UCL’s Investment Policy is centred around 5 core ethical investment principles.
UCL - Fossil Free Investment:
The University believes that, in investing its funds, regard must be made to ethical, social, environmental and governance issues. In pursuing its strategy UCL 2034, the University believes that its investments should reflect its own desire to be sustainable and promote sustainability and that a preference will be given to positive screening to proactively bring about sustainable positive change in the world. In 2019 UCL took the decision to divest from existing stocks of fossil fuels. The university also committed not to invest in companies involved in fossil fuel extraction or production and to making public its portfolio of investments to be transparent about its investment decisions.
UCL’s Investment Policy
This Policy commits that UCL will not invest in a particular company in the following circumstances:
i. Where such investment might conflict, or be inconsistent, with the aims, objectives or activities of UCL. For example, investment in the tobacco industry would be inconsistent with and would conflict with UCL’s research into cancer.
ii. Where such investment might hamper the work of UCL either by alienating financial supporters or potential financial supporters; or by having a material impact on applications from potential students.
iii. Where such investment, while not excluded by virtue of (i) or (ii) above, is considered by UCL to be unethical, based on a review by UCL’s Investment Committee.
UCL's Policy for Socially Responsible Investment:
In April 2020 UCL Council approved a new Policy for Socially Responsible Investment.
The policy commits UCL to adopting investment strategies that seek to minimise and ideally eliminate irresponsible corporate behaviour. Some of the ethical, social, environmental and governance issues which it will focus on include:
- Environmental degradation,
- Armament sales to military regimes,
- Human rights violations,
- Institutionalisation of poverty through discriminatory market practices,
- Racial or sexual discrimination,
- Tobacco production and manufacture.
UCL’s values recognise the enduring commitment to promoting environmental sustainability. There are various ways in which the University can reflect its environmental concerns in its investment decisions, including seeking investment in low carbon energy assets, actively engaging with companies it invests with in order to influence decision making, tackling irresponsible corporate behaviour, helping to achieve carbon reduction targets and divesting from those companies which are deemed to be in fundamental breach of acceptable standards of ethical and/or environmental practice. The University has a particular concern in relation to fossil fuels, and will not invest in companies involved in fossil fuel extraction or production.
As an investor, the University has three means of bringing pressure to bear on corporate behaviour: acquisition, engagement and divestment.
Where a company in which the University currently holds shares does not respond positively to concerns about its practices and is deemed to be in fundamental breach of acceptable standards of ethical and/or environmental practice, the University will divest itself of shares in that company and require the investment manager to inform the company of its reasons for doing so.
- Acquisition - UCL will incorporate ESG (Environmental, Social, Governance) factors into their selection criteria.
- Engagement with companies where ESG issues are a concern. Where the University invests in any company that does not appear to be pursuing sound ethical business practices and/or displaying appropriate environmental responsibility, investment managers will seek to persuade that company to operate in a more socially and environmentally responsible manner, both informally and formally (raising issues at Annual General Meeting and exercising its shareholder’s right to vote).
- Divestment - UCL will monitor the performance of companies and bring recommendations for divestment strategies to the Investment Committee for a decision, before ultimately divesting from those companies as described above.
The University will review this Policy for Socially Responsible Investment every two years.
The ethical principles outlined in UCL’s Investment Policy are upheld and reviewed through UCL’s Investment Committee, which reports through Finance Committee to Council, UCL’s governing body.
The Committee considers requests from the UCL community (including all staff, students and alumni) to review the ethical standing of stocks and sectors within UCL’s current investment portfolio.
The Committee includes student representation with the current UCL Union Democracy, Operations and Community Sabbatical Officer in attendance, who voices any concerns raised by the wider student community, including Fossil Free UCL
UCL’s Investment Committee undertakes ‘negative screening’, i.e. the exclusion of stocks from the existing portfolio on the grounds that such stocks do not meet the ethical standards of UCL.