In keeping with The University of British Columbia’s commitment to being a global leader in sustainability, UBC announced today it is launching the Sustainable Future Fund to give donors more choice when donating to UBC’s endowment.
Two years ago, UBC’s Board of Governors approved an endowment responsible investment policy that established best practices that take into account environmental, social and governance (ESG) factors when making investment decisions. Building on that commitment, the university is now allocating $10 million in seed money from its Trek endowment funds to the new Sustainable Future Fund that will invest in low-carbon emission and high ESG equity funds. This fund will be available to both existing and future donations effective the summer of 2016.
The Sustainable Future Fund will support sustainability in a holistic way – seeking best-in-class companies that lower carbon emissions, minimize water, soil and air pollution and demonstrate sound social and governance practices. It is projected that this fund will achieve an aggregate carbon emissions intensity that is significantly lower than passive index funds or funds that simply exclude fossil fuels.
The Board carefully considered a student and faculty proposal that called for UBC to immediately forgo further investments in fossil fuel companies and divest from all existing fossil fuel holdings within five years. After a detailed review and third-party analysis of their proposal, the Board concluded that a three-part approach of setting up the Sustainable Future Fund, continuing to use ESG principles to manage the main endowment fund, and engagement through the Canadian Coalition for Good Governance would influence corporate behaviour more meaningfully while at the same time meet the university’s fiduciary obligations.
Endowment funds are used to generate investment income that support a range of academic priorities, such as student scholarships, capital infrastructure and research programs.
“The Sustainable Future Fund and the application of ESG principles in the main endowment will shift investments towards companies that are environmentally and socially responsible in a structured, thoughtful way,” said Greg Peet, chair of the Board’s Finance Committee. “It’s an innovative solution, tempered by fiscal prudence, that ensures our endowment is preserved for generations to come.”
“UBC’s core mission is teaching and research, and as a university with a reputation of being at the forefront of innovation, we will continue to collaborate with industry and government on effective solutions to climate change, capitalize on engagement opportunities through our curriculum, and educate the next generation of thought leaders,” said UBC Interim President Martha Piper.
“This new fund further demonstrates UBC’s commitment to sustainability, and equally important, it also gives our donors flexibility and options when choosing how to donate to the university,” Piper said.
The incorporation of environmental, social and governance criteria in the endowment portfolio will, over time, select high-performing companies and screen out lagging companies regardless of the business that they are in. The Sustainable Future Fund, having a more aggressive mandate from donors, will include non-financial criteria for lower carbon intensity in addition to broader ESG scoring.
To learn more about the Sustainable Future Fund, and to see the third-party divestment analysis by Koskie Minsky, an external law firm with expertise on responsible investment, please visit: http://news.ubc.ca/wp-content/uploads/2016/02/Memo-to-UBC-re-Divestment-Proposal.pdf