Governance

1.  Purpose

To consider the corporate governance, University reputation and other related implications of the University's investments, in particular to consider strategic formulation and risk containment and to review and monitor both long and short-term investments.

Objectives

To manage the investment portfolio asset allocations to deliver the following objectives:

1. A financial return for the portfolio that exceeds CPI + 4%, net of fees, over the medium term (3-5 years), with dividend yield targeting budgets agreed with the University;

2. Implement restrictions that reflects  University policies (e.g. tobacco, arms, fossil fuels, anti-slavery, conflict minerals);

3. Make a positive contribution to environmental and social impact through wherever possible investing in ESG (Environmental, Social & Governance) compliant funds and considering investment in other assets that deliver financial and non-financial benefits.

4. Ensure an appropriate proportion of the funds invested can be realised quickly if required.

2.  Remit

Investment objectives and strategy

1. Propose and agree with the Court, investment objectives.

2. Recommend through the Policy and Resources Committee an investment strategy appropriate to meet these objectives.

3. Keep the investment strategy under review.

Behaviour

4. Act in the interests of the University.

5. Act with care and diligence.

Appointment of managers

6. Appoint investment and fund managers or equivalent, agree their remuneration and monitor their performance against agreed benchmarks or performance targets.

Monitor performance Custodian

7. Monitor the performance of the fund and managers against an agreed benchmark, and taking action as appropriate.

8. Ensure all funds are appropriately held by a custodian as required.

Diversification

9. Consider the need to diversify investments and consider overall portfolio risk balance.

Guidance from Court and Committees

10. Follow guidance from the Court, Central Management Group and the Policy & Resources Committee to implement any policy objectives and restrictions on investments.

Legislation

11. Instruct advisors to ensure all funds held in trust by the University of Edinburgh Endowment Fund are operated within the relevant legislation and the specific terms of each trust.

Income projections

12. Inform the Policy and Resources Committee of the future income projections from endowment investments.

University resources

13. Advise on potential investments to be made from University resources as well as endowed funds as requested, normally through the Treasury Management function; such investments may include Social or Sustainable opportunities and may include investments that make a positive contribution to environmental and social impact and deliver both financial and non-financial benefits.

3.  Composition

9 members

1. The Committee shall consist of not more than nine members.

2 Ex officio

2. The Director of Corporate Services and the Director of Finance shall be ex officio members of the Committee.

7 remaining

3. The remaining seven members may be lay members of Court or external to the Court and the University: at least three must be external members and at least one must be a senior lay member of Court (defined as being a member of Policy and Resources Committee). All shall have expertise in finance and investment matters and in particular recent or current experience of the asset classes that the investments are presently invested in.

Appointment

Externals

4. The Nominations Committee shall appoint members of the Investment Committee.

5. The Nominations Committee shall consult with the Convener of the Committee and with ex officio members on suitable external members.

3 year term

6. Term of office of members shall normally be for a maximum of three years unless otherwise determined by Court.

Reappointment

7. Members are eligible for re-appointment up to a normal maximum of two consecutive terms of office.

Convener

8. The Nominations Committee shall appoint the Convener of the Committee who shall be an external or a lay member.

Code of conduct

9. All members of the Investment Committee are expected to comply with the University's Code of Conduct as set out in the University's Handbook and declare any interests that may conflict with their responsibilities as members of the Investment Committee

Attendance

10. Senior Officers of the University may be attendance at Committee meetings.

4.  Meetings

Number of meetings

1. The Committee shall meet as required to fulfil its remit and will meet at least four times each year. Members are expected to attend wherever possible.

Circulation of papers

2. Minutes, agendas and papers will normally be circulated to members of the Committee at least five days in advance of the meeting.  Late papers may be circulated up to two days before the meeting.  Only in the case of urgency and with the agreement of the Convener will papers be tabled at meetings of the Committee.

3. Minutes, agendas and papers will also be circulated to those in attendance at meetings at least four days in advance of the meeting. Any other person in attendance at the meeting will be issued with papers appropriate to their reason for attendance.

Non agenda items

4. Non-contentious or urgent matters not on the agenda may be considered at a meeting subject to the agreement of the Convener of the meeting and with the consent of the majority of members present.

Contents of papers

5. Papers will indicate the originator/s and purpose of the paper, the matter/s that the Committee is being asked to consider and any action/s required and confirm the status of the paper in respect of freedom of information legislation.

Quorum

6. Four members of the Committee shall be a quorum.

7. This number must include one Court member, two members who are either external members or lay members and one ex-officio member.

Absence of convener

8. In the absence of the Convener of the Investment Committee the majority of members present may appoint one of the external or lay members to act as Convener for the duration of the Committee meeting.

Minutes

9. A formal minute will be kept of proceedings and submitted for approval at the next meeting of the Committee.

10. The draft minute will be agreed with the Convener of the Committee prior to circulation and in the case of the absence of the Convener at a meeting the Committee member appointed to act as Convener for the duration of that specific meeting.

Sub group

11. The Committee may form a sub-group to consider specific investment questions, policy issues or manager searches. The sub-group will present recommendations and all final decisions will be ratified by the full Committee.

5.  Other

Review of performance

1. The Committee will undertake from time to time a review of its own performance and effectiveness as part of the overall review of Court and its Committees and report thereon to Court.

Professional advice

2. In order to fulfil its remit the Committee may obtain external professional advice as necessary.

Factors affecting return

3. The Committee may have regard to other factors which influence the level of financial return such as ethical, environmental and social factors.

4. Investments involving community benefit and a lower rate of return may achieve the University’s aims more effectively than those offering a higher financial rate of return.

Justification of decisions

5. The Committee should document the justification when making a decision as well as noting the balance of risk, return and benefit.

Report to PRC

6. Reports on the main points discussed at each meeting will be provided to the subsequent meeting of the Policy and Resources Committee (PRC) and thereon reported to Court.

Publication of membership

7. The membership of the Committee will be published on the University's internet in accordance with the University's agreed publication scheme.

Annual report  

Review

8. An Annual Report will be prepared and submitted to Court through the PRC as soon as practical following Court approval of the University’s annual report and accounts. 

9. The Committee will review its own Terms of Reference and Statement of Investment Principles at least once every three years. It will also review the University’s Treasury Management Policy in a similar way.

Approved by the Policy and Resources Committee, 13 November 2017