University adds ESG factors to investment decision processes

Wednesday, June 6, 2018

This article was originally published on the Daily Bulletin (June 6, 2018).

The University of Waterloo will add environmental, social and governance (ESG) factors into investment decision processes for endowment, trust and pension funds.

The University’s Board of Governors voted in favour of accepting all recommendations in a report from the Responsible Investment Working Group (RIWG) on June 5, 2018.

The RIWG report includes six recommendations to:

  • formally adopt ESG factors as a valid and important lens to be integrated into investment decision-making processes;
  • adopt the guiding principles and the guidelines for the application of ESG principles contained in the report;
  • make amendments to the Pension SIPP and to the Investment Guidelines for endowment and trust funds, to reflect the adoption of ESG factors in the investment decision-making process;
  • prepare for the University to become a signatory in good standing to the United Nations Principles for Responsible Investment;
  • explore and evaluate potential social impact investments with the aim to launch a pilot investment in this space in one year’s time;
  • annually review progress on the implementation of these recommendations

“Sustainability is one of my priorities for this institution. The Board’s decision to add an environmental, social and governance lens to  our investment approach complements the University’s commitment to support social and environmental scholarship and research,” said Feridun Hamdullahpur, president and vice-chancellor at Waterloo. “The recommendations will allow us to adopt a broader, more balanced approach to investments in the near term and will guide comprehensive and progressive actions for years to come.”

The Board of Governors established the RIWG in June 2016 to recommend whether and how to incorporate ESG factors into decision making for the investment of the University's endowment and pension funds. Since then, the group has spent considerable time reviewing legislation, learning from other institution’s experiences, meeting with a wide variety of stakeholders and considering a range of perspectives.

“Adopting these recommendations is a significant positive step in updating the University’s investment policies and strikes the right balance for moving forward,” said Dennis Huber, vice-president, administration and finance. “I applaud the group’s thoughtful consideration of many divergent views from stakeholders, a broad array of legal, regulatory and fiduciary responsibilities as well as pragmatic operational considerations.”