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Harvard University Endowment

PRI reporting framework 2016

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ESG incorporation in actively managed listed equities

Implementation processes

LEI 03. Percentage of each incorporation strategy

03.1. Indicate (1) which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities and (2) the breakdown of your actively managed listed equities by strategy or combination of strategies (+/- 5%)

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied
100 %
Total actively managed listed equities 200%

03.2. Describe your organisation’s approach to incorporation and the reasons for choosing the particular ESG incorporation strategy/strategies.

Harvard maintains a strong presumption against divesting for non-financial reasons. From time to time, Harvard University's Corporation Committee on Shareholder Responsibility ("CCSR") addresses questions of investment (or divestment) policy. Examples include the 1989 decision to divest from companies engaged in the manufacture of tobacco products, as well as decisions in 2005 and 2006 to divest from certain companies involved in oil production activities with the Government of Sudan (which had been found to be engaging in genocide). To ensure compliance with the University's directive to divest from these securities, HMC uses negative investment screens for such securities for all of its internally managed listed equities.

HMC does not apply thematic ESG incorporation.  No asset class or portfolio carries a specific ESG-themed mandate (such as clean energy).  Rather, HMC seeks to integrate relevant material ESG risk factors into its investments.  HMC believes integration (rather than thematic incorporation) better suits the investment mandate of Harvard University and does not unduly restrict the investment universe.

03.3. Where assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

03.4. Additional information. [Optional]


LEI 04. Type of ESG information used in investment decision (Not Completed)


LEI 05. Information from engagement and/or voting used in investment decision-making (Private)


(A) Implementation: Screening

LEI 06. Types of screening applied

06.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

The CCSR determines the exclusionary screens that HMC should apply to its assets.  Currently, HMC negatively screens companies involved in the manufacture of tobacco products, and certain companies involved in oil production activities with the Government of Sudan (e.g., PetroChina Company Limited).

06.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

Harvard maintains a strong presumption against divesting for non-financial reasons. From time to time, the CCSR addresses questions of investment (or divestment) policy. Occasionally, the CCSR seeks advice on such questions from the University's Advisory Committee on Shareholder Responsibility ("ACSR"). Proposals on negative screening are addressed by the CCSR on a case-by-case basis as they arise. On the rare occasions when a decision is made in favor of a negative screen, appropriate notice is given to the relevant investment managers, and the screens are publicly disclosed. Any changes are made public. Information about the ACSR and CCSR, and about these exclusions, is available here: http://www.harvard.edu/shareholder-responsibility-committees.

06.3. Additional information. [Optional]


LEI 07. Processes to ensure screening is based on robust analysis

07.1. Indicate which processes your organisation uses to ensure that screening is based on robust analysis.

07.2. Additional information. [Optional]


LEI 08. Processes to ensure fund criteria are not breached (Private)


(C) Implementation: Integration of ESG issues

LEI 10. Review ESG issues while researching companies/sectors

10.1. Indicate if E, S and G issues are reviewed while researching companies and/or sectors in active strategies.

ESG issues

Coverage/extent of review on these issues

Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

10.2. Additional information. [Optional]

HMC portfolio managers identify and research ESG risk factors that are relevant and material to their investment decisions on a case-by-case basis.


LEI 11. Processes to ensure integration is based on robust analysis (Not Completed)


LEI 12. Aspects of analysis ESG information is integrated into (Private)


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