Overall Rating Gold
Overall Score 66.51
Liaison Aurora Sharrard
Submission Date Feb. 28, 2021

STARS v2.2

University of Pittsburgh
PA-10: Sustainable Investment

Status Score Responsible Party
Complete 1.26 / 5.00 Aurora Sharrard
Director of Sustainability
Office of Sustainability
"---" indicates that no data was submitted for this field

Total value of the investment pool:
4,342,563,000 US/Canadian $

Value of holdings in each of the following categories:
Value of holdings
Sustainable industries (e.g., renewable energy or sustainable forestry) 0 US/Canadian $
Businesses selected for exemplary sustainability performance (e.g., using criteria specified in a sustainable investment policy) 0 US/Canadian $
Sustainability investment funds (e.g., a renewable energy or impact investment fund) 0 US/Canadian $
Community development financial institutions (CDFIs) or the equivalent 0 US/Canadian $
Socially responsible mutual funds with positive screens (or the equivalent) 0 US/Canadian $
Green revolving funds funded from the endowment 3,548,933 US/Canadian $

A brief description of the companies, funds, and/or institutions referenced above:

While some of the above numbers are actually greater than zero, they were not yet available for documentation. The University's investment team discusses and documents ESG on every new commitment.

GREEN REVOLVING FUND: The University of Pittsburgh’s internal Capital Loan Program (CLP) provides schools, offices, and departments with funds to invest in approved capital projects and/or equipment, while recognizing the inherent costs associated with using the University' s financial resources. Loans are paid back internally over time with interest.

In November 2020, the first CLP project explicitly focused under a Sustainability Investment Fund concept was signed internally for $3,548,933. This 2020-21 project is managed by Facilities Management and focused on energy and water upgrades in an aggregate of 10 dedicated projects over 13 buildings. Project energy reductions, utility cost savings, and triple bottom line benefits are being tracked by Facilities Management and the Office of Sustainability at a variety of scales and over time, including by meter, by project, by building, along with aggregated project savings across all buildings and aggregated campus-wide savings.


Percentage of the institution's investment pool in positive sustainability investments:
0.08

Does the institution have a publicly available sustainable investment policy?:
Yes

A copy of the sustainable investment policy:
The sustainable investment policy:

FULL ESG POLICY ATTACHED. Summary & key quotes below:

In March 2020, the University of Pittsburgh’s Office of Finance established an Environmental, Social, and Governance (ESG) Policy, which helps inform investment decisions related to the institution’s Consolidated Endowment Fund.

The policy offers a systematic way for fund managers to make investment decisions after considering a range of factors, including: energy efficiency and use, hazardous materials management, water and land management, data protection and privacy, human rights, labor standards, product safety, regulatory compliance, business ethics and adherence to auditing standards.

As stated in the ESG Policy, the Consolidated Endowment Fund’s (CEF) “statement of Governance addresses “Social Responsibility” in Section XIV, providing:

“To fulfill the University's stated mission and meet the expectations of the donors who have entrusted gifts to the University, the University must manage its CEF wisely. As stated previously, the primary investment objective established for the CEF is to maximize the financial return on such assets, taking into account risk and other considerations as more specifically set forth in this Statement, in order to provide a reliable stream of meaningful income while preserving the CEF's real asset value. Accordingly, the Committee shall not apply non-financial constraints pertaining to investment holdings of the CEF unless there is a situation of such magnitude that the Board specifically directs the Committee to consider such non-financial parameters. In evaluating any specific social responsibility concern as directed by the Board, the Committee may consider the gravity of the social impact, the University's need to maintain a sound financial investment policy, the potential effectiveness of the Committee's investment or voting decisions to influence positive change, and such other considerations as the Committee may deem appropriate. In no event will a recommendation be made that an investment be selected or retained solely for the purpose of encouraging or expressing approval of a company's activities or, alternatively, for the purpose of placing or leaving the University in a position to contest a company's activities.”

Consistent with these responsibilities, the University recognizes that a key set of considerations appropriately included in the management of the CEF concerns ESG factors. As a result, the University’s Office of Finance (OOF), led by the Chief Investment Officer (CIO), has developed ESG criteria to incorporate into its existing processes for assessing investment opportunities, both in the U.S. and around the world.

Pitt ESG Policy Reference: https://cfo.pitt.edu/documents/ESGPolicyFinal3-25-20.pdf


Does the institution use its sustainable investment policy to select and guide investment managers?:
Yes

A brief description of how the sustainable investment policy is applied:

The University currently uses and will continue to consider active investment managers who take into account environmental and sustainability factors when making investment decisions on behalf of the University.

