Pitt’s ESG report featured on dedicated webpage | University time
By SHANNON O.WELLS
The inaugural report on Pitt’s commitment to include environmental, social and governance (ESG) factors in the management of its consolidated endowment fund now has its own dedicated webpage. The online site provides a user-friendly portal and overview showing how these factors are factored into Pitt’s investment decision-making process.
“The goal of the new ESG webpage is to clarify how ESG factors are applied in the University’s Consolidated Endowment Fund (CEF) investment decision-making process,” said Jeffer Choudhry, Pitt’s chief investment officer. “We hope the university community sees the new page as an effort to improve overall awareness of this important topic.”
Officially launched in July, the page highlights the ESG report originally published in March. The report outlines the goal of “fully integrating” ESG factors into the University’s decision-making processes based on “the fundamental belief that supporting responsible business practices also promotes strong investment results” , indicates a statement on the page.
The report is derived from Pitt’s official ESG policy statement, adopted in March 2020, which clarifies how ESG factors are integrated into endowment investment-based decisions. It also discusses the Pitt Endowment’s fossil fuel investment exposure as determined by the Board’s Fossil Fuels Ad Hoc Committee.
The webpage explains that the inaugural ESG report has been delayed to accommodate fiscal year 2021 investment statements as well as the process of hiring a chief investment officer. Choudhry was hired in January to replace Gregory Schuler, who stepped down in 2021.
Hari Sastry, Pitt’s senior vice chancellor and chief financial officer, noted earlier that while the report itself is new, the university has incorporated many ESG-focused concepts into its investment practices since 1990. Choudhry explained that “Pitt’s ESG policy builds on this approach and ensures a more consistent and comprehensive approach to evaluating investment opportunities for endowment.
The University’s investment exposure to fossil fuels has recently declined, in part due to the decline of energy companies in public markets and Pitt’s declining investment in private markets. The report shows a decline in the Endowment’s total portfolio exposure to fossil fuels from 10% as of June 30, 2015 to 5.9% as of June 30, 2021. The latter figure reflects Pitt’s total exposure to fossil fuels, with 1.4% of this public exposure. – commercial and 4.5% private investments. Figures for the 2021-22 financial year ended June 30, 2022 will be available in September.
“As mentioned in the ESG report, private holdings are expected to drop to zero by 2035 as our investment managers liquidate them over time,” Choudhry said. “The public share is likely to fluctuate depending on the energy companies listed on the stock exchange.”
The report also notes that the Finance Office has not made any new fossil fuel investments since February 2021, when the ad hoc committee’s report was released. “Fossil fuel exposure in CEF’s public market holdings is expected to remain low as fossil fuel exploration and production is expected to continue to become less attractive over time,” he said.
“We know and expect that CEF will generally fluctuate with the broader market,” Choudhry noted. “Fortunately, the University has the advantage of being a patient long-term investor who can ride out short-term swings. We also benefit from a partnership with talented third-party investment managers who can take advantage of these fluctuations to help mitigate risk.
While the report notes that the investment industry’s lack of quantitative measurement standards limits the usefulness of the ESG report and Pitt’s ability to assess progress, Choudhry said the value of the report is substantial and will increase once these limitations overcome.
“The ESG report is an important step in our efforts to increase the transparency of our investment processes,” he said. “This report includes more information about endowment investments than (Pitt has provided) in the past. We look forward to the day when there is a standardized set of industry-established metrics for evaluating ESG investing. As these standards are developed, we will explore their inclusion in future reports.
To be on par with peer university endowments, Pitt’s finance office hired an advisory firm focused on sustainable investing to advise it in developing ESG policy. The office reviewed ESG and/or socially responsible investment (SRI) policies published by 19 public and private peer universities, including those with similar endowments.
Factors Pitt considers when assessing investment risk include energy efficiency, hazardous materials management, climate change, water and land management, data protection and privacy. , human rights, labor standards, product safety, accounting and auditing standards, bribery and corruption, business ethics and regulation. compliance, the website says.
“Pitt is one of the first public universities to publish an ESG report, and we want to improve awareness and understanding of the endowment’s investment practices,” Choudhry said, adding that he meets regularly with key student organizations and was speaking to the Chancellor’s Advisory Council on Sustainability. in June with the aim of improving “overall awareness” and creating ongoing dialogue. “I look forward to continued engagement with the Pitt community on our ESG efforts.”
Shannon O. Wells is a staff writer for the University Times. Join it at [email protected].
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