The University of Virginia Investment Management Co., which manages and invests the University’s endowment, released a new framework to invest University funds more responsibly by evaluating the environmental and social impacts of future investment decisions.
The new investor responsibility framework is the next step in UVA’s ongoing efforts to invest more responsibly and sustainably. It was developed by UVIMCO’s Advisory Committee on Investor Responsibility, a group of UVIMCO representatives and University faculty, students, staff and alumni who were charged with advising UVIMCO leaders on ways to better consider the environmental, social and governance impacts of investment decisions.
Considering environmental, social and governance issues is not new to UVIMCO. The investment management company currently holds no direct investments in thermal coal and tar sands and less than 0.05% in fossil fuels. The vast majority of UVIMCO’s investments are held and managed by external investment managers; of these indirect investments, fewer than 6% are invested in natural resources. Last year, it committed $150 million in new investments to climate solutions focused on reducing carbon emissions.
In a statement UVIMCO said, “We are proud of the practices UVIMCO has developed and followed to date to make sure our investment decisions secure long-term returns for future generations at the University, while reflecting the University’s mission and values. With that being said, we can and should do more – especially in the face of urgent threats like climate change.”
A critical element of the new framework is UVIMCO’s formal commitment to transitioning the University’s endowment to net-zero emissions by 2050, if not sooner. A key element of this plan is for UVIMCO to use its influence as a stakeholder to encourage external managers to work with their investments to reduce their carbon emissions. In addition to that approach, UVIMCO and the Advisory Committee on Investor Responsibility will consider a number of different actions, including shifting investments over time to lower-emitting companies and those with credible plans to achieve net-zero operations. As necessary, UVIMCO may also use offsets to help remove carbon from the atmosphere and help offset any remaining emissions in its portfolio.
The framework includes new “Fossil Fuel Investment Principles” that list a specific set of sustainability criteria that, if not followed by a fossil fuel producer, make them ineligible for direct investment by UVIMCO.
“This net-zero strategy, which other institutions have also adopted, is a first step to turn our Investor Responsibility Framework into tangible action to make our portfolio more sustainable and more reflective of the need for action in response to the climate crisis,” UVIMCO said in a statement. “That new framework will be a guide to help ensure UVIMCO is properly considering [environmental, social and governance] risks and opportunities in future investment decisions.”
The goal of a net-zero portfolio is in line with the University’s goal of going fossil fuel-free by the year 2050.
UVA President Jim Ryan said, “I am grateful to the many people who worked on this plan to ensure that UVA’s investment strategy, as developed and implemented by UVIMCO, is consistent with the broader goals and values of our institution. UVIMCO’s primary goal is, and will always be, to make wise investments that help support the instruction, research and patient care missions of the University. This new framework is a great first step toward accomplishing that goal in a way that honors our responsibility to our community, our environment and the world around us.”