers,
I saw three early challenges.
To get a deeper understanding of the
business, to establish followership,
and to set a new North
star for the organization.
So on the first challenge,
when you think you've been with the
business for a reasonable length
of time a decade, in my case,
you work on the assumption that you
you know the business pretty well.
I actually discovered that in addition
to moving to a new job in a new country.
There were aspects of teachers
that I didn't know quite so well.
And the reason for this has
already been mentioned, I think,
which is teachers is a complex organization
with investments in over 50 countries
across a wide selection of assets.
The second challenge for me was actually
to build confidence in my leadership.
I knew that if I was going to
achieve what I wanted to as CEO,
I had to build followership,
starting with my senior leadership team,
many of whom have been my
peers until quite recently.
I had to persuade them that
I had both the right vision.
But frankly, I knew what I was doing.
The third challenge?
Was actually to find an
All Star for the business,
which has already been mentioned.
The one that we chose was to reach
$300 billion in net assets by 2030,
roughly 50% more than the $200 billion
that we had when I was appointed.
Now, while $300 billion sounds
like a nice round Number,
it actually is the number that we
need to achieve to make sure the
plan remains fully funded in 2030.
So back to January 2020,
we can all remember that far back these days.
I came into the job as an optimistic
CEO ready for the challenge.
What I didn't expect was how
much the environment would
change and just how quickly.
With the impact of the pandemic,
almost nothing turned
out as I first expected.
And in that, guys,
I thought I mentioned five things
that were to me the most notable.
First, the COVID pandemic created
unprecedented disruption for
the world and for our business.
The first major challenge for us
was to engage full remote working.
And to actually test all the
systems and working practices that
we'd set up for such a crisis.
In the face of uncertainty,
the team did a super job of reacting
quickly and actually moving to
full remote working and different
working practices that came with it.
And I think now the worst of the
pack tamic is hopefully over.
We will all need to decide what
is the best approach to both in
office work and remote working.
And I believe navigating these
conflicting needs will be one
of the defining issues of 2023.
As if you think about it,
we're trying to show enough
flexibility so that.
The sufficient in office experience
to give a good experience to
those who come into work,
but also we're showing sufficient
flexibility to high-quality younger
staff who actually currently see an
in Office 5 day working week as,
frankly, quite unattractive.
My second issue is geopolitics,
and I think that's become increasingly
strange around the world.
We now have in Europe a war which
I think nobody really saw coming.
The working relationship
between China and the US,
which was once the linchpin of
economic growth and stability,
is incredibly strained.
These developments are fuelling
volatility and uncertainty in global
markets and prompting many of the
investors we know to hunker down and
focus on investing in home markets.
And as you'd expect me to say,
my Third Point is soaring inflation.
High costs of both energy and
food are hurting families and
businesses around the world.
And central banks have moved in
an effort to deal with inflation
by hiking interest rates,
something you saw locally yesterday.
But that higher?
Rates is bringing other challenges
and the risk of stalling growth
or stagflation is a really
material one for our plan,
but also for many other businesses.
This is forcing us to rethink how
we look at our capital deployment.
My 4th point is actually now the
accepted urgency around how we
need to tackle climate change.
And this issue has put a lot of
pressure on investors to act now
to reduce their carbon footprint,
but also the footprint of all
of their portfolio companies.
The more progressive investors are
now starting to think about picking
up the challenges to proactively
invest in reducing emissions in more
high carbon intensive businesses.
And finally of my list of five.
I think we're also changing.
Differing environments and
thoughts about stakeholders and
expectations of those stakeholders.
Trust in government and large
institutions like teachers has waned.
Increasingly,
the onus is on us to demonstrate that we
have a purpose beyond making a profit.
So what have I learned
in the past three years?
Absolutely. My first point
would be to say that as a CEO,
you're only ever a transitory occupant
of a really privileged position.
Teachers had three excellent CEOs
before I was asked to do the job,
and there'll be further great ones
that will take the role after I go.
