Climate change is a global systemic risk (pdf), one that UC Investments incorporates into our investment decisions.
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 for UC’s endowment, working capital and pension.
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 quantify the carbon emissions footprint of our portfolio annually in order to provide us with one measure of climate change risk.
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 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 1.7 gigawatts of new solar, wind and geothermal electricity and battery storage.