Regent Policy Documents

SECTION 31: TRUST AND INVESTMENT POLICIES

31-13 SOCIAL RESPONSIBILITY AND INVESTMENT CONSIDERATIONS

(Formerly 97-1)

Scope

The policy on Social Responsibility Investment Considerations applies to the invested assets of the University of Wisconsin System’s Trust Funds, and to individuals interested in providing input regarding the corporate policies or practices of the companies and other entities in which the University of Wisconsin System invests.

Purpose

The purpose of this statement is to communicate the Board of Regents’ policies and practices for considering the various aspects of the social responsibility of the companies, governments, or other entities in which it invests University of Wisconsin System Trusts Funds.

Policy Statement

The Board of Regents of the University of Wisconsin System, in discharging its fiduciary responsibilities for the university trust funds, will take into account concerns about corporate and other security issuers’ social responsibility as outlined below.

  1. The primary fiduciary responsibility of the Board of Regents is to maximize financial return on invested assets, taking into account an appropriate degree of risk.
  1. However, the Board acknowledges the importance of maintaining an awareness of public concerns about corporate policies or other security issuers’ policies or practices that are discriminatory (as defined by Wis. Stats. § 36.29(1)) or cause substantial social injury*.
  1. To enhance the Board's awareness of social concerns the Board of Regents, through the Business, Finance, and Audit Committee, directs the University of Wisconsin System Administration to conduct a proxy review to highlight proxy resolutions related to discrimination and substantial social injury.  As further provided under RPD 31-13, the Committee will also determine its voting position for such shareholder resolutions.
  1. The Regents also wish to solicit input from students, faculty, alumni and citizens on matters related to social concerns.  To obtain this input, the Business, Finance, and Audit Committee of the Board of Regents may schedule a public forum at the request of parties interested in presenting such concerns to the Board of Regents.  The purpose of this forum is to offer the broadest opportunity for System constituencies to present such information to the Board of Regents.
  1. Cognizant of the University of Wisconsin System, state, and federal commitments to environmental protection, the Board of Regents Business, Finance, and Audit Committee, in discharging its responsibility for managing the University of Wisconsin System Trust Funds, does so with the expectation that the companies and other entities in which it invests will evidence a similar commitment in their respective activities.  In the event that any persons or group of persons, after careful investigation and evaluation of facts in evidence, concludes that a company in which the University of Wisconsin System Trust Funds has investments appears not to be performing in accord with the Committee's expectations and the appropriate governmental standards in this area, the Committee will afford those persons an opportunity to detail their evidence and concerns to the Committee.  The Committee may afford the company or other entity involved an opportunity to respond to the concerns expressed, before deciding what course of action is appropriate.
  1. In accordance with Wis. Stats. § 36.29(1), all investments “…made in any company, corporation, subsidiary, or affiliate that practices or condones through its actions discrimination on the basis of race religion, color, creed or sex. . . .” shall be divested in as prudent but rapid a manner as possible.   The Board of Regents, to facilitate the application of this statute, interprets the language above as follows:

    1. The words "that practices or condones through its actions" shall be interpreted to mean "employing persons in nations which by their laws discriminate on the basis of race, religion, color, creed or sex." 
    2. The University of Wisconsin System's investment counsel and its Trust Officer shall bring to the attention of the Business, Finance, and Audit Committee reports of the existence of laws in any other country that require companies doing business in such country to practice or condone discrimination on the basis of race, religion, color, creed or sex.  The Business, Finance, and Audit Committee shall investigate such reports with a view toward determining whether this subsection shall be applied to investments in companies employing persons in the country in question.

  2. The Regents are aware that a position on social responsibility may affect potential contributors to the University System.  For potential contributors who wish their donations to be invested in funds with social concerns as a high priority, the Business, Finance, and Audit Committee will ask University of Wisconsin System Administration staff to explore the use of investment alternatives to meet such objectives.

* "Substantial social injury" with regard to corporate or other security issuers’ behavior is defined as the injurious impact on employees, consumers, and/or other individuals or groups resulting directly from specific actions or inactions by a company.  Included in this category are actions that violate, subvert, or frustrate the enforcement of rules of domestic or international law intended to protect individuals and/or groups against deprivation of health, safety, basic freedoms or human rights.  Only actions or inactions by companies that are proximate to and directly responsible for identifiable social injury will be regarded as falling within these guidelines.  (This definition is borrowed from the Stanford University "Statement on Investment Responsibility Concerning Endowment Securities").

Oversight, Roles and Responsibilities

The Board of Regents has ultimate fiduciary responsibility for the management and administration of the University of Wisconsin System Trust Funds.  The Board’s Business, Finance, and Audit Committee is delegated oversight of the management and administration of the Trust Funds.  UW System Administration is responsible for conducting proxy reviews and exploration of socially responsible investment alternatives.   The Secretary of the Board of Regents has responsibility for scheduling requested public forums under section 4 of this policy.

Related RPD and Applicable Laws

RPD 31-2 Management and Administration of Trust Funds
RPD 31-10 Proxy Voting
RPD 31-16 Sudan Divestment
Wis. Stat. § 36.29.

History: Res. 695, adopted 03/08/1974, created Regent Policy Document 74-3(a), subsequently renumbered 31-5. Res. 1590, adopted 02/10/1978 created Regent Policy Document 78-1 and replaced Regent Policy Document 77-4; subsequently renumbered 31-6. Res. 1615, adopted 03/10/1978, created Regent Policy Document 78-2; Res. 6626, adopted 03/11/1994, amended 78-2; subsequently renumbered 31-7. Res. 7406, adopted 03/07/1997, created Regent Policy Document 97-1, subsequently renumbered 31-13; Res. 9505, adopted 06/06/2008, amended Regent Policy Document 31-13; Res. 9909, adopted 04/08/2011, amended Regent Policy Document 31-13; Res. 10119, adopted 10/05/2012, rescinds Regent Policy Documents 31-5, 31-6, and 31-7, and amends Regent Policy Document 31-13 to incorporate portions of the rescinded policies.


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The Regent Policy Documents were adopted and are maintained pursuant to the policy-making authority vested in the Board of Regents by Wis. Stats. § 36. The Regent Policy Documents manifest significant policies approved by the University of Wisconsin System Board of Regents. This document is a ready reference for those charged with carrying out these policies. Unless noted otherwise, associated documents and reports may be obtained from the Office of the Secretary of the Board of Regents, 1860 Van Hise Hall, 1220 Linden Drive, Madison, WI 53706, ph 608-262-2324. http://www.uwsa.edu/bor/policies/