University of California Signs Carbon Pledge

OAKLAND, Calif. — The University of California (UC) has become the first university in the world to sign the Montreal Carbon Pledge, the school confirmed on Feb. 19. The pledge is a commitment from asset owners and investment managers to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis.

The commitment is one part of UC’s promise to implement an environmental, social and governance (ESG) investment strategy, or what’s commonly known as socially responsible investing. The adoption of the ESG investment strategy was announced in September among the results of the president’s Task Force on Sustainable Investing, which considers environmental and social factors when it comes to investing. In recognition of these moves, the White House announced in February 2014 that UC would play a major role in its Clean Energy Investment Initiative, which stems from the university’s commitment to profitably invest at least $1 billion over the next five years in solutions to climate change.

In February 2014, UC became the first university in the world to sign the Montreal Carbon Pledge, sponsored by the United Nations-supported Principles for Responsible Investment (PRI), an international network of investors with roughly $45 trillion in assets under management.

“The University of California is making measurable, solid gains on sustainability, not only through our investments but on our campuses, in our laboratories, at our medical centers, and elsewhere throughout the system,” said UC President Janet Napolitano in a statement. “We will continue to leverage the tremendous brain power and innovation of our public university system to work toward a solution to climate change.”

“We invite others to take this important step with us,” added UC Chief Investment Officer Jagdeep Bachher in a statement. “As we ask more from the companies we invest in, we must hold ourselves accountable for measuring and managing the carbon risks in our portfolio.”

The university also recently joined two sustainable investment efforts. The first is the Ceres and its Investor Network on Climate Risk (INCR), a group of more than 100 institutional investors, companies and public interest groups that aim to address climate change and other sustainability challenges. The second is the Carbon Disclosure Project (CDP), a provider of company-level data on greenhouse gas emissions, water use and forest management.

“As we look to integrate sustainability into our investment analysis and identify emerging investment risks and opportunities stemming from climate change, the resources of these networks and projects will assist us in better measuring the holistic risk we take in our portfolio,” Bachher said in a statement. “These entities give us a platform to engage companies on important environmental, social, and governance issues alongside other large institutional investors.”

In addition, UC’s Office of the Chief Investment Officer has partnered with the PRI on a project to develop best practices for addressing climate change and carbon at the portfolio level.

“Many organizations write about the importance of sustainability,” said UC Regent Paul Wachter, chair of the committee on investments, in a statement. “However we are focused on taking concrete steps to integrate sustainability into our investment decision-making process.”

In recognition of the progress the university is making in incorporating climate and other significant risks into its investment decision-making process, UC garnered the top spot in the Global Universities Index published last month by the Asset Owners Disclosure Project. The index ranks 278 leading university endowments worldwide on how they manage the risks and opportunities presented by climate change.

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