Friday, September 11, 2015
More on UC going green (and saving the world!)
Jagdeep Singh Bachher is the chief investment officer of the University of California regents.
...Over the past few months, the university has sold its remaining direct holdings in coal-mining and oil-sands-focused companies. The move is part of our new risk-review process that more comprehensively considers environmental sustainability, social responsibility and governance risks in our investment strategy... Our approach to sustainability counters the timeworn trope that institutional investors can adopt a values-based investment strategy only if they can guarantee targeted returns. In our view, institutions that ignore societal values in their investment strategy imperil their bottom line — today and for years to come... As a global leader in sustainability research and practice, the University of California has been wary of coal-mining and oil-sands investments for a while. Our sell-off of the small holdings in our active portfolio acknowledges the growing regulatory and market risks associated with these businesses.
More tellingly, hedge funds that were short-selling coal shares this year have been rewarded handsomely for that choice. Over the same period, Goldman Sachs struggled to write off its $200 million investment in a Colombian coal mine as labor unrest and other operational challenges racked up substantial losses...This year, we joined the White House in an effort to help long-term investors such as ourselves — pension funds, endowments, sovereign funds, family offices and foundations — identify, screen, assess and invest in companies that offer the most promising, and potentially profitable, solutions to climate change. We believe the performance of such investments will unlock billions and potentially trillions of dollars within those key investor communities to help companies bridge the gap between innovation and commercialization, and speed the distribution of technology that reduces global greenhouse gas emissions.
As our students return to campus with the certainty of purpose that divestment is the only solution to society’s woes, we are integrating sustainability into our investment framework as a philosophy of long-term investing in and for the future, and as a key metric for evaluating risk.By doing so, we will not only be able to generate competitive, risk-adjusted, long-term investment returns, but also help save the world.
Full op ed at http://www.sfchronicle.com/opinion/article/Why-UC-doesn-t-embrace-blanket-disinvestment-of-6496833.php?t=28f2ada17fcefdcb88&cmpid=twitter-premium
Save the world! Wow!