Have a question?
What is the status of your divestment campaigns?
UBC came out in support of divestment in December 2019 and set a goal of full divestment by 2030 in September 2020. Since then, UBC has moved some holdings to fossil-free funds and reduced fossil fuel holdings to 1.4% of the endowment (down from 6% in 2016 and 2% in 2019). You can learn more about the story of the campaign by watching the Story of Divestment at UBC.
On November 1st, 2021, SFU committed to full divestment by 2025. This followed an announcement in October 2021 that it had already transferred $340 million to fossil fuel-free funds and reduced fossil fuel holdings to 5% of total investments.
On February 2, 2021, UVic announced it had fully divested its working capital fund. Further, on November 17, 2021, the UVic Foundation announced it has partially divested the endowment fund. Specifically, UVic has fully divested its endowment equities from fossil fuels. It still retains some fixed income fossil fuel investments which make up 0.4% of the endowment.
All three campaigns were years-long battles, starting around 2013, and we continue to hold our universities accountable for following through. To learn more about the Canadian divestment movement and stay up to date with ongoing campaigns, check out and follow the Divest Canada Coalition.
Which pools of money are you asking universities to reinvest?
We are asking our universities to reinvest the funds that they have or are in the process of divesting. Specifically, we are asking:
UBC to reinvest 10% of its Endowment Fund ($2.03 billion) and Working Capital Fund ($1.07 billion), totaling approximately $310 million.
SFU to reinvest 10% of its endowment funds ($650 million) and non-endowment and working capital funds ($550 million), totalling approximately $120 million.
UVic to reinvest 10% of the UVic Foundation endowment ($525 million) and the UVic working capital fund ($331 million), totalling approximately $86 million.
Endowment funds are investments—usually derived from donations, but in the case of UBC it includes land revenues as well—that are invested in perpetuity. The returns generated by these investments are used to fund activities such as scholarships and research chairs. The initial capital is never spent.
Working capital funds are reserves of money used for operating purposes and invested for the short-term in low-risk assets. Funds may come from provincial operating grants, tuition, private, corporate and government research grants, operating income and funds for capital projects.
If you are a university faculty or staff member and would like to see your pensions divested and reinvested as well, feel free to contact us and we would be happy to chat about supporting a campaign around that.
Why 10%?
We understand our university investment portfolios need to stay diversified in order to meet their financial objectives and duty to invest prudently. Given this, we think 10% is a reasonable and achievable goal. In 2019, the Concordia University Foundation set a goal of 10% in impact investments, with priority to student-led social enterprise and local Quebec businesses. We think this sets a strong precedent for our universities to meet a similar target and go beyond by focusing exclusively on local impact first investments.
We would like to see our universities start with $10 million each and increase the amount incrementally from there. By signaling intent for community reinvestment, our universities can catalyze even more potential investments, creating a plethora of opportunities for financially secure and socially just investing.
Who should decide what our universities reinvest in?
We are proposing that our universities each create a Community Investment Committee composed of members of the university and local community that hold expertise in community economic development, social and environmental justice, solidarity economies, business and finance, as well as relevant lived experience. Further, we propose that each university will establish a selection committee composed of representatives from our student unions and climate justice oriented student organizations which will be responsible for reviewing applications for the committee and recommending members for appointment.
Is what you’re asking for the same as
impact investing?
Impact investing refers to a range of investments that have both a financial return as well as an environmental or social return. It includes both investments that require competitive market rate returns while others will accept lower returns for greater impact. When we call for community reinvestment, we are asking for impact first investments. This means the societal benefit should always be the top priority with financial returns being a secondary objective. We are also asking for investments to be restricted to our community, in this case the province of BC. As such, some impact investments are considered community investments, while others are not. We use the term community impact investing because both community and impact are crucial.
Isn’t this a capitalist solution to our societal problems which were themselves created by capitalism?
The goal of reinvestment is to shift the conversation about what type of returns our money should be making and for whom. We believe an investment should mean investing in building stronger, healthier, more equitable communities, not merely investing in financial growth for those who already possess capital.
In calling for community reinvestment, we are calling for non-extractive finance. This means social purpose must be prioritized over financial return, and organizations should have enough money left over after paying interest to grow their organization and build wealth in their community. In doing so, we can shift economic power towards local and democratic organizations like cooperatives, credit unions and community land trusts which will support the transition towards a just and regenerative economy.
We understand reinvestment is not the ultimate solution to the deeply systemic issues of our time. We also need large scale policy changes and regulation, along with wealth redistribution, reparations and respect for Indigenous rights and title. Like divestment, this is just one piece of the puzzle towards building a just and sustainable future.
We encourage you to check out Regenerative Finance’s Regenerative Economy Values and Resource Generation’s Transformative Investment Principles.
What is the expected return for community reinvestments?
There is a wide range of risk/return profiles within the realm of community investment, allowing for strong diversification. Each product has its own advantages and limitations; when put together these different products can complement one another to meet overall objectives. Impact GICs, for example, produce secure cash flows with low returns and little risk. Social impact ventures, on the other hand, usually offer high returns but with higher risk, low liquidity and a longer time horizon. Meanwhile, community bonds often offer low-medium returns, stable cash flows, variable levels of risk and lower liquidity. Although some community impact investments offer competitive returns, generally speaking, the returns are lower than market rate due to being non-extractive and impact first.
From Bridges Ventures (2012):
If community investments offer lower returns, how can this be compatible with our universities’ fiduciary duties?
And won’t this cause our universities to lose money available for university activities?
While returns for community investments may be lower than traditional investments, they are comparable to existing portions of university investments such as fixed income and money market products.
Further, community investments offer financial benefits such as portfolio diversification which supports risk mitigation, thus aligning with fiduciary duty. Community impact investments have low correlation with traditional asset classes and can hedge against systemic risks in the economy, such as climate change and other ESG risks.
Community impact investments may be considered counter-cyclical, experiencing stronger demand during economic downturns than the rest of the market due to their role in providing for critical societal needs in the real economy. These investments provide stability during market crises, hedging against downturns. For example, during the 2008 Great Recession, social investments in many cases reported consistent positive returns whereas traditional investments saw double digit losses. Similarly, credit unions fared better than traditional banks during the 2008 financial crisis, due to safer lending practices, driven by their non profit-maximizing objectives.
Community impact investments often have greater perceived risk than their real risk simply due to being unconventional investments. Traditional investors are known to herd towards “conforming assets,” viewing new investments as risky even if they are not. This can steer investment decisions away from beneficiaries’ best interests. Given the poor track record of traditional short-term oriented investment metrics in protecting investors from the 2008 crisis, new metrics are needed oriented toward long-term value creation and contribution to the real economy. These new metrics will recognize the positive contribution of community impact investments to the financial wellbeing of a portfolio.
A prudent approach to community investment requires integration into the portfolio-wide investing strategy, adjusting other investments as needed to accommodate the risk and return profiles of new investments. The prudent investor standard applies to the portfolio as a whole. This means certain investments may carry greater risk or offer lower financial returns, provided that the portfolio as a whole is appropriately balanced and diversified. By finding the right balance of risk/return profiles and asset classes across the whole portfolio, an integrated portfolio approach can improve total risk-adjusted returns.
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