Oct 15, 2021

Siddall Vows to Rebuild Trust

AIMCo CEO Evan Siddall made his first appearance before the Alberta Heritage Savings Trust Fund Committee, offering some insight into his vision for the organization.

The committee meets quarterly to review the most recent investment performance report for the $18.3 billion fund. AIMCo representatives attend to respond to questions from the committee which is made up of members of Alberta's Legislative Assembly.

The first quarter performance report presented to the committee showed a 5.5% rate of return, above the fund's 3.6% benchmark.

A video of the meeting is available here.

Evan Siddall's opening comments to the committee follow:

"We are pleased to appear before this Committee, as part of our accountability to Albertans.

I gather there were some questions about our last appearance. I do hope Committee members understand that while AIMCo will always appear when asked, from time to time other pressures may require me to rely on my colleagues. I will nevertheless commit to my personal presence at least twice per year.

I am Evan Siddall and I was appointed Chief Executive Officer of the Alberta Investment Management Corporation in July. I’m here with Dale McMaster, our Chief Investment Officer, and Amit Prakash, our Chief Investment Strategy Officer.

Having moved to Edmonton. I am delighted to live along the North Saskatchewan River valley, the heart of the city and a place of travel, community, making and trading from ancient times beginning with the Nehiyaw, Dénésuliné, Nakota Sioux, Anishinabae, Niitsitapi and Metis Indigenous peoples.

Every morning I watch people on their way into work, walking or biking on the path in front of my house, and I imagine they are the teachers, nurses, police officers, first responders, and other public servants whose savings AIMCo is entrusted to invest.

It reminds me that AIMCo exists to help our clients secure a better financial future for Albertans. We are guided by a sense of purpose that starts with our clients – including the Heritage Fund, which we are here to discuss today.

With so many of these people working harder than ever to keep Albertans safe during the COVID-19 pandemic, we want to reassure them that their retirement funds are safe.

I want to begin by reporting to the committee that AIMCo’s performance in 2021 to date has been strong across the board. In the first half of the calendar year, AIMCo earned a total fund return of 7.3 per cent.

As Dale will explain further, the Heritage Fund has also performed well in 2021, earning a return of 5.5% during the first quarter of the fiscal year, and beating its comparative benchmark by 1.9%.

I recognize that these results cannot be looked at in isolation. As this committee knows well, in 2020, AIMCo faced significant trading losses due to a volatility trading strategy.

In the wake of these losses, our Board and management did the right thing. They undertook a comprehensive review of our risk management practices, identified the root causes of the company’s failures and recommended improvements.

Thirty-one recommendations emerged from that review, and we are on track to implement all of them by year end.

I am proud to be leading AIMCo at this inflection point. We know we need to rebuild trust, and we are doing so by devoting our work to the clients we serve.

This renewed client-centric focus is evidenced by AIMCo’s recently signed Investment Management Agreement with the Alberta Teachers’ Retirement Fund. The Agreement follows collaborative discussions to define how we can work together to ensure that AIMCo best serves the interests of ATRF and its most important constituents – Alberta’s retired and active teachers.

We look forward to signing similar agreements with other clients soon.

Being conscious of the people we serve makes us more mission-driven, as well.

We are working on purposeful investment strategies around “E” — the environment, climate change and the transition to a low carbon economy, “S” — activities that benefit society, and “G” — governance at both AIMCo and the companies in which we invest.

Very simply, mission-driven organizations outperform: research shows that they are more productive and innovative. For large long-term investors like AIMCo, this is the opportunity that “ESG” investing represents.

We desire a better future for Albertans. That means investing both to insulate people’s savings from climate change and to profit from the combined benefits of a long-term investing horizon and our home field advantage in energy know-how.

I want to be clear in stating that we believe that divesting hydrocarbons would miss an urgent opportunity to work with the companies who have the most to lose -- as well as the ingenuity to win -as the world transitions to a low-carbon economy.

Divestiture may indeed be counterproductive to climate goals: serving only to increase the cost of capital for the companies most in need of transitional funding. Helping carbon-intensive businesses adapt may be the most important contribution to make, not something to be avoided.

AIMCo will invest so that our clients profit from the economic transition ahead, first of all. Building Alberta’s financial future also means protecting our province’s economic prospects.

We are in the business of making investment decisions. Good decision making starts with governance. At AIMCo, that started under a fortified Board led by our Chair, Mark Wiseman.

But this also includes evaluating how companies we invest in make decisions and how they are governed. We want to see diversity on boards and executive teams, to be sure they are exposing their choices to the challenge of a broad range of views.

My hope is that through these changes, our clients will renew their trust in us to secure long-term financial prosperity for the people of Alberta that they represent.

Thank you again for the opportunity to speak with you today. We look forward to your questions."