On June 4, 2013, the UBC Board of Governors approved a responsible investment strategy to guide management of its endowments and working capital funds. It also appointed a special working group to recommend further changes.
The strategy was developed by the Board’s Responsible Investment Committee for the Endowment, established in 2010 to consult with external experts and other universities, and to find an effective approach for UBC’s endowment mission, capabilities and investment beliefs. It includes:
1. Direct investment in environmental and social projects
The University has invested $382 million in student housing or climate change/greenhouse gas reduction projects. These direct investments are fully controlled by the University to benefit its community, deliver the most aggressive climate action plan of top-ranked Universities world-wide and improve the social well-being of its students. This direct fund is the largest investment of its kind in Canada. The University will report the value of these direct investments each year (PDF).
2. Good governance
Under the new strategy, the University’s Investment Management Trust (IMANT) will join the Canadian Coalition of Good Governance. It will also use environmental, social and governance (ESG) principles in the selection of its fund managers.
3. Continuous improvement
The University will assemble a special task group within the Board of Governors to continue to review the rapidly evolving landscape and recommend further changes to the full Board.
The goal of UBC’s endowment is to provide financial resources to support the University’s academic mission. UBC’s endowment funds are invested predominantly in pooled funds run by managers selected for their superior investment process and attention to environmental, social and governance (ESG) investing practices. The University will continue to explore best investment practices based on ESG principles and engagement.
UBC is a global leader in sustainability. It has the most aggressive greenhouse gas emission targets of top-ranked Universities worldwide (with a 33 per cent reduction of greenhouse gas emissions beyond Kyoto targets by 2015). In terms of social sustainability, UBC has the most ambitious public transportation program in North America, the largest student housing program in Canada, and the largest childcare operation in B.C.
UBC was Canada’s first university to achieve a Gold rating in the Sustainability Tracking, Assessment & Rating System (STARS), a comprehensive sustainability rating system for higher education institutions administered by the Association for the Advancement of Sustainability in Higher Education (AASHE).
How is the UBC Endowment Fund managed?
UBC’s approximately $1 billion Endowment fund is the responsibility of the Board of Governors, which delegates its management to UBC Finance, and implementation of its investment policy to UBC’s Investment Management Trust Inc (IMANT).
IMANT was established in 2003 as a wholly owned subsidiary of UBC that reports to its Board of Directors appointed by the UBC Board of Governors.
How does IMANT decide what it invests in?
The goal of the UBC Endowment is to provide financial resources to support the University’s academic mission.
The UBC Endowment Investment Policy Asset Mix is recommended by the IMANT Board of Directors and approved by the UBC Board of Governors and sets out where the assets of the UBC Endowment are to be invested.
IMANT does not itself invest in individual stocks, bonds and other instruments. Rather, IMANT selects fund managers, who in turn invest UBC Endowment monies in the funds they manage.
As part of the investment manager selection process, IMANT evaluates prospective managers on their consideration of environmental, social and governance issues (ESG) in the selection of investment instruments (stocks, bonds etc).
Visit the UBC IMANT website to see the statement of IMANT investment beliefs.
What does the UBC Endowment Fund invest in?
The Endowment Fund is highly diversified, both geographically and by asset class, and weightings vary among these classes. For the most part, the Fund is invested in Foreign and Canadian equities and in Canadian Fixed Income instruments (bonds etc). A smaller proportion of the Fund is invested in private equity, real estate and infrastructure assets.
View a breakdown of Endowment Fund investments (PDF).
What is UBC’s approach to responsible investment?
The UBC Board of Governors has approved a responsible investment strategy on June 4, 2013. The strategy commits the University if British Columbia to three major actions:
- Make direct investments in environmental and social projects, already worth $382 million
- Strengthen its commitment to good governance by joining the Canadian Coalition of Good Governance and by continuing to consider environmental, social and governance (ESG) factors in selecting fund managers
- Set up a Board task force to make further recommendations
What is the problem with divestments?
In adopting its new responsible investment strategy, the university consulted widely with leaders in the responsible investment field. These leaders did not favor divestment but recommend an approach that makes decisions based on ESG principles and engagement with companies to improve performance.
Issues with portfolio screening are multiple and complex. Ethically, portfolio screening is difficult to apply to reflect the competing political, environmental and social interests playing out at any given time, and whether these interests should be company specific or sector-wide. Economically, screening out entire sectors such as the Canadian energy sector would push more of the endowment outside of the country, into geographic areas that often have more questionable social and environmental records. Financially, implementing a direct screening policy would prevent UBC from investing in pooled or indexed funds and would generate significant overhead that would negatively impact student and researchers supported by the endowment.
How much does the University invest in the oil and gas sector?
UBC does not make direct investments in specific companies. It invests in pooled funds managed by external managers.
At various times, the funds in which UBC’s Endowment is invested include a number of companies in the oil and gas sector.
Does the University invest in ethical funds?
While no set or direct commitments have been made, as part of various infrastructure and private equity funds, IMANT has invested part of the Endowment Fund in sustainable initiatives (wind farms, solar and hydro energy, etc.)
More significantly, from its student housing financial endowment and working capital, UBC has invested $382 million in student housing and greenhouse gas reduction projects at UBC.
How will UBC show leadership in this area?
UBC is a global leader in sustainability in its research, in its commitment to reducing greenhouse gas emissions on campus, and in social sustainability initiatives such as student housing, transportation and childcare.
The university recognizes that in the area of responsible investment, there is ongoing considerable debate on the exact values that could guide ethical investment. There is a long list of worthy issues that could conceivably be included in ethical investment criteria but there is no consensus with respect to specific investments.
To that end, the UBC Board of Governors has established a task force to review the matter and recommend further actions.