The UBC endowment Responsible Investment Policy commits UBC to incorporate environmental, social, and governance (ESG) factors in its investment choices.
This means that UBC will ensure its fund managers incorporate these factors in the management of their portfolios. The policy also outlines options to engage with companies or industries that are of concern to the UBC community, while maintaining the university’s obligation to its donors.
Please note that UBC’s public equities holdings, overseen through UBC Investment Management Trust Inc. (UBC IMANT), are publicly available on the UBC IMANT website. This information is updated every six months.
Considering Environmental, Social & Governance Performance
UBC commits to incorporate ESG factors in its investments in the following ways:
1. Manager Selection
When selecting and evaluating investment managers, UBC commits to integrate ESG factors. All public equity managers must incorporate ESG considerations in their investment decision making.
2. Investor Engagement
UBC does not invest in companies directly, but rather through pooled funds, managed by external fund managers. Wherever possible, UBC will encourage its fund managers to use their proxy votes to encourage transparency on ESG policies, procedures, and other activities.
3. Direct Engagement
While direct engagement with individual companies is not a practical option (as UBC does not invest directly in specific companies), where there is significant exposure to a company, industry, or nation that is facing a considerable ESG issue, UBC will encourage their investment managers to engage directly through available channels.
4. Collective Engagement
On a selective basis, UBC will engage issuers, regulators, and industry groups (through third parties) where it is believed that a collective approach to engagement will be more effective than direct engagement.
In developing the Responsible Investment Policy, UBC’s Responsible Investment Committee had many discussions with representatives of peer institutions and with leaders in the responsible investment field. It was widely agreed by leaders in responsible investing that engaging with companies and making decisions based on ESG principles is an effective way of positively influencing long-term change and options such as divestment were not favoured for a number of reasons.
One of the important features of the policy is that it defines a clear framework for the university to decide when divestment will be considered. A new Responsible Investment Committee will examine such requests for action, using the following criteria:
- Proven social, political, economic, or environmental rationale.
- Reasonable evidence that divestment is an effective way to achieve the desired outcome.
- Absence of alternative policies.
- Consistency with the university’s legal obligations as trustee.
- Consistency with its other university relationships.
Responsible Investment Background
In 2010, the UBC ‘s Responsible Investment Committee for the Endowment began discussions with external experts and other universities, as well as a review of best practices, to determine an effective approach to responsible investment for UBC’s endowment.
An initial strategy was adopted in June 2013. The strategy identified ongoing investment in campus environmental and social projects, committed UBC to join the Canadian Coalition for Good Governance, and appointed a task group to recommend further policy changes to the Board.
After discussion with industry experts and peer institutions, the task group made a number of recommendations outlining options for incorporating ESG factors in the investment process. The UBC Board of Governors approved the policy on April 14, 2014.
The Sustainable Future Pool (SFP) was established in 2017 as first step to understand the financial impact enhanced ESG measures (“Environmental, Social, Governance” – the reduction or exclusion of companies that own fossil fuels and a focus on reduced carbon emissions) would have on the Endowment’s performance. SFP is an endowment pool (group) within the UBC Endowment that is managed separately from the Main Endowment Pool.
The SFP was established to test, validate and research, investment strategies that specifically target lower carbon emissions and minimal (or no) fossil fuel holdings without materially negatively impacting the endowment’s financial performance.
With the continued progress in implementing a comprehensive responsible investing framework, and in particular the commitment of UBC towards divesting the Endowment, UBC is moving to incorporate the learnings of the SFP into the entire Endowment. With this transition, the Sustainable Future Pool will become part of the Main Endowment Pool and cease to exist.
UBC directed UBC Investment Management Trust Inc. (UBC IMANT) to develop and adopt an investment approach that builds on existing responsible investing practices, further addresses climate risk, and helps to drive positive social change.
In April, 2020, UBC’s Board of Governors passed a motion that committed UBC to become a global leader in its comprehensive response to the climate emergency. In so doing, the university reaffirmed its approach to divestment, aiming to reduce climate change-related financial risk in its endowment through the continued application of ESG (environmental, social and governance) investment practices, signing on to the UN Principles of Responsible Investing, and the reduction of carbon emissions and stranded fossil fuel assets.
During the second half of 2020, UBC IMANT received approval from UBC’s Board of Governors for its comprehensive Responsible Investing Strategic Plan.
The Responsible Investing Strategy includes strengthening UBC’s advocacy and leadership in responsible investing practices. In July 2020, UBC became a UN Principles of Responsible Investing signatory and a founding signatory of Investing to Address Climate Change: A Charter for Canadian Universities. In September 2020, UBC established an ambitious goal of reducing carbon emissions connected to the university’s Endowment portfolio by 45% by 2030.
As part of the effort to meet this goal, UBC IMANT committed to reducing the university’s carbon footprint by increasing investment in a low carbon, fossil-fuel-free mandate by $34 million by December 2020. UBC and UBC IMANT are pleased to report that his milestone has been achieved.
In addition, an important commitment of the Responsible Investing Strategy was to provide enhanced transparency about the university’s Endowment portfolio holdings. As such, UBC IMANT has made the Endowment public equities holdings available on the UBC IMANT website and will update the information annually.
UBC and UBC IMANT will continue to demonstrate leadership among universities and endowments as our responsible investing journey continues. Progress planned for 2021 includes transferring further funds to lower emission funds, establishing an active ownership policy, and incorporating climate risk analysis into an asset mix study.