PAE 15: Sustainable Investment 12 pints available A. Credit Ratinale This credit recgnizes institutins that use their investment pwer t prmte crprate sustainability. This culd take the frm f making psitive investments that prmte sustainability r engaging with cmpanies in which they already hld investments. Psitive investing supprts scially and envirnmentally respnsible practices and the develpment f sustainable prducts and services. Active investr engagement can help align an institutin s investments with its values, prtect the institutin frm the financial cnsequences f fines, lawsuits, custmer byctts and damages t a cmpany s reputatin that may result frm unsustainable crprate behavir, and imprve the sustainability perfrmance f the businesses it invests in. Bth types f activities cntribute tward a mre just and sustainable financial system B. Criteria There are tw pssible appraches t earning pints fr this credit. Institutins may pursue ne r bth. Institutins fr which investments are handled by the university system and/r a separate fundatin f the institutin shuld reprt n the activities f thse entities. Optin 1. Institutin invests in ne r mre f the fllwing: Sustainable industries, such as renewable energy r sustainable frestry Businesses selected fr exemplary sustainability perfrmance (e.g. certified B Crpratins) Sustainability investment funds, such as a renewable energy r impact investment fund Cmmunity develpment financial institutins (CDFI) Scially respnsible mutual funds with psitive screens. Investment in a scially respnsible mutual fund with nly negative screens (i.e. ne that excludes egregius ffenders r certain industries, such as tbacc r weapns manufacturing) des nt cunt. Green revlving lan funds that are funded frm the endwment and/r Optin 2. Institutin has plicies and/r practices that meet ne r mre f the fllwing criteria: Has a publicly available sustainable investment plicy, fr example t cnsider the scial and/r envirnmental impacts f investment decisins, in additin t financial cnsideratins Uses its sustainable investment plicy t select and guide investment managers STARS 2.0 Technical Manual 282 PAE Investment
Has engaged in prxy vting t prmte sustainability, either by its CIR r ther cmmittee r thrugh the use f guidelines, during the previus three years Has filed r c-filed ne r mre sharehlder reslutins that address sustainability r submitted ne r mre letters abut scial r envirnmental respnsibility t a cmpany in which it hlds investments, during the previus three years Has a publicly available investment screening plicy, fr example t prhibit investment in an industry (e.g. tbacc r weapns manufacturing) r participate in a divestment effrt Engages in plicy advcacy by participating in investr netwrks (e.g. Principles fr Respnsible Investment, Investr Netwrk n Climate Risk, Interfaith Center n Crprate Respnsibility) and/r engages in inter-rganizatinal cllabratins t share best practices C. Applicability This credit applies t institutins with endwments f US $1 millin r larger. Institutins with endwments less than US $1 millin may chse t mit this credit. D. Scring An institutin earns the maximum f 12 pints available fr this credit by investing 100 percent f its investment pl in ne r mre f ways listed in Optin 1 (abve) r by investing 50 percent f its investment pl sustainably and meeting all f the investr engagement criteria listed in Optin 2 (abve). Incremental pints are available fr Optin1 and partial pints are available fr Optin 2. Each ptin is scred as fllws: Optin 1: Psitive Sustainability Investment Institutins earn the maximum f 12 pints available in Optin 1 by investing 100 percent f its investment pl in ne r mre f the ways listed abve. Incremental pints are awarded based n the percentage f the institutin s investment pl that is invested sustainably. Fr example, an institutin that invested 50 percent f its investment pl sustainably wuld earn 6 pints (half f the pints available in Optin 1). Enter values as indicated belw t calculate pints earned using Optin 1 Pints will be calculated autmatically when data are entered in the STARS nline Reprting Tl Factr Multiply Value f Psitive Sustainability Investments Divide Ttal Value f the Investment Pl Equals Ttal Pints Earned fr Optin 1 12 = STARS 2.0 Technical Manual 283 PAE Investment
