Responsible Investment Policy (B10.16)
June 26, 2014
September 30, 2016
1.1 The University’s financial investments are made in compliance with the University Act [RSBC 1996], the Investment Governance Policy (B10.09), and the Endowment Management Policy (GP20). This Policy and GP20 are subject to and consistent with B10.09. The University incorporates environmental, social, and corporate governance (ESG) considerations into its investment decisions.
1.2 The following principles guide the University’s financial investments;
1.2.1 The University believes that its fiduciary responsibility for managing investment risks includes the risk pertaining to environmenta, social and corporate governance issues.
1.2.2 The University is an institution that has the tools of research, academia and public policy influcence within its community; it believes that engagement is the best means of influencing corporate behavior and that divestment should be looked at as a last resort.
1.2.3 The University believes that it should consider the interests of all its stakeholders and not only the beneficiaries of its Endowment.
2.1 This Policy identifies the University’s approach to incorporating ESG into its investment decisions.
3.1 This Policy applies to all Endowment Funds and Non-Endowment Funds (Funds).
4.1 Environmental, social, and corporate governance (ESG) is an approach to investing that integrates ethical values and societal concerns with investment decisions.
4.2 Financial Investments means Endowment Funda and Non-Endowment Funds.
5.1 This Policy is consistent with the University Act which states that the Board must make investment decisions “...that a prudent person would make” and with policies B10.09 and GP20. Where there is a conflict between this Policy and the latter policies, the requirements of B10.09 andGP20 will take precedence.
5.2 The University is committed to responsible investment pursued through the framework of environmental, social, and corporate governance considerations.
5.3 The University is a signatory to the United Nations Principles for Responsible Investment (UN PRI) to support incorporating ESG into its investment decisions. Details about the UN PRI are included in Appendix A.
5.4 SFU uses a number of tools to pursue responsible investment, including:
5.4.1 SFU evaluates fund managers on how well they incorporate ESG into their research, analysis, and decision making.
5.4.2 The University, as a signatory to the UN PRI, is required to be an active investment owner and, therefore, its actions may include, but are not limited to:
a) Proxy voting delegated to external investment managers;
b)Direct engagement with external investment managers;
c) Encouraging academic and other research on this theme;
d) Reporting through the UNPRI.
5.4.3 The University has established a Responsible Investment Committee (RIC) to review ESG issues at SFU, including those raised by University community members (students, faculty, staff, and alumni). The Committee will be convened in accordance with its Terms of Reference.
Consideration of questions about ESG issues with respect to University investments must take into account applicable legislative requirements and government and University policy, as well as the legal standards applicable to prudent institutional investors. The Committee will consider submissions of a serious nature where the University’s social responsibility as an investor is questioned by applying ESG screening criteria, including those described in Standard 1.
5.5.1 Divestment Criteria:The Committee will consider the following guidelines in considering the appropriate response to any request:
a) The extent and significance of the University’s investment in a particular entity.
Determination of whether investments are considered significant will depend on the Committee’s judgment of the relative magnitude of the University’s holdings both as a fraction of all University investments and in relation to the market capitalization of the entity under review.
b) The degree and relative degree to which the entity itself is involved in contributing to social injury and the severity of the injury.
The Yale University concept of social injury is defined as the injurious impact the activities of a company are found to have on the environment, consumers, employees, or other persons, particularly activities which violate, or frustrate the enforcement of, rules of domestic or international law intended to protect individuals against deprivation of health, safety, or basic freedoms. For the purposes of this Policy, social injury shall not consist of doing business with other companies which are themselves engaged in socially injurious activities.
c) Reasonable evidence that divestment will produce a positive outcome.
Divestment is likely to produce a positive outcome and evidence exists to substantiate this conclusion; divestment will change the behaviour of the company or industry; divestment, based on reasonable evidence, is a better choice than active engagement with the company or companies.
d) Divestment must be consistent with the University’s legal obligations as a fiduciary.
The University should consider the interests of its stakeholders (students, faculty, donors, alumni, staff, provincial government and taxpayers). The University has a fiduciary duty to manage investments responsibly to maximize return on its investments within a policy risk tolerance as approved by the Board of Governors.
5.5.2 ReportingThe RIC may seek expert advice in responding to requests for divestment.
6.0 AUTHORITY UNDER THIS POLICY
6.1 The Vice-President, Finance and Administration (VPFA) is tasked with meeting the requirements of B10.09 and GP20, and for pursuing responsible investment at SFU. The VPFA is authorized to develop any internal processes required to implement responsible investment at SFU.
7.0 AUTHORITY FOR THIS POLICY
7.1 Vice-President, Finance and Administration has oversight of this Policy.
The UN PRI initiative is the leading global network for investors to demonstrate commitment to responsible investment, with over 1,200 signatories representing nearly $35 trillion in assets under management (2013).
UN PRI investors commit to the following Principles for Responsible Investment:
1. Incorporate ESG issues into investment analysis and decision‐making processes
2. Be active owners and incorporate ESG issues into our ownership policies and practices
3. Seek appropriate disclosure on ESG issues by the entities in which we invest
4. Promote acceptance and implementation of the Principles within the investment industry
5. Work together to enhance our effectiveness in implementing the Principles
6. Report on our activities and progress towards implementing the Principles.
Environmental issues include:
1. biodiversity loss
2. greenhouse gas (GHG) emissions
3. climate change impacts
4. renewable energy
5. energy efficiency
6. resource depletion
7 chemical pollution
8. waste management
9. depletion of fresh water
10. ocean acidification
11. stratospheric ozone depletion
12. changes in land use
13. nitrogen and phosphorus cycles
Social issues include:
1. activities in conflict zones
2. distribution of fair trade products
3. health and access to medicine
4. workplace health safety and quality
6. labour standards in the supply chain
7. child labour
9. relations with local communities
10. human capital management
11. employee relations
13. controversial weapons
14. freedom of association.
Governance issues include:
1. executive benefits and compensation
2. bribery and corruption
3. shareholder rights
4. business ethics
5. board diversity
6. board structure
7. independent directors
8. risk management
9. whistle-blowing schemes
10. stakeholder dialogue