Climate change is a global systemic risk (pdf), one that UC Investments incorporates into our investment decisions. 

UC Investments’ climate change strategy is to: manage climate related risks to our investment portfolio; invest in transformational climate solutions; engage with portfolio companies to address climate related risks; and refine our strategy over time, based on evolving data. This strategy applies broadly to all of our assets under management, with some UC Retirement Savings Plan -related exceptions.

In 2016, UC Investments signed on to the Financial Stability Board’s Task Force on Climate-Related Financial Disclosure (TCFD), in recognition of the fact that robust and consistent corporate and asset owner disclosure of climate-related financial risks and opportunities could help us make more informed investment decisions.  Our inaugural TCFD report (pdf) holistically integrates UC Investments’ climate related strategies, metrics and targets, including the carbon footprint of our investment portfolio, the results of our 2020-2021 shareholder engagement efforts to reduce climate risk in our portfolio and highlights of our venture capital investments in climate solutions.

We manage the stranded asset risks associated with thermal coal, oil and gas by not investing (pdf) in companies that own any amount of fossil fuel reserves (unless such companies are held in commingled accounts). In fiscal year 2019-2020, we sold roughly $1 billion worth of publicly traded companies that own “proved and probable” reserves of thermal coal, oil and gas because we believe that they posed a long term risk to generating strong returns. Going forward, we continue to screen such companies from our separately managed accounts by following the MSCI ACWI IMI ex Tobacco ex Fossil Fuel Index which is based on MSCI’s ex fossil fuels exclusions methodology (pdf).

We collaborate with other investors, including the Climate Action 100+,  and the Ceres Investor Network on Climate Change, to engage our investee companies on quantifying their climate risks and developing strategies to manage it. We augment our shareholder engagement efforts on climate change by working in collaboration with other investors through the responsible engagement overlay (“reo”) service. Working through reo, UC Investments is able to leverage our resources and amplify our voice in a constructive in-depth dialogue with investee companies, as we did in 2020 (pdf).

We invest in new opportunities– through venture capital, growth equity, infrastructure or related fund vehicles - that advance climate solutions.  Since 2015, UC Investments has committed just over $1 billion to sustainable investments, including renewable energy projects in the US, Canada, India, Japan and Ireland, totaling over 2.6 gigawatts of new solar, wind and geothermal electricity and battery storage.