Optin 2: Investr Engagement 1 pint is awarded fr each f the plicies r practices listed. An institutin with all f the plicies and practices listed wuld earn the maximum f 6 pints available fr Part 2. Ttal pints earned fr this credit are calculated accrding t the fllwing table: Enter values as indicated belw t calculate pints earned fr this credit Pints will be calculated autmatically when data are entered in the STARS nline Reprting Tl Pints Earned in Optin 1: Psitive Sustainability Investments Add Pints Earned in Optin 2: Investr Engagement Equals Ttal Pints (up t 12 available) + (up t 6 available) = (up t 12 available) STARS 2.0 Technical Manual 284 PAE Investment
Scring Example: Sustainable Investment Mdel Cllege s investment pl ttals $100 millin. The cllege invests $20 millin in sustainable industries and cmmunity develpment financial institutins. The cllege als engages as an investr in 3 ways, by: (1) having a sustainable investment plicy; (2) using its plicy t select and engage its investment managers; and (3) participating in the Investr Netwrk n Climate Risk. Optin 1: Psitive Sustainability Investment Factr Multiply Value f Psitive Sustainability Investments Divide Ttal Value f the Investment Pl Equals Ttal Pints Earned fr Optin 1 12 20 millin 100 millin = 2.4 Optin 2: Investr Engagement 1 pint is awarded fr each f the plicies r practices listed fr a ttal f 3 pints. Ttal pints earned fr this credit are calculated accrding t the fllwing table: Pints Earned in Optin 1: Psitive Sustainability Investments Add Pints Earned in Optin 2: Investr Engagement Equals Ttal Pints 2.4 + 3 = 5.4 E. Reprting Fields Required Ttal value f the investment pl (US/Canadian dllars) Value f hldings in each f the fllwing categries: Sustainable industries, such as renewable energy r sustainable frestry (US/Canadian dllars) Businesses selected fr exemplary sustainability perfrmances (US/Canadian dllars) STARS 2.0 Technical Manual 285 PAE Investment
Sustainability investment funds, such as a renewable energy investment fund (US/Canadian dllars) Cmmunity develpment financial institutins (CDFI) (US/Canadian dllars) Scially respnsible mutual funds with psitive screens (US/Canadian dllars) Green revlving funds funded frm the endwment (US/Canadian dllars) An indicatin f whether the institutin has a publicly available sustainable investment plicy An indicatin f whether the institutin uses its sustainable investment plicy t select and guide investment managers An indicatin f whether the institutin has engaged in prxy vting, either by its CIR r ther cmmittee r thrugh the use f guidelines, t prmte sustainability during the previus three years An indicatin f whether the institutin has filed r c-filed ne r mre sharehlder reslutins that address sustainability r submitted ne r mre letters abut scial r envirnmental respnsibility t a cmpany in which it hlds investments during the previus three years An indicatin f whether the institutin has a publicly available investment screening plicy An indicatin f whether the institutin engages in plicy advcacy by participating in investr netwrks and/r engages in inter-rganizatinal cllabratins t share best practices An affirmatin that the submitted infrmatin is accurate t the best f a respnsible party s knwledge and cntact infrmatin fr the respnsible party. The respnsible party shuld be a staff member, faculty member, r administratr wh can respnd t questins regarding the data nce submitted and available t the public. Cnditinal Required if the institutin is claiming pints fr psitive sustainability investments (Optin 1): A brief descriptin f the cmpanies, funds, and/r institutins referenced abve. Specific disclsure f hldings (e.g. fund r cmpany names) is nt required; general infrmatin abut the industries r fund types represented by the hldings is sufficient. Required if the institutin is claiming pints fr having a publicly available sustainability investment plicy: Uplad plicy r prvide a website URL where plicy is available Required if the institutin is claiming pints fr using its sustainable investment plicy t select and guide investment managers: A brief descriptin f hw the plicy is applied, including recent examples Required if the institutin is claiming pints fr engaging in prxy vting: STARS 2.0 Technical Manual 286 PAE Investment
