- Do you spend the money that is given to you for the endowment?
- Why don’t you spend the principle?
- Do endowment funds go to paying for salaries?
- Do endowment funds pay for other operating costs?”
Reponsible Investment Policy
- Why is there a policy on responsible investment?
- What exactly is ‘responsible investing’?
- Who decides what companies UBC invests in?
- What are the concerns raised by industry experts about divestment?
- Is this policy final?
- How does investment in the Sustainable Future Pool impact the donor’s charitable purpose?
- Does the Sustainable Future Pool answer the call for divestment of fossil fuels by UBC students and faculty in 2015?
Last update: May 25, 2018
1. Do you spend the money that is given to you for the endowment?
No, we don’t spend the endowment. The initial amount of money raised, either through donations or through land sales, becomes the principle. We invest the principle and use the money it generates (through interest and dividends) to support the purposes that were specified by donors or by the policies of the board related to land sales.
2. Why don’t you spend the principle?
The endowment ensures that UBC has the ability to fund academic excellence in perpetuity. By protecting the principle, we have the ability to ensure an important funding source for future generations.
3. Do endowment funds go to paying for salaries?
The endowment does not generally fund the salaries of faculty and staff. However, some endowment funds are used for special research chairs, which includes supporting faculty positions in very specific academic areas.
4. Do endowment funds pay for other operating costs?
No, the endowment fund is separate from the operating budget and is not used to fund the core activities of the university.
Responsible Investment Policy
1. Why is there a policy on responsible investment?
UBC is being proactive to determine how to reflect its values through its endowment fund investments. The policy balances UBC’s fiduciary responsibility with the need to create clear, balanced mechanisms to make appropriate responsible investment decisions.
2. What exactly is ‘responsible investing’?
Responsible investing is an approach that explicitly acknowledges the environmental and social performance of companies and industries along with the long-term health and stability of the financial market as a whole. Responsible investing requires companies and investors to take a wider view, and recognizes that the generation of long-term, sustainable returns is dependent on stable, well-functioning and well-governed social, environmental and economic systems.
3. Who decides what companies UBC invests in?
UBC does not directly invest in specific companies, but invests in pooled funds managed by external managers. UBC’s endowment fund is the responsibility of the Board of Governors, which delegates its management to UBC Finance, and implementation of its investment policy to UBC’s Investment Management Trust Inc. (IMANT). The investment policy asset mix is recommended by the IMANT Board of Directors and approved by the UBC Board of Governors and sets out where the assets of the UBC Endowment are to be invested. Visit the UBC IMANT website to see the statement of IMANT investment beliefs.
4. What are the concerns raised by industry experts about divestment?
UBC consulted with industry experts, most of whom favour an approach of engaging companies to influence them to improve their environmental and social governance performance.
Concerns were raised that divestment is often more symbolic than effective, and on some occasions, divestment can carry the risk of unintended negative consequences – i.e. divesting opens up opportunities for less responsible investors, and can drive investment to countries with weak or nonexistent regulatory regimes or ESG standards.
From an economic perspective, screening out entire sectors such as the Canadian energy sector would push investments outside of the country, into geographic areas that often have more questionable social and environmental records. It would also penalize energy companies with strong environmental records and those that have diversified their portfolios to include renewable energies.
5. Is this policy final?
As part of the responsible investment policy, UBC, through its Board of Governors, has committed to reviewing its responsible investment policies at least every three years – and more often if justified by rapid industry changes.
6. How does investment in the Sustainable Future Pool impact the donor’s charitable purpose?
The largest difference is that when making investment decisions, in addition to its fiduciary responsibility to the charitable purpose and an obligation to invest in the best interest of UBC, SFP investment decisions will also consider non-financial standards such as carbon emission.
In addition to this governance difference between the two endowments pools,
• the SFP currently has a lower spend rate; and
• terms for the endowment will need to include UBC’s ability to alter the fund’s investment profile if deemed in the best interest of the charitable purpose and UBC.
7. Does the Sustainable Future Pool answer the call for divestment of fossil fuels made by UBC students and faculty in 2015?
The referenda called for divestment of fossil fuels in the UBC Endowment. It was legally determined that divestment of the UBC Endowment from fossil fuels is inconsistent with UBC’s Responsible Investment Policy and UBC’s fiduciary responsibilities.
The SFP pursues sustainability concepts beyond the progressive strategies already being incorporated in the Main Endowment Pool and will have reduced or no fossil fuel investments (currently it has none) and target lower carbon emissions.