It's really my job to make sure
that I leave the organization in a
better shape than when I started.
It's a responsibility,
I think, to work with purpose,
not with apprehension.
Second, you could really only achieve
success with the right people.
Rising to the challenges we faced over the
past three years was certainly not easy.
It was achieved thanks to
an outstanding team.
Where we're able to make those
changes throughout our organization.
The team has shown incredible
adaptability in very trying times.
My Third Point would be to say
that we're very fortunate at
teachers to have a diversified
approach to portfolio construction.
And this has helped us to adapt and
what have been fiercely negative
investment markets to allow us to be
able to show stability and growth.
To make sure that we main
a fully funded plan.
And that being able to do this with speed
and agility is in no small measure.
A feature of history.
As a historian,
I like lots to talk about history,
and that was really down to how
teachers were set up over 30 years ago.
Our governance structure.
Which was designed very wisely by
our sponsors some 30 years ago,
is one of the key reasons we were able
to act really decisively starting in 2020.
Our sponsors chose to choose a
professional and independent board
which has the turn has delegated
some authority to the executive
team to run the plan.
And this approach to governance
has become internationally as
the Canadian model and it is,
in my opinion,
one of Canada's greatest exports.
Canadian plans differentiate themselves
by being able to attract the best talent.
Invest directly.
And also to switch rapidly between
public and private investments,
all of which help to boost our
returns over long term.
And I think it's true to say
that many investors around the
world are now trying to implement
their own version of this model,
with varying degrees of success.
Our model and powers to act quickly
and with conviction to deal with
challenging market conditions
and I just thought I'd share an
example of which which I think
highlights it pretty well.
Back in March 2020,
fixed income represented
46% of our asset mix.
When COVID impacted rates fell to near 0,
we reacted quickly to and wide
both the scale and the interest
rate sensitivity of that portfolio.
By December 2020,
our allocation to fixed income
had been reduced to 16%.
Now sometimes percentages don't
give you the full picture,
but essentially what we did was to
switch over $60 billion from fixed
income into other asset categories,
predominantly private companies.
Now, I don't want to leave you the
impression we've got everything figured out.
Navigating all of today's
challenging is is very much what
I would call work in progress.
We need to continue to invest,
but more importantly,
we need to continue to take risks.
In what will probably remain
to be very volatile markets.
The next 10 years look like they'll
be very different from the last 10,
so investment strategy needs to
adapt to be able to reflect this.
And with this backdrop.
As Joe mentioned earlier,
I thought I'd cover 3 areas quickly around
how we see opportunities for the future,
and that's international expansion.
Innovation and impact.
Now, despite the more complex global
markets are referred to earlier,
we'll continue to diversify our
portfolio and our team internationally.
While we invest in over 50 countries,
we're focusing on 9 or 10 strategic
markets where we believe we have both.
The competitive advantage where we
also have the necessary expertise.
And these include some longstanding markets,
places like here in Canada,
the US and the UK.
But also more recently,
we've been exploring new markets
such as India and Mexico,
where we've been quite active
over the last 12 months.
And we're deepening also
our focus on innovation.
And that includes investing
in high growth companies.
Where we think they're likely
to benefit from changes in
technology and consumer behaviour.
Three years ago we created
teachers venture growth,
a team that now works with over 20
companies in sectors ranging from
digital healthcare to plant based foods.
It's currently represents about
3% of our portfolio and we plan
to grow that to between 7:00
and 10% over the next 10 years.
We're also bringing innovation to
all of our portfolio through CORU,
which is our incubator.
Cora works with the companies in our
portfolio to identify opportunities
to create standalone businesses
or new products that can be spun
out and can succeed independently.
And I thought I'd give you an example.
So one of those companies that has
been set up is something called field.
Which designed software which
allows you to monitor the safety
of staff in the workplace.
And field came out of our partnership
with a UK gas utility, SGN.
And they have a number of staff working
in remote areas all around the UK.
And since the field app was developed.
