The document summarizes a case study of the University of Toronto's engagement in responsible investing. Through interviews and document review, it was found that student initiative was the driving force behind the creation of the University's Responsible Investment Committee. Maintaining legitimacy and institutionalizing change over time as student members graduate were identified as the biggest challenges. The document recommends that the University conduct further research, join collaborative initiatives, and educate trustees to help fully institutionalize responsible investing practices.
University Engagement in Responsible Investment: A Case Study of the University of Toronto
1. A New Role in the Social Economy for Universities? Case study of the University of Toronto Engagement in Responsible Investing Heather Hachigian Presented to the Panel on Social Finance in Canada II at the Annual Conference of the Association for Non-Profit and Social Economy Research, Concordia University, Montreal June 02, 2010
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7. Theoretical Framework: Institutional Change Stages of Change 1. Knowledge Prior history and knowledge of innovation (characteristics of organization) 2. Persuasion (Stakeholders) -Dialogue -Education -Power/influence 3. Decision (Administrative) Accept or Reject (External pressures, other interests 4. Implementation -Exploratory and often conditional 5. Institutionalization -Routine practice -Formal and permanent structures/processes External Environment -Legal -Political/Economic Organizational Capacity -Resources -Admin processes Organization Motivation -Culture -History Beneficiaries (Faculty and staff) Community Actors Students -Individuals -Student groups Asset Managers Micro level Mezzo level Macro level
Good afternoon- I am a graduate student at Carleton University, I will be talking about research on university's role in social economy particularly through its role as an investor and financer for the social economy today- this is research I have been working on periodically over the last year with Ted Jackson's guidance.
University is an important actor in the social economy- a hybrid organization -(nonprofit and public organization, -also a corporate function -with many different stakeholders Examples of how the university has played a role in social economy- CSL various outreach programs legal and medical services community university research partnerships- This quote from Milward about the responsibility of the university to its community I think sums up a growing consensus that the university must connect with the community in which it operates and it cannot stand isolated from this community. - “Only, it is in relation to this outer world, which we neglect at our peril within the confines of the academic world, that the idea of a university comes both to reflect the reality of things and to look up to the ideal.” It is widely accepted that the university is not only research institute but an important contributor to community development and social economy.
So if the university is an actor in community, social economy, than perhaps this can be extended to all aspects of its operations- and here I am talking specifically about its role as an investor of its pension and endowment fund for example. This is a role that is not often attributed to a university- so can this also be used for a vehicle of contributing to one of the root problems of community distress, which is a lack of finance- through responsible investing practices? Responsible investing, as defined by the Social investment organization and responsible endowment coalition includes the following activities: -screening out investments that do not align with investor's values -using ownership to influence behaviour of corporations on esg issues -proactively investing in projects, corporations that do align with values (development loan funds, affordable housing projects, etc). There are examples of north american universities engaging in all three of these broad forms of responsible investing- the sustainable campus report card, Rockefeller foundation puts out an annual report- which includes a category for endowment funds- finds that several schools are engaged in sri. Also, last year I did a scan of Canadian universities- found many SRI polices, etc.
So my research does not seek to address the moral or business case behind why universities should engage in SRI – but rather seeks to understand how this change has occurred- the challenges, drivers, actors informal and formal processes involved in this new approach to investment for the university This research project makes use of a case study of the University of Toronto- I chose this case because U of T has longest history of RI initiate in Canadian university and because it has the only RIC in Canada- -semi structured interviews with representatives from students, faculty and administration to get a variety of perspectives and conducted a document review
-student driven initiative (law students, and now on second generation of students) -administration not interested in SRI- but were willing to listen to students -Legitimacy was most important factor for students- to establish this with administration - solutions oriented, not coming to administration with demands, but rather with research and other examples and business case and engaged in dialogue on the issue- -more traditional forms of SRI- proxy voting guidelines and screening, divestment- not yet moved into community investing, economically targeted investing- - if we can look at this as a path dependency movement- assume that down the line this will become a part of its practices- like many American universities are investing in the social economy-
-Emerging from interviews, the most significant challenge is how to institutionalize the change in investing practices of the university- since this is a student driven initiative, fear that it will fizzle out once the students move on- high turn over rate- -so using this spectrum of institutional change find that U of T is stuck now on the implementation- where exploratory stage but not permanent
I am now in the stages of re-developing my theoretical framework for the paper- originally I used institutional economics Now drawing on corporate org theory, nonprofit change- stakeholder theory, since nature of university is very complex- many different actors and processes- This model represents the stages of change shown in the previous slide (stages 1 through 5) and then on the outside are the different actors and processes that are involved in the stages of change in the institution. Students and community actors through informal and some formal processes- but like a bottom up approach- and looking at the channels to effect change at the top- also looking at role of faculty as pension fund beneficiaries- who have a direct interest obviously in how their pensions are invested. And also on this level I put the UTAM- need to translate policy into action From the top, org theory suggests that the most difficult aspect to influence is the organization motivation for change- history, culture- -also have the external environment – the recent economic crisis for example that may make people more risk averse and less willing to take on this sort of activity, legal requirements, fiduciary duty etc. Also, the organizational capacity- in u of t case- do not have the resources to hire someone so students are taking on this initiative- doing the research for investing responsibly,and administration here- who have certain processes in place that may make it difficult for change- change from the top down. Decision makers in the model.
Since I found a number of universities who are on the brink of this in Canada- maybe not as far as developing an RIC, but have adopted a policy, made a decision to move forward- what can be done to move this into the final stage of change- the institutionalization of it? Some recommendations: legitimacy as most important- approach and even if you get a change in admin where not intersted- can still use this to get there. asking university to sign on to something like the UN PRI – this entrenches a long term and public commitment to SRI Reaching out to other student groups, faculties and spreading the base of support at the bottom and faculty level- U of T is doing this through engaging other researchers in faculties- held a conference recently and invited risk metrics, tru cost to come in and stuents to sign up and consider engaging in research- publication opportunities Joining netowrkss like the REC- has case studies and models for taking on the initiative and universities at different stages of the change Finally, trustee education- there is none formally in canada- found from Betsy martin consulting report, however, CAUBO last year held a session on SRI- finding ways to educate trustees on the issue.
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