In March 2020, the University of Pittsburgh’s Office of Finance established an Environmental, Social, and Governance (ESG) Policy, which helps inform investment decisions related to the institution’s Consolidated Endowment Fund.
The policy offers a systematic way for fund managers to make investment decisions after considering a range of factors, including: energy efficiency and use, hazardous materials management, water and land management, data protection and privacy, human rights, labor standards, product safety, regulatory compliance, business ethics and adherence to auditing standards.

As stated in the ESG Policy, the Consolidated Endowment Fund’s (CEF) “statement of Governance addresses “Social Responsibility” in Section XIV, providing:

“To fulfill the University's stated mission and meet the expectations of the donors who have entrusted gifts to the University, the University must manage its CEF wisely. As stated previously, the primary investment objective established for the CEF is to maximize the financial return on such assets, taking into account risk and other considerations as more specifically set forth in this Statement, in order to provide a reliable stream of meaningful income while preserving the CEF's real asset value. Accordingly, the Committee shall not apply non-financial constraints pertaining to investment holdings of the CEF unless there is a situation of such magnitude that the Board specifically directs the Committee to consider such non-financial parameters. In evaluating any specific social responsibility concern as directed by the Board, the Committee may consider the gravity of the social impact, the University's need to maintain a sound financial investment policy, the potential effectiveness of the Committee's investment or voting decisions to influence positive change, and such other considerations as the Committee may deem appropriate. In no event will a recommendation be made that an investment be selected or retained solely for the purpose of encouraging or expressing approval of a company's activities or, alternatively, for the purpose of placing or leaving the University in a position to contest a company's activities.”

Consistent with these responsibilities, the University recognizes that a key set of considerations appropriately included in the management of the CEF concerns ESG factors. As a result, the University’s Office of Finance (OOF), led by the Chief Investment Officer (CIO),has developed ESG criteria to incorporate into its existing processes for assessing investment opportunities, both in the U.S. and around the world.

Pitt ESG Policy Reference: https://cfo.pitt.edu/documents/ESGPolicyFinal3-25-20.pdf


Has the institution engaged in proxy voting, either by its CIR or other committee or through the use of guidelines, to promote sustainability during the previous three years?:
No

A copy of the proxy voting guidelines or proxy record:
---

A brief description of how managers are adhering to proxy voting guidelines:

To date, the University outsources proxy voting to our external (and global) investment managers, some of which have robust ESG / SRI policies and/or are signatories to the UN PRI or other noteworthy organizations.

The University currently uses and will continue to consider active investment managers who take into account environmental and sustainability factors when making investment decisions on behalf of the University.

As stated in the University's March 2020 ESG Policy:

"Proxy Voting: The University’s beliefs [sic] that the investment managers that are carefully selected and employed by the University are best suited to vote the proxies of shares held in the portfolios that they manage. Therefore, responsibility for voting such proxies shall be delegated to the respective external investment managers utilized by the CEF. In the event of any regulatory or other statutory requirement that prohibits the investment manager from voting on behalf of the University, the CIO shall assume responsibility for voting such proxies."

Pitt March 2020 ESG Policy reference: https://cfo.pitt.edu/documents/ESGPolicyFinal3-25-20.pdf


Has the institution filed or co-filed one or more shareholder resolutions that address sustainability or submitted one or more letters about social or environmental responsibility to a company in which it holds investments during the previous three years?:
No

Examples of how the institution has engaged with corporations in its portfolio about sustainability issues during the previous three years:

As with proxy voting, any filings would be undertaken by the University's external investment managers.


Does the institution participate in a public divestment effort and/or have a publicly available investment policy with negative screens?:
No

A brief description of the divestment effort or negative screens and how they have been implemented:

SOCIALLY RESPONSIBLE INVESTING

On February 28, 2020, the University of Pittsburgh’s Board of Trustees adopted a Socially Responsible Investing (SRI) screening process that considers persistent societal concerns raised by students, faculty, staff, alumni, and the community.

At its June 26, 2020, meeting, the University of Pittsburgh’s Board of Trustees activated the Socially Responsible Investing (SRI) screening process adopted in February 2020 to create an Ad Hoc Committee on Fossil Fuels that explored whether the University should divest its Endowment from fossil fuels. The Ad Hoc Committee was chaired by Board of Trustees' Member Dawne Hickton, composed entirely of Trustees, and submitted its report to the Board Chairperson on January 15, 2021.

ESG POLICY

The SRI process described above is separate from the University’s March 2020 adoption of an Environmental, Social, and Governance (ESG) Policy that guides the University as it makes investment decisions regarding the Endowment. The first report on Pitt’s ESG strategies is expected by the end of 2021.