SGM has seen a 20% reduction
in work injuries and also an
8% increase in profitability.
And there's also been quite a lot of
interest from third parties to license
the technology for their own workforce.
And having said all of that,
I do want to make the point that at
teachers we do want to have a positive,
lasting impact on the world.
Our active management model has
helped us to shape our approach,
for example, to climate change.
We believe the best way to
accelerate the energy transition is
in by engaging with high emitters
rather than passively divesting.
And that active ownership approach
and the ability to invest in both
public and private companies.
Has meant that we're well suited to help
with many larger businesses to decarbonise.
And finally,
for our investment strategy to succeed,
we will need to promote a more
distinct brand for teachers.
And this is particularly
true internationally,
where we're often seen as one
of the Canadian pension plans.
And let's be honest,
whilst that means we're in
good company from that,
with that characterization,
it does not help us really to be
able to work with the very best
investment partners or equally to
secure and retain the best talent.
So I hope my remarks and the Q&amp;A
coming up next with with Andy gives
you a good sense of who we are.
What we're trying to navigate.
I also hope that you see an
institution that is well positioned
to handle all of the challenges
we'll face around the world.
Capitalise on the growth ahead and
create a meaningful and lasting
impact on our chosen markets.
And finally I wanted to. Make a couple
of other comments if I may so firstly.
I noticed that our severance health
is suffering today and I know a lot
of the royal family are gathering,
so certainly my thoughts go to
somebody who I think has shown
massive leadership throughout my
life in terms of her actions and
her contributions around the world.
But let me bring it back to home
and really reinforce what was said a
minute ago and that is to say that.
Many of our Members,
along with two million children in Ontario,
are returning to school this week.
And I want to add on my best wishes
for the start of this school year
and I hope it's a massive success.
But from my role and my responsibilities,
I also want to make one final point.
Which is that I wanted to reaffirm
that will continue to work with our
Members and work on their behalf to
reduce the financial anxieties of
retirement when they choose to take it.
Thank you very much.
Well, thank you very much, Joe,
and thank you everybody for being here
as we start this season. I have to be.
I have to humble myself for a moment.
The fact that I am up here with a
CEO of teachers tells me that no one
had teachers has read what I wrote.
When the fund started out,
if those of you with decent memories
may recall that when teachers began,
it held a portfolio of Untradable
Ontario bonds and the first actions
that teachers was to use derivatives
to get out of the Ontario bond
market and into foreign markets.
And if you go to the Internet
and type my name,
you'll find an article that says
teachers risks all with derivatives.
I was an innovation skeptic.
I questioned that actually,
that that column got me a call.
Why don't you come on up to North York?
I ended up at a bar called the slug.
Has anybody else?
It was a bad British and Bob Bertram
taught me the derivatives were
not going to blow up teachers.
It was all going to be OK.
Here we are a few years later,
the goal is 300 billion in assets and I'm
fascinated on how you're going to get there.
And I thought I'd start by by talking about
teachers kind of role as an innovator.
As you said,
the Canadian.
Role is established,
but but teachers should take and
teachers leadership should take a great
deal of credit for blazing that trail.
You now face a demographic issue
that eventually other plans
will face your workforce.
The Teacher of Ontario.
They have the wonderful habit
of living quite long.
They they are tend to be over 30
years of of of benefits from the plan.
You've got a lot of teachers who are
over the age of 100 still taking
a pension and your workforce is.
Still relatively same.
So you now have far more members
collecting a pension or not more,
almost as many members collecting a
pension as you do actually in the workforce.
So how does teachers change the
way it thinks about investing and
about running the how do you as a
CEO change the way you lead the
fund as the fund matures?
And what lessons can that offer
the other Canadian plans and all
of us as we head to retirement?
Well, thanks, Andy.
I could spend a long time on this question.
I'll try and be succinct.
I think that the central pivot point
is actually your appetite for risk.
So I mentioned it earlier,
but with the demographics of our plan,
as I said a minute ago,
we can't take too many risks.
