Chief Investment Officer of the Regents
The University of California is committed to environmental sustainability, social responsibility and prudent governance at every level of the university’s ten campuses, five medical centers, three national laboratories and agricultural and natural resources centers. This commitment is embodied in the university’s research, academic programs, business practices and governance structure and practices. Under the leadership of President Janet Napolitano the University of California has launched numerous sustainability initiatives, including the UC Global Food Initiative and the creation of a Global Climate Leadership Council that will guide UC’s efforts to achieve carbon neutrality by 2025.
At the Office of the Chief Investment Officer of the Regents (OCIO), we are guided by these principles of sustainability. Our framework for sustainable investing finds its roots in the unique culture and practice of the University of California.
Sustainability is a fundamental input that guides our investment decision-making. The Brundtland Commission (pdf) defines sustainable development as economic activity that meets the needs of the present without compromising future generations’ ability to meet their own needs. We use that same framework to think about our role as “sustainable investors.” We must meet the needs of our current operations and the current requirements of our retirees without compromising our ability to serve future students, staff members and faculty. While many of our stakeholders are focused on sustainability from a values perspective, we consider sustainability in risk assessment and due diligence.
We believe that integrating risk evaluation of environmental sustainability, social responsibility and prudent governance factors more systematically into our evaluation processes and into the processes of our external fund managers is increasingly necessary to provide the most accurate risk-reward calculation. Relevant environmental, social and governance externalities can be mispriced in the present but can be a factor in changing valuation over time. As multigenerational investors, we must recognize the importance of both long-term investment horizons in addition to benefits of near-term opportunities, and believe that investing in solutions will have more impact than our decisions about how and when we exit certain markets or assets. We believe that institutional investors are well positioned to invest in transformational solutions to environmental and social issues while earning a competitive return. That is why we have allocated over $1 billion to climate change solutions and, through our UC Ventures program, are promoting entrepreneurship and innovation at our university.
Announcement of a series of steps UC has taken to combat global climate change by investing in sustainability.