Sustainable Investment Framework

The University’s Sustainable Investment Framework (SIF) outlines the University's approach to sustainability, particularly climate change, in its investment portfolios and processes. In line with the commitments set out in the Sustainability Plan 2017–2020, the SIF ensures that we integrate climate change risk more systematically into investment management.

The SIF was developed with advice from Mercer Investments and approved by University Council on 13 December 2017 . It is informed by local as well as global best practice, informed by the Australian Prudential Regulation Authority (APRA), UN-backed Principles for Responsible Investment (PRI) and recommendations from the global Financial Stability Board Taskforce on Climate Related Financial Disclosure (TCFD).

Read more about the development of the Sustainable Investment Framework.

An extension to include property and infrastructure was added on 9 March 2021.

Our approach

The University believes that companies that effectively manage their Environmental, Social and Governance (ESG) responsibilities should deliver better risk-adjusted returns over the long term. The SIF aims to improve investment outcomes by integrating ESG factors, including climate change risk and opportunity, into the investment decision-making process, consistent with the University’s fiduciary duties. The SIF also aims to improve the carbon footprint of the University’s listed equity portfolio where possible without negatively impacting its overall investment objectives.

Assessment of Fund Managers

The University’s approach is informed by its outsourced investment management structure, where the University outsources decisions on individual securities. In the first instance, the University will assess and monitor the performance of each of its Fund Managers, using the following criteria:

  • Awareness of climate change risk and potential impact
  • Process for identifying, assessing, and managing climate change risk as part of portfolio risk management
  • Portfolio stress testing against scenarios, including a 2-degree Celsius scenario
  • Identification of long-term opportunities linked to climate change
  • Incorporation into investment decision-making
  • Exercising of stewardship responsibilities to mitigate climate change risk

Performance assessment will also include a listed equity carbon footprint of the portfolio, focusing on the weighted average carbon intensity (WACI). The University may also identify individual listed equity investments for more in-depth material climate change risk assessment.

Exercising active ownership

Investments determined to have a material climate change risk will be brought to the attention of the Fund Manager to determine an appropriate resolution, which may result in engagement or disposal. If, based on its overall assessment, the University determines that the Fund Manager is not appropriately integrating climate change risk and opportunity into its investment processes, the University will reassess its ongoing relationship with the Fund Manager.

As a long-term investor focused on sustainability, the University is committed to responsible investment stewardship and active ownership, in order to improve the risk-adjusted return outcomes of the portfolio.

Review process under the SIF

SIF Review Process worklflow

Reporting

The University publicly reports on its performance against the SIF in its annual Sustainability Report. All Sustainability Reports can be found at Sustainability Framework.

Contact

For queries or to provide feedback on our sustainability framework, please contact us at:
sustainable-campus@unimelb.edu.au