But we are in the risk business,
so every investment we make probably
has some element of risk to it,
by and large,
unless we're buying government
bonds by and large.
So I think the the challenge for us is
to try and say in our investment activities,
what is the right balance in our
portfolio to actually say we can
generate the returns needed to
keep the plan fully funded and
grow the assets towards that
$300 billion Northstar number.
But also we're taking the right level
of risk so that we're not gonna sit
back to your point below the plan up.
In in the main, what we've been
able to do more recently I think is
navigate some big shifts in products
like fixed income and private assets
and really go to assets we think
give us the characteristics we need.
So they picked a couple.
We're very long in inflation sensitive
assets because we we feel that inflation
is a big challenge for our plan.
All the pensions are inflation links.
Our liabilities go up with inflation.
So we have.
Around 40% of our portfolio in in
those types of assets and I think
that is has helped us back to the
point of navigating the first half of
this year reasonably well and still
early days in terms of navigating
I think challenging markets.
The second point, if I could say it,
is that we need everybody in
the organization.
To feel it's a safe culture to take a risk.
And I think where plans struggle
is that if people try to innovate
or try to try out something new
and get highly criticized for it,
then you won't do it again.
And you know,
teachers is a fabulously
successful organization.
My job under what I've defined as the
teachers 3.0 strategy is to evolve
it to the next stage of expansion,
which will involve some change
and that can be challenging.
There's an interesting political
environment right now around ESG.
Been around the investments
that that you're making,
the impact investments that you're
making to to help the environment.
I'm thinking specifically if you've
been following the US News of of certain
politicians Ron DeSantis in Florida,
some of the Texas politicians they're
sort of saying look funds in that
we sponsor with state money should
have it on almost an anti EG bias.
They they they feel that that ESG is a
woke political movement you're talking about.
Your the fund demonstrating lasting
value not only for performance but
as as a force of good in markets.
Can you just talk a little bit about
you know what you would say to what I
perceive as a bit of an ESG backlash
that that pension plans like teachers,
that fund managers like Larry Fink at
Black Rock they're facing you know,
how do you,
how do you marry up the SG obligations
of the fund along with your mandate to
to generate sustainable performance?
With a couple of comments.
I think within the CESG discussion
is the the question of trust.
So trust is very hard to gain
and really easy to lose.
And when we talk about climate impact?
We have to make sure that we're walking
the talk every time and what we invest
that it's consistent with what we've said,
which is a component,
core component I would argue,
of our branding.
The execution of ESG issues is not easy.
You know, we we've been known
for quite a long time of being,
I think pioneers of strong governance
around the companies we operate in,
whether it's public or private companies.
But I think the newer areas, the the S
and the E are really coming to the fore.
I think on climate,
the most interesting thing we're
grappling with at the moment is.
At one level, you know,
there's a range of views across
our membership about whether
we should be in fossil fuels.
Should we have them?
Should we divest from them?
That's perfectly good discussion to have.
Our view is actually those companies
are more likely to decarbonise
with our ownership than if we
hand it over to somebody else.
But it's not easy to do and we have
to make sure that we have the skills,
the money and the time to allow those
businesses to do the transition.
On the social side,
there's been a lot of debate
within our firm and I think there
is going on more broadly now.
Teaches approach has really
been for a long time.
We've always tried to do the right
thing as you might describe it.
But that's not good enough.
We have to be more granular than that.
And really what we're trying to do
now is actually saying what are the
things we can do to essentially level
up inequality in the communities
that we work with around the world.
That's not gonna be the 50
countries that I was mentioning,
but it probably will be in the 9
to 10 markets where we've chosen
to have a specialist involvement.
Let's talk a little bit about
the the high carbon investments,
because you were out with a publication
this week on the website that that
says it was actually a wonderful
discussion of of where you're going on,
on a lot of different fronts.
But the one that caught my eye
was a $5 billion commitment to
high carbon transition assets.
Do you want to just talk about
like what that might look like?
