UC progress on sustainable investments strategy

The University of California today (Feb. 19) announced a series of steps it has taken to combat global climate change by investing in sustainability, including becoming the first university in the world to sign the Montreal Carbon Pledge.

The measures are part of UC’s efforts to fully implement an environmental, social and governance (ESG) investment strategy, the adoption of which was announced in September among the results of the president’s Task Force on Sustainable Investing. In recognition of these moves, the White House announced last week that UC would play a major role in its Clean Energy Investment Initiative, which stems directly from the university’s commitment to profitably invest at least $1 billion over the next five years in solutions to climate change.

“The University of California is making measurable, solid gains on sustainability, not only through our investments but on our campuses, in our laboratories, at our medical centers, and elsewhere throughout the system,” said President Janet Napolitano. “We will continue to leverage the tremendous brain power and innovation of our public university system to work toward a solution to climate change.”

UC’s progress in implementing its ESG policy will be more fully discussed at the Friday (Feb. 20) meeting of the UC Board of Regents’ Committee on Investments, to be held at UCLA.

Earlier this month, UC became the first university in the world to sign the Montreal Carbon Pledge, sponsored by the United Nations-supported Principles for Responsible Investment (PRI), an international network of investors with some $45 trillion in assets under management.

The pledge is a first step toward measuring the long-term investment risks associated with climate change and carbon regulation. By becoming a signatory, UC commits to measuring and annually disclosing the carbon footprint of its investments with the goal of using this information to inform carbon asset risk and management strategies.

“We invite others to take this important step with us,” said UC Chief Investment Officer Jagdeep Bachher. “As we ask more from the companies we invest in, we must hold ourselves accountable for measuring and managing the carbon risks in our portfolio.”

The university also recently joined two prominent sustainable investment efforts:

  • Ceres and its Investor Network on Climate Risk (INCR), a group of more than 100 leading institutional investors, companies and public interest groups committed to addressing the risks, and seizing the opportunities, resulting from climate change and other sustainability challenges
  • The Carbon Disclosure Project (CDP), the largest provider of company-level data on greenhouse gas emissions, water use and forest management.

“As we look to integrate sustainability into our investment analysis and identify emerging investment risks and opportunities stemming from climate change, the resources of these networks and projects will assist us in better measuring the holistic risk we take in our portfolio,” Bachher said. “These entities give us a platform to engage companies on important environmental, social, and governance issues alongside other large institutional investors.”

In addition, UC’s Office of the Chief Investment Officer has partnered with the PRI and a select few global investors on a project to develop best practices for addressing climate change and carbon at the portfolio level. The project is timed to be completed by the United Nations climate negotiations scheduled for late 2015 in Paris.

“Many organizations write about the importance of sustainability,” said UC Regent Paul Wachter, chair of the Committee on Investments, “however we are focused on taking concrete steps to integrate sustainability into our investment decision-making process.”

In recognition of the progress the university is making in incorporating climate and other significant risks into its investment decision-making process, the UC garnered the top spot in the Global Universities Index published last month by the Asset Owners Disclosure Project. The index ranks 278 leading university endowments worldwide on how they manage the risks and opportunities presented by climate change.

“While it’s nice to receive recognition for the steps we have taken,” Bachher said, “we continue to focus on further developing our ability to incorporate analysis of all environmental, social, and governance risks in our portfolio and working with our peers to encourage companies to act in a manner that will benefit investors with long-term horizons and commitments to future generations.”

Access the September release about the findings of the Task Force on Sustainable Investing here.