Sample Investment Policy Statement Rider for Responsible Investing

February 19, 2016  | by William F. Jarvis

Industry Knowledge | Responsible Investing

A number of clients and prospects have asked how their Investment Policy Statement (IPS) can be amended to accommodate responsible investing strategies.

In response, we have prepared a rider which can be inserted into the IPS of institutions that are seeking to engage in Socially Responsible Investing (SRI), Environmental, Social and Governance (ESG) investing, Impact investing or total or partial divestment of fossil fuel-related investments.

The rider requires that the institution’s Board demonstrate that the particular responsible investing strategy being pursued is consistent with (i) the institution’s charter; (ii) other Board resolutions and actions; and (iii) in the case of donor-restricted funds, donor intent as expressed in a gift instrument.

The Board must also take action to demonstrate that it has behaved prudently according to the standards set forth in UPMIFA, which require examination and discussion of, among other things, (i) donor intent (in the case of donor-restricted funds); (ii) costs; and (iii) other relevant facts relating to the particular responsible investing practice or practices being pursued.

For institutions located in Pennsylvania, which is a non-UPMIFA jurisdiction, the rider attempts to be broadly consistent with the requirements of the Uniform Prudent Investor Act, which is in effect there. The rider is not intended to be used by public or private pension funds, although they may desire to examine it as an informational matter.

We hope that institutions will find the rider useful, bearing in mind that Commonfund is not a law firm and the rider is not legal advice. Institutions should consult their own legal counsel in determining whether, and how, to incorporate the rider into their own investment policy and practice.

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Information, opinions, or commentary concerning the financial markets, economic conditions, or other topical subject matter are prepared, written, or created prior to printing and do not reflect current, up-to-date, market or economic conditions. Commonfund disclaims any responsibility to update such information, opinions, or commentary. To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated in this material. Forecasts of experts inevitably differ. Views attributed to third parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Managers who may or may not subscribe to the views expressed in this material make investment decisions for funds maintained by Commonfund or its affiliates. The views presented in this material may not be relied upon as an indication of trading intent on behalf of any Commonfund fund, or of any Commonfund managers. Market and investment views of third parties presented in this material do not necessarily reflect the views of Commonfund and Commonfund disclaims any responsibility to present its views on the subjects covered in statements by third parties. Statements concerning Commonfund Group’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Commonfund Group fund. Such statements are also not intended as recommendations by any Commonfund Group entity or employee to the recipient of the presentation. It is Commonfund Group’s policy that investment recommendations to investors must be based on the investment objectives and risk tolerances of each individual investor. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund Group. Commonfund Group disclaims any responsibility to provide the recipient of this presentation with updated or corrected information. Past performance is not indicative of future results. For more information please refer to Important Disclosures.

Disclaimer

Information, opinions, or commentary concerning the financial markets, economic conditions, or other topical subject matter are prepared, written, or created prior to printing and do not reflect current, up-to-date, market or economic conditions. Commonfund disclaims any responsibility to update such information, opinions, or commentary. To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated in this material. Forecasts of experts inevitably differ. Views attributed to third parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Managers who may or may not subscribe to the views expressed in this material make investment decisions for funds maintained by Commonfund or its affiliates. The views presented in this material may not be relied upon as an indication of trading intent on behalf of any Commonfund fund, or of any Commonfund managers. Market and investment views of third parties presented in this material do not necessarily reflect the views of Commonfund and Commonfund disclaims any responsibility to present its views on the subjects covered in statements by third parties. Statements concerning Commonfund Group’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Commonfund Group fund. Such statements are also not intended as recommendations by any Commonfund Group entity or employee to the recipient of the presentation. It is Commonfund Group’s policy that investment recommendations to investors must be based on the investment objectives and risk tolerances of each individual investor. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund Group. Commonfund Group disclaims any responsibility to provide the recipient of this presentation with updated or corrected information. Past performance is not indicative of future results. For more information please refer to Important Disclosures.