And and how you'll answer to Members
that that feel you shouldn't be
involved in fossil fuels at all.
So I I'd encourage everybody,
if you haven't had the opportunity
on our website,
there's our responsible investing
and climate report.
It sets out a lot of our thinking and
our objectives around how we're trying
to tackle these areas for the high
carbon assets that you just mentioned,
Andy.
We've set aside a notional number about
$5 billion and in the size of businesses
we're likely to be working with,
that's probably two or three investments.
And what we're going to do is make sure
that when we look at those investments,
we can deliver what we're hoping to deliver,
which is we're clear about
what needs to change.
We can help those businesses
to execute that transition.
And actually at the end of the day,
they are significantly
lower emitters of carbon.
And to give you an idea,
the average emissions from our
portfolio is about 30 tonnes of carbon.
Paper asset we have, dollar asset we have.
These higher emitting businesses
will be over 300 tonnes,
so 10 times the criteria that we have
generically through the portfolio.
So coming back to the point
of are we being brave?
I think we are being brave because we're
actually putting our marker down to
say we wanna take on these businesses
to proactively help them decarbonise.
We could leave them to somebody else,
and I'd say it's your problem.
But the evidence we've seen so far is
somebody else isn't doing anything.
So we are taking the view that it's more
likely to happen under our ownership
than it were left to somebody else.
And Joe,
would you have lower investment targets
on those on those assets or or would
the investment targets stay the same?
But but there's also the social
benefit that you that you talked about.
I honestly, I I would personally say this.
I mean. Our investment team,
who some of who are here today
probably give me a different view,
but I would say that there's a base level.
The return should be the same,
right?
And in some ways you should in
many ways be looking for a larger
investment return because they
come with reputational risk.
Good point.
As we said right from the start,
this is this is your event.
I'm thrilled to ask your questions and we do.
I've come up with a couple of
questions from the crowd.
Joe,
you said the plan leans on innovation.
Today Canadian institutional investors
are under invested in the life
sciences compared to US pension plans
growing in Canadian life science companies.
Is a basically good policy
for this this country.
How can we reduce the impediments to
investments in like Canadian life
science and create more value in Canada?
Great question, whoever asked it,
so thank you for it.
I would say quite honestly,
we're a bit underweight in
medical and life sciences too.
I think the reason for that
is really one of scale.
If you think about it.
We we generally like to invest in
probably above about $100 million
in any business and there are
lots of fantastic life science
companies which are below that.
Size and valuation threshold
for us easily to embrace them.
We try to look more flexibly through
our teachers venture growth team,
which I mentioned earlier and they have
done some things in this area absolutely.
I think the challenge in in
life sciences and to be honest,
I think in Canada more broadly is how
do we work with other local investors
to be essentially the second or
third provider of funding to really
try and scale a substantial business?
That's probably where we're at,
at our sweet spot.
You you mentioned the the
teachers venture growth and I
I really love the investment.
If you haven't seen the portfolio,
Joe's got an investment in Elon Musk's
SpaceX, which is I think really cool.
How do you think though about those
disruptive technologies and you you
mentioned reputational risk too.
I mean you know the case stuff their toe on,
on an investment in a crypto company.
You know, how do you think about
cutting edge companies where the
obviously the chances of success
mean really outsized returns,
but there is a much higher
chance that it goes to 0.
How how do you think about investments in?
In inventure.
Well, the first thing to say to
everybody in the room is I'm not
trying to get a ticket to Mars.
Though quite like to go,
but that wasn't that wasn't the argument.
These companies have risk.
So we again we have to be thoughtful
about are we, are we comfortable,
we can assess the level of risk and it's
it's appropriate for a plan like ours.
I also mentioned earlier,
we want to get paid for the risk
we take and we found today that the
assets we've accumulated in our
teacher venture growth team about 20.
As I mentioned earlier,
they've done really well.
They generate a 40% return last year for us,
which is fantastic.
And so what's the point here?
I think the point for us is to say.
When you are often dealing
with a venture business.
