The Investment Committee is appointed by the UUA Board of Trustees, and operates under the Investment Policy adopted by the Board. The Investment Policy authorizes the Investment Committee (“IC”) to interpret and implement the Investment Policy, establish IC Guidelines (including the investment objectives above), and report regularly to the board. The Investment Committee establishes the asset allocation policy that sets target commitments for each asset class. The committee is also responsible for setting guidelines for rebalancing asset classes and reviewing them on at least a quarterly basis.
Socially Responsible Investing: Reflecting UU Values
In recent years, through staff, the Board and the Socially Responsible Investment Committee (“SRIC”), the UUA has conducted seminars and provided materials to help UU Congregations formulate their own SRI programs. Individually, many UU Congregations have been successful in exercising shareholder rights and expressing their views regarding companies they hold through investments in their endowment portfolios.
However, when a UU Congregation becomes an investor in the Fund, its voice is amplified by joining with other investors in the Fund, to the extent that the assets are directly managed on behalf of the UUA or in certain selected investment vehicles that apply SRI criteria in selecting their investments. The UUA believes this gives UU Congregations an opportunity to have a more powerful and wide-ranging impact on corporate behavior and other issues of deep concern to Unitarian Universalists. Within the specified parameters, these SRI initiatives represent an effective way to bring UU ideals to the marketplace and for UU Congregations to fulfill their SRI goals. Specifically, shareholder advocacy and proxy voting initiatives seek to give investors a way to have UU values represented, year after year, under a focused and coordinated program to change behavior of US and multi-national corporations. This program is implemented through collaboration among UUA staff, the SRIC, and the Investment Committee.
1. Shareholder Advocacy
The UUA believes it should take full advantage of rights as a shareholder to express UU values on key issues to corporations in which money is invested. Shareholder advocacy addresses such issues as equal opportunity employment, board diversity, executive compensation, non-discrimination based on sexual orientation and gender identity or expression, global labor standards, and environmental issues like global warming through the following activities:
- Filing and co-filing shareholder resolutions;
- Presentations of resolutions at corporate annual meetings; and
- Dialogues with corporate representatives.
The UUA is a member of the Interfaith Center on Corporate Responsibility (“ICCR”), which, along with other institutional investors, uses its members’ collective ownership in US corporations to challenge management and boards of directors to improve their policies concerning social, environmental and corporate governance issues.
2. Proxy Voting
Shareholders, particularly institutional shareholders, can influence decision makers of publicly traded corporations to engage in ethical and sustainable business practices. Ownership in a company confers the opportunity to take positive action for others and the world in which we live. As a shareholder, the UUCEF has the right to vote on many issues regarding financial, governance, social and environmental issues. Many of these subjects are complex and difficult to follow within a portfolio with hundreds of holdings. Fund investors are served by the UUA and its partner organizations which follow shareholder issues, monitor them carefully, and then implement proxy voting guidelines consistent with UU values.
To support these efforts the UUA uses the services of Institutional Shareholder Services (“ISS”), a firm that conducts research on proxy matters, makes recommendations and then handles proxy voting on shares owned by the Fund as the UUA directs. Because it serves a range of institutional clients interested in similar services, ISS has the resources to monitor the large number of issues related to companies in which the Fund invests. In the course of a year, ISS will cast over one thousand votes with hundreds of companies on behalf of the Fund. The UUA receives regular reports on how its proxies are voted and the results of those votes, and posts this information on the UUA website.
3. Community Investing
Community Investing is financing that creates resources and opportunities for economically disadvantaged people and communities. It supports development initiatives in low-income communities both in the United States and in developing countries. The Fund commits approximately 1% of its assets to community investments. The SRIC, in close cooperation with the Treasurer, makes decisions regarding the choice of community development investments. Options for community investment include community development banks, credit unions, loan funds, venture capital funds, and other institutions which offer investment products that support community development. Funds may also be deposited with micro-enterprise lenders, which make small loans to worthy persons and projects with the goals of building self-sufficiency, addressing violence and alleviating poverty.
4. Investment Screening
How and where we choose to invest can forcefully proclaim our UU ideals. Investment screening is the practice of excluding investments from portfolios based on social, environmental and governance criteria. It also includes weighting portfolios towards companies that perform better on these criteria and avoiding poor performers. Screening criteria are designed to represent UU values, as expressed in General Assembly Resolutions and Resolutions of Immediate Witness, Board resolutions and the UUA Purposes and Principles.
The UUA employs Jantzi Sustainalytics, which specializes in SRI issues, to rate over 1,000 U.S. companies based on these values and to advise on which companies to exclude from the portfolio.
Screening is most applicable to investments in individual securities, but less so to pooled investments such as mutual funds and private co-mingled funds. Some of the pooled investments included in the UUCEF do no screening whatsoever. The Fund’s assets that are invested in pooled investment vehicles represent only a portion (and depending on the pooled vehicle, may represent only a small portion) of all investors’ investments in such vehicles. As a result, it is not possible for the UUA to apply the SRI Guidelines and screens directly to the holdings of the pooled investment vehicles in which the Fund invests. However, while the UUA cannot control the selection of specific investments by pooled vehicles, the Investment Committee endeavors, in connection with selecting the pooled vehicles in which the Fund invests, to choose, to the extent available and with due regard to investment performance, pooled vehicles that apply SRI policies and restrictions similar to the UUA’s SRI Guidelines.