Uplad prxy vting guidelines r prxy recrd, prvide a website URL where guidelines r recrd is available, r prvide an indicatin that managers are adhering t plicy Required if the institutin is claiming pints fr engaging with crpratins in its prtfli abut sustainability issues during the previus three years: Examples f hw the institutin has engaged with crpratins abut sustainability issues during the previus three years Required if the institutin is claiming pints fr having an investment screening plicy: A brief descriptin f the plicy and hw it has been implemented Apprximate percentage f endwment that the plicy applies t Required if the institutin is claiming pints fr engaging in plicy advcacy by participating in investr netwrks and/r inter-rganizatinal cllabratins: A brief descriptin f the netwrks and/r cllabratins Optinal The website URL where infrmatin abut the institutin's sustainable investment effrts is available Ntes abut the submissin F. Measurement Timeframe Reprt n current plicies and actins taken within the past three years. Sampling and Data Standards Reprt n a snapsht f the entire investment prtfli in Optin 1. Reprting n a sample f the endwment r a special fund f the endwment is nt allwed fr this credit. Institutins shuld strive t reprt n a representative snapsht. G. Standards and Terms B Crpratins Certified B Crpratins are a type f crpratin that meets cmprehensive and transparent scial and envirnmental perfrmance standards, meets higher legal accuntability standards, and builds business cnstituency fr public plicies that supprt sustainable business. B Lab, a nnprfit rganizatin, certifies B Crpratins. Cmmunity Develpment Financial Institutin Cnsistent with the Respnsible Endwments Calitin, a CDFI is defined as: STARS 2.0 Technical Manual 287 PAE Investment
A financial institutin established t prvide credit, financial services, and ther services t underserved markets r ppulatins. Investing in CDFIs prmtes sustainability by helping prvide credit t individuals and cmmunities wh are underserved by cnventinal lending institutins. In additin, CDFIs prvide an pprtunity fr institutins t invest in their lcal cmmunities. Investment Pl Cnsistent with the Natinal Assciatin f Cllege and University Business Officers (NACUBO), investment pl is defined as: The predminant asset pl r gruping f assets that is rganized primarily t supprt the institutin and reflect its investment plicies. Psitively Screened Fund A fund in which managers practively select businesses based n exemplary scial and/r envirnmental perfrmance. Negative Screen Cnsistent with the Respnsible Endwments Calitin negative screens are defined as fllws: Negative screens exclude certain industries r prducts frm investment prtflis. Schls r ther investrs can apply a negative screen t their investment prtfli t exclude cmpanies frm their investments. Screens are ften applied by individual investrs t ne r mre f the fllwing sectrs: tbacc, liqur, weapns, prngraphy, nuclear technlgies, resurce extractin (mining and drilling) and family planning prducts. Dzens f schls have screened ut tbacc frm their prtflis, and a handful f ther schlsmstly religiusly affiliatedhave applied stricter screens. Sharehlder Reslutin Cnsistent with the Respnsible Endwments Calitin, sharehlder reslutins are defined as: Frmal statements that are sent annually t every single sharehlder f a publicly traded cmpany n a prxy ballt. Sharehlder reslutins are als knwn as sharehlder prpsals r prxy reslutins. These reslutins usually wrk like a nnbinding referendum n a specific issue within a firm. [ ] Any sharehlder wh wns mre than $2,000 f a cmpany s stck fr ne year prir t the vte can write and file a reslutin and every sharehlder has the right (and duty) t vte n the reslutins f all cmpanies in which they wn stck. The reslutin prcess is gverned by the Securities and Exchange Cmmissin (SEC), a federal agency STARS 2.0 Technical Manual 288 PAE Investment
respnsible fr verseeing the market and crprate gvernance systems that prtect sharehlders frm each ther, frm managers and frm themselves. STARS 2.0 Technical Manual 289 PAE Investment