The key question I've always found,
and I did do some venture
investing back in my youth.
I suppose you could call it that.
Is that you need to understand
the competency and capability of
management to execute the plan.
Everybody tends to look at the technology
or the market and spend a lot of
time with consultants trying to get,
you know, is there a gap,
is there room for growth?
But actually to me the,
the,
the overriding link to success
around these type of venture business
or growth equity businesses.
Have you actually got a great
founder or entrepreneur who
can drive the business forward?
So Elon Musk is a case in point.
Unusual guy,
but you look at what he's done
across multiple businesses,
he has got something special about him.
Yeah, that makes sense.
I'm going to take another
question from the crowd.
You talked about some of the challenges
we're facing in light of recent market
downturns and soaring inflation.
Our pension funds still
sufficiently capitalized.
Do you see underfunded pension
plans being an issue going forward?
Well, I'll be careful
about talking for others.
Let me start with that.
That statement of our May,
what we do in our plan is actually
we try to think not only in terms
of what you heard me talk about,
which is generating return to grow
our asset base closer to that $300
billion North Star where we should
have enough assets and and liquidity
to be able to fund the pension.
Contributions we need to make.
What we also have to do,
because we administer the plan,
we also need to think about the liability
profile of what we're working with.
And sometimes those don't
always move in tandem.
So we are thinking more carefully now
given we are having a rising interest
rate and inflationary environment
about looking at our liabilities and
saying how do we try and insulate
that risk as well as much as we can.
And we we start from a premise of
we're trying to leave the existing
arrangement we have with our
stakeholders as it stands in terms of
contributions in and payments out,
but it is a challenging funding.
Dynamic and I think that's why the team
has to be on its metal every day to,
to perform.
And I'm interested in the way
you think about global markets.
You know, you've built offices elsewhere,
you've got offices in Asia,
you've got offices in in in Europe.
Do you expect and you've always had a
culture of being a direct investment
as opposed to hiring outside managers.
So when you look at the global market,
first of all,
do you expect to increase over time the
global exposure or the fund and secondly?
When you think about Australia
or India or or South America,
will teachers eventually have
teams in those in those markets?
How's how's global growth going to shape?
I think I laid my marker down fairly
early on to be chosen as CEO teachers that
I believe in international investing.
That has been my background personally
and I very much introduced some
thoughts strategically before I became
the CEO of teachers that actually
that to me was the right thing to
do essentially for our our growth.
Within that, you know,
you're really looking at the logic
of saying diversified investing is
better access to different countries
and markets is better because they
move with different growth rates,
different speeds,
and you learn more actually by
being an international investor
than being being a local 1.
We've got us an objective particularly
around our private assets to
have essentially a 5050 balance
between North America and and
and other international markets.
And that's a really big challenge
when you add in the weight of the
Cadillac Fairview local portfolio
and real estate and some other
North American based assets to see
that that sort of shift over time.
Where will we be in say 10 years time?
It's hard to say.
I think we're finding increasingly
back to my geopolitical.
Comments that actually,
if you're a flying investor from abroad,
it's becoming more challenged to
be taken seriously as a credible
asset owner and manager.
And politically,
there are a number of changes that
are happening in markets we like and
we've been operating in for a while
where clearly the new government is saying,
I'm not so sure that foreign investors are
what we want for certain types of assets.
And where that gets most complicated,
I would say,
is probably around things like
infrastructure,
particularly strategically important
infrastructure assets where we'd like
to be an owner and we have to persuade
ourselves with the right choice.
I'm gonna go with one final question and
then there is just a minute or two left.
Anybody who wants to get a card in that,
that would be great.
But look, as Canadians were always
fascinated with how others see us,
now Americans see us.
You're a relative newcomer
to this this country,
obviously been with teachers
for for for some time,
but what have been the your observations
on on doing business in Canada?
Any big surprises on coming to this
this market and this business community
or this is potentially the question,
Andy,
where?
The trapdoor opens between myselves
beneath my seat.
