Pension funds of big public companies, such as universities, manage billions of dollars invested in corporations worldwide. With UVic’s efforts to become more sustainable, the topic of socially responsible investing (SRI) is a timely one. Common Energy, a student organization with the goal of making UVic more sustainable, started a project to push for SRI at UVic last fall.
One part of the project was a Nov. 6 public panel discussion titled “Responsible Investing for a Sustainable Future,” during which three experts talked about SRI and universities: Peter Chapman, executive director of the Shareholder Association for Research and Education; Ben Richardson, a UBC Law professor and senior Canada Research Chair in Law and Sustainability; and Christine Bergeron, an investment manager with Vancity`s Community Capital team.
All three of the speakers underlined the importance of responsible investing. The core statement of the panel was that it’s definitely possible for a public company such as a university to engage in SRI. Christine Bergeron provided some recent stats, which showed that the Global 100 Most Sustainable Companies index promises strong financial returns at the moment. She admitted that one short-term statistic can’t be used as fundamental data, but it’s definitely an example that sustainable companies do not necessarily have to be less profitable.
Last year, Common Energy tried to work more closely with the departments responsible for investing at UVic: the University of Victoria Foundation board, in charge of the endowment fund, and UVic’s pension office, which manages the pension fund.
“We actually sent out a letter — it would have been in January last [school] year, something like that — to both the head of the Foundation board and the head of the pension office. And we got no response from the pension office, but we did get a response from the Foundation board,” says Matt Hammer of Common Energy. He explains that they already had been working with the Foundation board through administrative contact, so they decided to focus on that department and come back to the pension office at a later time.
The UVic Foundation board passed a resolution this summer, which was a positive step in the direction of SRI. “As long-term investors, the Foundation Board believes responsible investing, taking environmental, social and governance (ESG) factors into consideration, can have a positive effect on long-term financial performance and investment returns. We delegate this responsibility to our investment managers and request proxy voting reports quarterly and annual disclosure by investment managers regarding the processes by which ESG factors are incorporated into the investment decision making process,” wrote Lisa Hill, chair of the UVic Foundation, in a statement to the Martlet.
UVic’s endowment funds total around $270 million currently, and the market value of its pension fund investments (which comprise a balanced fund and defined retirement benefit fund) totalled around $678 million at the end of last year. According to Common Energy, both the endowment and pension funds were invested in corporations engaged in controversial practices, such as human rights abuses and fossil fuel development.
“In assessing the risk/reward potential of any investment, the pension fund’s external investment managers will consider many factors. These include whether there are social, environmental, or governance risks that may impair the future value of the investment, since these risks inevitably affect a company’s prospects,” wrote Susan Service, the director of Pensions and Investments at UVic in a statement to the Martlet.
“Also, in common with most pension plans, the trustees review proxy votes to monitor good governance and (social) policies. This type of approach is widely used by the major Canadian pension plans and is detailed on their websites. It is important to note that under pension and trust law, pension trustees must ensure that the pension trust funds are invested in the best financial interests of members and other plan beneficiaries.”
Common Energy wants more engagement between UVic’s academic and social mission and the management of the university’s funds. To achieve that, Common Energy is asking for the adoption of principles of responsible investing and the formation of institutional structures that allow the university to thoughtfully exercise these principles.
“We’re not really at this point pushing the university towards divestment,” says Kelsey Mech, director of Common Energy. She explains that if UVic were to simply move its investments to more socially responsible companies, other investors would buy up their old stocks, which doesn’t really make a long-term impact. Instead, Common Energy focuses more on shareholder engagement both at UVic and beyond.
In September, the student organization launched a survey on how faculty and staff feel about socially responsible investment of the pension fund, which is in its early stages. They are hoping to get some feedback for their project. “Some people are worried. It’s their pensions; it’s their money,” says Hammer. “So there are definitely those opinions out there, but largely the responses that we’ve got have been really positive.”