Frequently asked questions on investment responsibility
The Board of Trustees on Dec. 4, 2018, announced a new investment responsibility framework for Stanford, including a new educational and research initiative. Below are answers to questions about the new set of actions.
What is being announced?
Stanford’s Board of Trustees has concluded a year-long review of investment responsibility issues. There are four components to what is being unveiled, described further in a Stanford Report story and a letter from Board Chair Jeff Raikes:
- A new $10 million educational and research initiative focusing on responsible, sustainable and impact investing and governance
- A Stanford Management Company Ethical Investment Framework
- An updated Statement on Investment Responsibility issued by the Board of Trustees
- An updated process for investment responsibility requests to be heard within the university
What will the educational and research initiative consist of?
The year-long investment responsibility review highlighted the enthusiasm from the university community for additional education and learning opportunities in the area of responsible investing. The new initiative will enable the university to both bring together existing specialized programs spread across several schools and develop new programs.
The initiative will serve as a centralized resource for undergraduate and graduate students, faculty, alumni and industry leaders in the area of responsible investment. Examples of activities include partnering with existing programs; supporting and creating new research and learning experiences; and hosting sustainable/ESG/responsible investment-related educational events, conferences, workshops and trainings.
The university has committed $10 million over a 10-year period to the initiative, which will be developed over the next year in collaboration with faculty and staff from across the university, including the Graduate School of Business, Stanford Law School and the School of Humanities and Sciences. A faculty working group will begin meeting in January 2019 to plan the scope and mission of the new initiative.
How will the new investment responsibility proposal process work?
The process is outlined in the Investment Responsibility Guidelines, which are intended to create a clearer and more effective process. An individual or group with an investment responsibility concern will be able to make a proposal to the Investment Responsibility and Stakeholder Relations (IRSR) office and to the Special Committee on Investment Responsibility (SCIR) of the Board of Trustees.
The SCIR will review the proposal in the context of the Statement on Investment Responsibility. The SCIR can decide whether further review of the proposal is necessary. If so, it will undertake a full evaluation of the issue. In doing so, the SCIR can choose to form an ad-hoc fact-finding committee, which would include subject-matter experts and would be responsible for research and campus engagement where needed. The SCIR may make a recommendation to the full Board of Trustees who would then make the final decision on what action, if any, should be taken on the request.
What will happen to the Advisory Panel on Investment Responsibility and Licensing (APIRL)?
It will not continue as a standing committee, consistent with what the APIRL itself recommended in its report to the Board of Trustees. However, as noted, the board’s Special Committee on Investment Responsibility may create ad-hoc task forces for research, fact-finding and community engagement where needed on specific issues as they come up.
In cases where the Board of Trustees previously has taken an action to divest, what happens now?
Where the Board previously has taken an action to divest, that action will remain in place. Any group wishing to make a request for review of an investment responsibility issue going forward can do so through the new Investment Responsibility Guidelines.
The APIRL report suggested adopting the United Nations Principles of Responsible Investment. Why is this not part of the outcome announced by the Board?
The APIRL also noted in its report that “the university might decide instead to adopt a variant of the PRI principles or a custom ethical or sustainable investing framework.” That is what Stanford Management Company has done by developing its new Ethical Investment Framework.
The APIRL report also suggested increased transparency around investments. How is that being achieved?
Stanford Management Company has adopted expanded annual reporting and an expanded website among its efforts to enhance visibility and clarity. Details of the university’s investment holdings are not public, as Stanford Management Company CEO Rob Wallace recently explained in a Stanford Report Q&A, because competition from other entities seeking to mirror Stanford’s investments would damage results.