Environmental, Social & Governance Integration
Our Sustainable Investments team supports the Investment Office by providing expertise and support for significant environmental, social & governance (ESG) risks and opportunities that can affect our investments. We serve as the central hub for research and communication of sustainable investment insights and methodologies across our organization.
We work with our assets classes and investment office leadership to:
- Assess and manage high-value ESG risks and opportunities alongside traditional factors in the investment process.
- Review, pilot, procure, and/or create useful tools to facilitate integration of high-value ESG topics into investment processes.
- Recognize profitable opportunities based on ESG characteristics and those considered most at risk from shifts toward more sustainable products and services.
- Identify ways to generate positive social and environmental impact with strong financial returns. We call these "Why Wouldn't You?" opportunities.
Recent Research Projects
Staff from throughout the Investment Office are working to determine how our portfolio is exposed to water scarcity in light of increasing demand for water and a decreasing supply of water. The results will inform our engagement with key companies and managers.
In 2018-19, staff from multiple asset classes spent a year working with technology experts and external managers to review the latest industry papers on emerging technologies. The goal was to identify and understand potentially disruptive emerging technologies and how they may present new opportunities or risks to our portfolio.
Sustainable Investment Practice Guidelines
Acknowledging sustainability issues can impact all areas of the portfolio, we develop, use, and continually refine tools and practices to help our internal and external managers utilize sustainable investment considerations throughout the life cycle of the investments. These includes investment selection, and contracting and monitoring processes, which are subject to fiduciary principles.
In 2016, each asset class developed a set of sustainable investment practice guidelines that reflects their needs and strategies. The guidelines integrate existing beliefs, principles, and policies related to ESG considerations, including our Investment Beliefs, Global Governance Principles (PDF), and United Nations-supported Six Principles for Responsible Investment.
These guidelines are intended to evolve and adapt with industry best practices and as data and tools emerge and improve:
- Global Equity Sustainable Investment Practice Guidelines (PDF)
- Global Fixed Income Sustainable Investment Practice Guidelines (PDF)
- Private Equity Sustainable Investment Practice Guidelines (PDF)
- Real Assets Sustainable Investment Practice Guidelines (PDF)
Sustainable Investment Research Initiative (SIRI) Library
We believe it is important to ground our approach in data and evidence. For this reason, we created the Sustainable Investment Research Initiative (SIRI) Library. SIRI was designed to promote innovative thought leadership that would advance and inform our understanding of sustainability factors and the impact they may have on companies, markets, and investment intermediaries.
In 2013, SIRI compiled more than 700 academic papers that evaluated environmental, social, and governance issues, and their impact on value creation and risk management. In 2017, with our academic partners such as UC Davis Graduate School of Management, we completed a SIRI refresh which included an additional 1,200 academic papers. SIRI is now a searchable database of over 1,900 papers on ESG topics, including new issues such as income inequality and diversity.