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LANGUAGE REGARDING ENVIRONMENTAL, SOCIAL AND GOVERNANCE

The MSPP's assets are all invested by external investment managers ("IMs"). They invest assets for the MSPP in accordance with investment mandates that describe the investments they may make for the Plan, and the securities they may purchase on the MSPP's account.

In their selection of securities for the MSPP's account, the Trustees expect their IMs to consider all factors that may materially affect the return and risk of the security. Such factors include financial factors, as disclosed in companies' financial statements and as analyzed by the IM, product and technology factors, firm leadership and management factors and environmental, social and governance ('ESG') factors. While the significance of ESG factors may vary from security to security, the Board does expect its IMs to properly consider relevant ESG factors in each case. IMs may engage investee corporations in regard to the adoption of ESG principles, and may encourage them to consider subscribing to UN and other internationally recognized ESG principled documents.

In this regard, the Board of Trustees considers itself a long term rather than a short term investor. Given the size, risk tolerance and demographics of the MSPP, the Board has not invested MSPP assets with investment funds specializing in short term trading, but has rather selected Canadian and non-Canadian equity, fixed income and real estate managers. The Board's preference is to avoid the high transaction costs associated with short term trading in these securities. Rather, the Board prefers to focus on longer term time horizons for capital appreciation and income generation. In this context, longer term factors, including ESG factors, assume greater importance than they do for short term traders and investors.

The Board has received IM reports for some time in relation to ESG factors, generally in relation to decisions concerning proxy voting. The Board will continue to expect, and to rely upon, IM ESG reports in regard to its current and prospective holdings.

In terms of corporate governance, the Board agrees with generally expressed concerns about excessive levels of executive compensation, as well as executive compensation packages that provide disproportionate remuneration to senior executives when financial performance is strong but do not reduce compensation commensurately when financial performance is weak.


In terms of social factors, the Board has followed widespread debates over minimum wage reforms and reforms to laws governing precarious employment, and believes that North American business models premised on wages that are below emerging minimum wage levels or that are based on precarious employment practices are now at some risk of disruption owing to the possibility of changes in those laws, depending on jurisdiction.

In terms of environmental factors, the Board recognizes that measures to limit the increase in the average global temperature levels to 2 degrees centigrade (from pre-industrial levels) are urgent and are highly likely to be adopted by governments around the world. In this regard, the Board is cognizant of the work of Intergovernmental Panel on Climate Change and of the G7 Statement on Climate Change of June 2015, which recognized the significance of climate change and the importance of measures to de-carbonize the world's economy. The Board is also cognizant of measures taken by significant international investors to divest themselves of certain fossil fuel assets, or to limit further acquisitions of such assets, and observes that the number of institutions adopting such positions is increasing. In these circumstances, the Board expects its IMs to consider the impact of climate change, and the related issues of water scarcity, extraction practices and green initiatives on securities held in the MSPP portfolio.

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