Well, let me start by saying
I I married a Canadian lady.
Well done, so I'm I'm a bit more
Canadian than you might think.
And you know, I've I talked to my children,
certainly my daughter would see ourselves
more Canadian than than from the UK,
I think it's fair to say.
And I think Canada has enormous strengths
and it's going to help it navigate
some of the turbulent waters we see
well over the next couple of years.
When you start with all the the
the asset base it has in oil
and gas as well as commodities,
very well placed if you contrast
Canada to what I see from where
I came from in the UK around
energy prices and energy risk.
You don't have the same,
I think pressure around electricity,
particularly prices and I think that's a
huge help again in terms of a stability
in in the local market and the world.
One might be a little
fearful about house prices.
I guess they they seem in certain locations,
certainly here, to have gone up
significantly in recent times.
I think that will be one to watch out for.
But I should probably conclude this this
question by saying I'm actually working
way later than I ever thought I would.
And I'm doing that because I'm working
with people I really want to be with
and they give me energy and enthusiasm
every day of the week to come into
the office and try and do better.
And I think that's probably the best thing
I can say about working with a Canadian
team and a Canadian environment in there's
so much that they bring to the table
that make you a better person every day.
Well, if there's no other questions,
I think that's a wonderful
note to finish it up.
I have had the pleasure of covering
the Canadian model as it evolved,
and I've also had the opportunity
to travel around the world.
Canadian pension plans with
teachers as a leader.
There are calling cards,
there are some of our best ambassadors.
They are world class capital pools
and I commend the Canadian club for
giving us an opportunity to to hear
from Joe and to sort of celebrate
what we're doing and then better
understand where things are going.
So it has been my honor to.
Be up on stage today and thank you,
Joe for for taking a few minutes with us.
Paula.
Yes. Very much. Thank you.
My name is Paula Allen.
I'm a director with the Canadian
Club of Toronto and it is my
absolute pleasure to thank our
first guest of of the season.
And what an incredible conversation.
Thank you.
Mr Taylor, on behalf of the Canadian club,
it's very inspiring to hear your vision
and what the work that you do in
international expansion, the innovation,
the impact and as the daughter of Avery
and Rupert and the daughter-in-law of
Alpha educators in Ontario who are
healthy and happy and very secure,
I thank you for that as well.
It makes it makes a difference.
It's, it's very clear.
Just to see why the Ontario Teachers
Pension Plan is an enviable one.
But I was also struck by, you know,
not only your vision as a CEO and your
passion as a CEO, but several times.
You might not have realized that,
but I was keeping track.
I keep score of things.
There's several times that you
mentioned your team, your talent,
the people that you work with.
That makes a difference because
that is what's going to bring that
sustainable value and also the importance
of the impact of the work you do,
not only the constituents but
the social good.
So many things to thank you for in
addition to your time here today
and wish you continued success in
your leadership in one of the most
successful pension plans in the world.
And Andrew, you're always welcome back.
Such a skilled moderator and a wonderful
partner to chat with at the table, and we
all forgive you for your egregious error.
But don't stop because you make make whole
people accountable and make them explain
their decisions over over drinks in a bar.
But again truly thank you for your your
skill in moderating the conversation
and very much thanks to our tireless
Canadian club staff for making sure
that there's always value to our members,
to our sponsors and our guests are well
taken care of and particular thanks today.
To PwC and McCarthy Tetro as sponsors
of today's event, it could not
happen without their their support.
So thank you all and I'm hoping to
see each and everyone of you plus all
of your friends back maybe a bigger
venue to some of our other events.
On September the 28th,
we'll have Aaron Cory,
CEO of Canada Infrastructure Bank,
joining us on September 29th.
Our lineup will feature a stellar
panner panel on the insights in Canada
and the world's economic outlook,
so I will definitely not miss
either of those.
And also thank you to our partners in AV,
Val Vandenberg Communications
and Live media.ca.
So I hope you had an inspiring a few minutes
and stay safe and see you again soon.