Responsible Investment Policy
Date
June 26, 2014
Date of Last Review/Revision
November 24, 2022
Number
B 10.16
Mandated Review
November 24, 2027
Policy Authority: Vice-President, Finance and Administration
Associated Procedure: None
EXECUTIVE SUMMARY
SFU is committed to responsible investment. This policy sets out SFU’s approach to incorporating environmental, social, and corporate governance (“ESG”) considerations into its investment decisions.
TABLE OF CONTENTS
1.0 PREAMBLE
2.0 PURPOSE
3.0 SCOPE AND JURISDICTION
4.0 DEFINITIONS
5.0 POLICY
6.0 ROLES AND RESPONSIBILITIES
7.0 REPORTING
8.0 RELATED LEGAL, POLICY AUTHORITIES AND AGREEMENTS
9.0 ACCESS TO INFORMATION AND PROTECTION OF PRIVACY
10.0 RETENTION AND DISPOSAL OF RECORDS
11.0 POLICY REVIEW
12.0 POLICY AUTHORITY
13.0 INTERPRETATION
14.0 PROCEDURES AND OTHER ASSOCIATED DOCUMENTS
1.1 Simon Fraser University’s Financial Investments are made in compliance with the University Act, the Investment Governance Policy (B 10.09), and the Endowment Management Policy (GP 20). This policy and GP 20 are subject to and consistent with B 10.09.
1.2 The University incorporates environmental, social, and corporate governance (“ESG”) considerations into its investment decisions.
1.3 The following principles guide the University’s Financial Investments:
1.3.1 The University believes that its fiduciary responsibility for managing investment risk includes the risk pertaining to environmental, social, and corporate governance issues.
1.3.2 The University is an institution that has the tools of research, academia, and public policy influence 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.
1.3.3 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 See Appendix A for the definitions of words used in this policy and its associated procedures.
5.1 This policy is consistent with the University Act which states that the Board of Governors (“Board”) must make investment decisions “…that a prudent person would make” and with policies B 10.09 and GP 20. Where there is a conflict between this policy and the latter policies, the requirements of B 10.09 and GP 20 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 in Appendix B.
5.4 The University uses several tools to pursue responsible investment, including:
5.4.1 SFU selects and monitors fund managers based on how well they incorporate ESG into their research, analysis, and decision-making;
5.4.2 SFU, as a signatory to the UN PRI, is required to be an active investment owner. Active ownership can be displayed through:
a. Proxy voting and proxy voting reviews which may be delegated to external investment managers and service providers;
b. Corporate engagement, which may be delegated to external investment managers;
c. Coordinated institutional efforts to increase awareness and adoption of ESG best practices.
5.4.3 SFU committed to measure and reduce the carbon footprint of its investment portfolio by 45% below the baseline measurement reported as of March 31, 2016, and to achieve this reduction by 2025 to match Canada's national climate commitment.
5.4.4 In November 2021, in recognition of the escalating climate emergency, SFU announced a full divestment from fossil fuels by 2025.
5.5 The Board of Governors of the University has established a Climate Action and Sustainability Committee (“CASC”) to provide advice and recommendations to management on matters as they may relate to sustainability or climate action initiatives. The CASC will be convened in accordance with its Terms of Reference, which may be amended by the Board of Governors of the University from time to time.
5.6 Divestment. Consideration of questions about environmental, social and governance (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 University 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 (see Appendix B).
5.6.1 Divestment Criteria. The University 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 holding both as a fraction of all University investment 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, donors, alumni, faculty, 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 University’s Board of Governors.
5.6.2 Energy Divestment
a. Divestment will occur by screening out all Energy holdings, except for renewable energy, from the portfolio. The equity portfolios will screen out all Energy holdings as defined by the Global Investment Classifications Standards (GICS). The fixed income portfolios will screen out all Energy holdings with the exception of renewable energy, as defined by the FTSE Russell bond indices.
6.0 ROLES AND RESPONSIBILITIES
6.1 The Vice-President, Finance and Administration (“VPFA”) is responsible for meeting the requirements of policy B 10.09 and policy GP 20, and for pursuing responsible investment at SFU.
6.2 The VPFA is authorized to develop any internal processes required to implement responsible investment at SFU.
7.1 The VPFA will report to the CASC and to the Board of Governors as set out in section 6 of this Policy.
8.0 RELATED LEGAL, POLICY AUTHORITIES AND AGREEMENTS
8.1 The legal and other University Policy authorities and agreements that may bear on the administration of this policy and may be consulted as needed include but are not limited to:
8.1.1 University Act, R.S.B.C. 1996, c. 468
8.1.2 Freedom of Information and Protection of Privacy Act, R.S.B.C. 1996, c. 165
8.1.3 Investment Governance Policy (B 10.09)
8.1.4 Endowment Management Policy (GP 20)
8.1.5 Terms of Reference for Board Standing Committees (B 10.02)
9.0 ACCESS TO INFORMATION AND PROTECTION OF PRIVACY
9.1 The information and records made and received to administer this policy are subject to the access to information and protection of privacy provisions of British Columbia’s Freedom of Information and Protection of Privacy Act and the University’s Information Policy series.
10.0 RETENTION AND DISPOSAL OF RECORDS
10.1 Information and records made and received to administer this policy are evidence of the University’s actions to apply a principles-based approach to investment. Information and records must be retained and disposed of in accordance with a records retention schedule approved by the University Archivist.
11.1 This policy must be reviewed every five years and may always be reviewed as needed.
12.1 This policy is administered under the authority of the Vice-President, Finance and Administration.
13.1 Questions of interpretation or application of this policy or its procedures shall be referred to the Vice-President, Finance and Administration, whose decision shall be final.
14.0 PROCEDURES AND OTHER ASSOCIATED DOCUMENTS
14.1 Appendix A contains the definitions applicable to this policy.
14.2 Appendix B contains the United Nations Principles for Resp