Both the University’s SRI and ESG actions build on the July 2019 report of the University of Pittsburgh’s 2018-19 Socially Responsible Investment Committee, which Chancellor Patrick Gallagher addressed in an August 2019 letter detailing the university’s next steps towards considering sustainable investment strategies.

Reference: https://www.sustainable.pitt.edu/ad-hoc-committee-on-fossil-fuels-divestment/

AD HOC COMMITTEE ON FOSSIL FUELS OF THE BOARD OF TRUSTEES

In August 2020, The Ad-Hoc Committee on Fossil Fuels of the Board of Trustees of the University of Pittsburgh was charged by the Chair of the Board of Trustees to provide a report by January 15, 2021, on “options on whether, to what extent, and via what methods the University, in its Endowment, should consider divestment from fossil fuels in existing and/or future investments.”

As stated in the report of the 2020-21 Ad Hoc Committee on Fossil Fuels of the Board of Trustees of the University of Pittsburgh:

“Pursuant to the Bylaws of the University, the Investment Committee (“IC”) of the Board of Trustees provides oversight and guidance to the Chief Investment Officer regarding the management of the University endowment. The IC’s “responsibilities shall include, but not necessarily be limited to, the approval of endowment investment guidelines, objectives and spending policies, and the review of the selection of investment advisers and consultants and the review of the performance of investments.”

The IC is guided in its work by the “Statement of Governance, Investment Objectives and Policies for the Consolidated Endowment Fund” (“Statement of Governance”). The Statement of Governance provides that “the Committee shall not apply non-financial constraints pertaining to investment holdings of the CEF unless there is a situation of such magnitude that the Board specifically directs the Committee to consider such non-financial parameters.” The IC includes two student members.

While the IC provides oversight and direction, only the University Board of Trustees can apply
non-financial constraints to the CEF, which it has done only once previously. No current nonfinancial constraints on the CEF currently exist. A history of the Board’s consideration of nonfinancial factors is provided in “Section 1.4 and Appendix B.” of the Ad Hoc Committee’s Report.

2021 REPORT OF THE 2020-21 Ad Hoc Committee of the Board of Trustees of the University of Pittsburgh: https://www.trustees.pitt.edu/sites/default/files/osec-docs/fossil_fuels/ad_hoc_committee_ff_report_final_w_appendix.pdf

At the February 26, 2021, meeting of the Board of Trustees, the Board adopted all the findings and options of the Ad Hoc Committee’s report, implying that the University should implement all options (quoted below):

1) Forgo applying a negative screen to the CEF with respect to fossil fuels.
2) Strongly support the implementation of the University’s current ESG Policy and direct the University’s Chief Investment Officer and investment team to apply ESG considerations to every CEF investment decision.
3) Strongly support the current long-term strategy of the University’s CEF, which is expected to continue to pursue strong risk-adjusted financial returns while reducing private holdings in fossil fuel exploration and production to zero by the end of 2035, as monitored by the Investment Committee.
4) Direct the University’s Investment Committee to oversee the development of a long-term strategy focused on seeking attractive investments that help reduce, avoid, and eliminate GHG emissions.
5) Direct the University to provide greater transparency regarding the fossil fuel investment trends of the CEF, which would support the University in its mission and goals, while increasing University community understanding about the purpose and management of the CEF. Specifically:
a) Support the commitment made by the Office of the Chief Financial Officer (“CFO”) to begin publishing an annual public ESG Report in 2021, which will highlight the application of ESG considerations in ensuring the CEF provides strong financial returns in perpetuity and to fossil fuel investments specifically.
b) Support regular, clear, and accessible University communication, education, and engagement about the CEF’s aggregate status, trends, and current and future fossil fuel exposure (including the basis for any material changes in expectations), including an annual update to the Board and University community.


Approximate percentage of endowment that the divestment effort and/or negative screens apply to:
0

Does the institution engage in policy advocacy by participating in investor networks and/or engage in inter-organizational collaborations to share best practices?:
Yes

A brief description of the investor networks and/or collaborations:

The University of Pittsburgh participates in the Big Plus Roundtable (formerly Big Ten Network), the 360 One Firm, and COO Peer Network. ESG and Diversity & Inclusion are active topics of discussion in these forums.

As detailed in the ESG Policy, the University currently uses and will continue to consider active investment managers who take into account environmental, social, and governance factors when making investment decisions on behalf of the University. Some of the University's external investment managers have robust ESG / SRI policies and/or are signatories to the UN PRI or other noteworthy organizations.

The University currently uses and will continue to consider active investment managers who take into account environmental and sustainability factors when making investment decisions on behalf of the University.


Website URL where information about the institution’s sustainable investment efforts is available:
Additional documentation to support the submission:
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