Policy Ref: RI1
Consultation: Finance & Estates Governance Committee
Approving Body: Governing Council
Executive Lead (Risk Owner): University Treasurer
Policy Owner (Risk Updater): University Treasurer
Date Approved: January 2023
The Council Members and Executive of the RAU take a responsible approach to investment that aligns with the RAU’s objects and purpose. This approach primarily focuses on the integration of environmental, social and governance (ESG) factors into our investment selection, alongside stewardship and engagement and the exclusion of certain industries.
The RAU will invest in entities that exhibit appropriate standards of behaviour and performance against a range of ESG criteria, using those which integrate ESG matters into their investment process and practice in an industry-leading way to generate more sustainable long-term financial returns. The RAU expects its investment managers to be able to report on ESG matters in line with these needs.
The RAU believes that engaging with entities to improve behaviour can be effective in promoting change. Accordingly, the RAU’s preference is for its investment managers to be active owners and stewards of its capital, voting at company meetings, and engaging collaboratively with like-minded asset owners and managers to effect change and reporting accordingly.
The Council Members and Executive recognise that ethical issues are not always clear-cut, and therefore prefer to use a more progressive approach based on the positive criteria as set out above. However, negative screening will be applied to companies with significant involvement (>10% of turnover) in the following industries: armaments; tobacco; thermal coal; gambling; and adult entertainment – since these activities are inconsistent with our purposes as a Higher Education institution.
In addition, the RAU’s investment managers are signatories to the UN’s Principles for Responsible Investment (UNPRI) – the world’s leading proponent of responsible investment, confirming a commitment to: integrate environmental, social and governance considerations (ESG) within the investment managers’ process and ownership practices; seek ESG disclosures on investments; enhance the implementation and effectiveness of the principles throughout the industry; and report upon the activities investment managers undertake to this end.
Further, the RAU’s investment managers are members of The Investor Forum, a community interest company set up to help investors work collectively to escalate material issues with the Boards of UK-listed companies, and are active participants in Climate Action 100+, an investor initiative to ensure that the world’s largest corporate greenhouse gas emitters take necessary action on climate change.