University of California, San Diego
PA-9: Sustainable Investment

In 2017 the endowment made a $50 million commitment to Congruent Ventures, a new energy seed-stage venture capital fund, which is a clean tech investment firm seeded with capital from the investment office and which sources investment opportunities from throughout the UC system. The fund is also invested in Pattern Energy, a renewable power company. The endowment also made a $25 million investment in Pattern Energy, a renewable power company. In 2017 the endowment also made a $35 million investment in TPG Rise Impact Fund, TPG’s impact investment fund. Additionally, the investment office has liquidated its high-yield bond holdings of of Dakota Access Pipeline (DAPL) operating companies ETP and SUNOCO. In 2015 the office sold its holdings in the world’s largest coal mining firms and firms that generate profits from Canadian oil sands mining. In 2015 the University of California became the first and largest founder of the Aligned Intermediary, which helps long-term investors identify investable climate infrastructure projects in clean energy, water infrastructure and waste-to-value. In 2017 the UC endowment made a $50 million sustainable agriculture investment through the AI platform. That same year, the UC became the first and only institutional investor that is a signatory to the Bill Gates Breakthrough Energy Coalition to accelerate clean energy solutions. UC also works to partner with family offices and other investors, sourcing ideas from our national labs and agricultural centers.

http://regents.universityofcalifornia.edu/regmeet/sept14/i317.pdf http://www.ucop.edu/investment-office/sustainable-investment/sustainability-framework/index.html

We approach sustainability both from a risk management and investment opportunity perspective. We believe that sustainability can help us increase our risk-adjusted returns over the long term by helping us manage long horizon risks. As part of the overall due diligence process and ongoing assessment every investment manager is reviewed and scored against the UC’s sustainability framework. In 2017 the endowment made a $50 million commitment to Congruent Ventures, a new energy seed-stage venture capital fund, which is a clean tech investment firm seeded with capital from the investment office and which sources investment opportunities from throughout the UC system. The fund is also invested in Pattern Energy, a renewable power company. The endowment also made a $25 million investment in Pattern Energy, a renewable power company. In 2017 the endowment also made a $35 million investment in TPG Rise Impact Fund, TPG’s impact investment fund. Additionally, the investment office has liquidated its high-yield bond holdings of of Dakota Access Pipeline (DAPL) operating companies ETP and SUNOCO. In 2015 the office sold its holdings in the world’s largest coal mining firms and firms that generate profits from Canadian oil sands mining. In 2015 the University of California because the first and largest founder of the Aligned Intermediary, which helps long-term investors identify investable climate infrastructure projects in clean energy, water infrastructure and waste-to-value. In 2017 the UC endowment made a $50 million sustainable agriculture investment through the AI platform. That same year, the UC became the first and only institutional investor that is a signatory to the Bill Gates Breakthrough Energy Coalition to accelerate clean energy solutions. UC also works to partner with family offices and other investors, sourcing ideas from our national labs and agricultural centers.

The investment office votes its proxies in accordance with ISS ESG guidelines.

The investment office has worked with outside groups such as Ceres and the 30 Percent Coalition on shareholder engagements. We have also partnered with other investment managers to engage with companies over key issues, such as diversity, and will from time to time engage in direct dialogs with companies on our own as and when we deem appropriate to do so. In 2016 for example the UC was a co-filler on a resolution by Exxon Mobile shareholders, requesting that the company requesting that the company publish a two-degree scenario analysis. Although originally defeated a similar resolution was successful in 2017. This past February the company published its first such analysis. The investment office has since engaged in a dialog with the company about its report. We are currently involved in a joint share holder engagement effort with the California State Teachers Retirement System concerning board diversity.

The Office of the Chief Investment officer applies a handful of negative screens to its investments. These include: companies doing business in the Sudan, companies that derive a significant amount of their revenue from thermal coal or oil sands, tobacco companies, and business which operate private prisons. We also screen for fire arms manufactures. Regent Policy 6301: POLICY TO EXCLUDE SECURITIES OF COMPANIES MANUFACTURING TOBACCO PRODUCTS FROM INDEX FUNDS AND TO CONTINUE EXISTING EXCLUSION FROM ACTIVELY MANAGED FUNDS http://regents.universityofcalifornia.edu/policies/6301.html Regents Policy 6302: POLICY ON DIVESTMENT OF UNIVERSITY HOLDINGS IN COMPANIES WITH BUSINESS OPERATIONS IN SUDAN http://regents.universityofcalifornia.edu/policies/6302.html

The UC Investment Office participates in a number of climate related investment groups, and will engage with companies either directly or as part of a broader group. Recent engagements have included dialogues with energy companies over their two-degree scenario planning as well as their concerns for the rights of indigenous peoples and other factors. We participate in regular calls and share learning with other investors as part of Ceres, the Investors & Indigenous Peoples Working Group, and other networks. We also have supported efforts related to the redrafting of the Equator Principles. Through the Task Force on Climate-related Financial Disclosures (TCFD), UC has worked to encourage all companies to adhere to the findings of the task force. In 2016, UC became a signatory to the UN Global Compact, and continues to work with the UN Principles for Responsible Investment (PRI) in forwarding our sustainable investment goals including participating in conferences, meetings and working groups.

The UC San Diego Foundation has approximately 70% of its endowment invested in the General Endowment Pool of the UC Regents. We cannot pull out yet information specific to UCSD holdings.