University of Dayton
PA-9: Sustainable Investment

The above investments include: - a large cap equity fund that invests in companies whose environmental strategies are generating tangible business results, in the form of revenue growth, cost improvement, or enhanced franchise value. The funds seeks to invest in companies that have a above average returns as a result of environmentally-efficient design or manufacturing, or offer products or services that address environmental problems. Environmental analysis complements thorough fundamental research and a strict valuation discipline; only companies with strong fundamental, environmental and valuation characteristics are considered for investment. - a fixed income fund that selectively invests in corporate, municipal, supranational and government agency securities with above-average ESG profiles and/or bonds that fund essential environmental, social or economic development projects. - a commitment to invest in a renewable private energy fund. To date we have invested $1.3 million, which represents .2% of our long-term pool value as of January 31, 2018. This fund invests in renewable energy projects around the globe.

Portions of UD's Socially Responsible Investment Guidelines for Catholic, Sustainable, and Responsible Investment are included below to address the questions in this section.

Compliance with the guidelines is monitored monthly with assistance from our investment consultant and independent custodian. In 2015, the University completed the divestment from fossil fuel companies in the domestic equity and domestic fixed income portion of its portfolio. In addition, in 2016 and 2017, specific investments were made in “sustainable” funds that focus on renewable energy investments and in companies that have track records of environmentally sustainable business practices.

The University intends to be a responsible investor by voting proxies of individually owned stocks and mutual funds. The University uses the services of an outside firm to vote proxies on its behalf based on approved guidelines for proxy voting that are consistent with its stated SRI guidelines. The University staff will periodically review the proxy voting records of this firm in order to ensure compliance with these guidelines. The University may also choose to invest in an entity or fund which it might otherwise avoid in order to exercise its rights as a shareholder in order to affect desired change consistent with these guidelines. However, such action is limited and is only done in support of a known or planned proxy actions, and such actions must be approved by a majority of the its Investment Committee. The University delegates many of its investment decisions to its Consultants and Investment Managers, and it may delegate the voting of proxies in accordance with these guidelines.

Avoidance Strategies and Negative Screens: The Staff will periodically review and prepare a list of companies to be screened from its investments, and this list is reviewed and approved by the Investment Committee of its Board of Trustees. UD's fossil fuel and Catholic negative screens currently encompass global equities and fixed income securities, and preclude investing in 347 companies. The following criteria are used in preparing the list of prohibited investments: • The University does not invest in corporations that own significant amounts of unburned fossil fuels, retain the rights to extract significant amounts of unburned fossil fuels, generate significant revenue from the extraction of fossil fuels, or who are significant users of fossil fuels and are not making meaningful efforts to reduce their use of fuels that are harmful to the environment. • The University strives to avoid investment in corporations that are involved in the direct participation in or support of abortion and the sale and/or manufacture of abortifacients, the manufacture or sale of contraceptives, the production or use of stem cells derived from aborted fetus in stem cell or fetal tissue research, and the sale or production of pornographic materials or materials that are demeaning to certain races, genders, or ethnic groups. In addition to its negative screening process, the University monitors and strives to avoid investment in entities that: • Demonstrate a significant lack of concern or fairness in labor-management relations and the equitable treatment of women and minorities, and which show disregard for consumer or worker safety and environmental quality. • Generate a significant portion of their revenues from the production of offensive military or other weapons; • Are involved in the exploitation of natural resources or human life in underdeveloped areas of the world;and • Engage in management or board governance practices that: limit the appointment of minorities and women to leadership or board positions; favor certain classes of shareholders, executives, and board members with regard to shareholder voting rights; and maintain compensation practices that are not aligned with shareholder interests.