The University of Hong Kong (HKU) has established a set of guiding principles for its Investment Environmental, Social and Governance (Investment ESG) policy, specifically for the Long-Term Investment Pool (LTIP). These principles are to be read alongside HKU's Investment Policy Statement, which manages the LTIP. The following are some key principles contained in this Investment ESG policy.
We believe that incorporating ESG considerations into our investment process could potentially improve returns over time, rather than hinder them. However, to fully align our portfolio with our values, it may be necessary to not only integrate ESG factors into our decision-making, but also to deliberately avoid or restrict investments in certain industries, regardless of their financial prospects.
HKU's Investment ESG policy will be implemented mainly through our choice of investment managers and their ESG policies. We aim to collaborate with investment managers whose investment philosophy incorporates ESG considerations and is reflected in their investment approach.
HKU acknowledges that human-induced greenhouse gas emissions are causing climate change, which is a significant global concern for many years to come. As a long-term investor, HKU has decided to include climate change in its investment decisions. The policy is in support of the 2015 Paris Agreement, which aims to reduce global warming by eliminating carbon emissions and reach net-zero by 2050. The objective of this policy is to make sure that the investment strategy is based on the scientific agreement on climate change and in line with the Paris Agreement's objectives, for the benefit of long-term returns and all stakeholders.
Apart from protecting the environment, HKU also believes in responsible ownership of assets. We prefer to see investment managers engaging directly with their portfolio companies to promote enhancement in accordance with ESG considerations and the benefits of long-term shareholders.
HKU recognises that certain business activities and industries are inconsistent with our own values as an educational institution. We wish to limit exposure to these sectors where reasonably possible. To facilitate this, we have specified certain sectors into absolute exclusions based on significance of revenue exposure. These are described in the list below. Businesses with exposure beyond these levels will be excluded:
Regular reviews of ESG (environmental, social and governance) factors will be conducted for all investments, with the level of detail varying based on the asset class and the available information. HKU will monitor the investment managers and the investment portfolio's ESG characteristics and identify potential sources of risks. The Investment ESG policy will not be static. It will be reviewed regularly alongside a review of the Investment Policy Statement.
July 2023
