Revision: New IAU 01-003 DEPARTMENT: ADMINISTRATION

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POLICY AND PROCEDURES

Date: January 2022

Revision: New IAU 01-003 DEPARTMENT: ADMINISTRATION

Effectivity: 13 FEB 2022 Supersedes: NEW Review Date: 01 FEB 2024 No. of Pages: 4

IAU 01-003 SUSTAINABLE INVESTMENT POLICY Page 1 of 4

1. TITLE: SUSTAINABLE INVESTMENT POLICY

2. PURPOSE:

This policy establishes the objectives and parameters of the University investment portfolios and outlines how the University is embracing environmental, social and governance (ESG) factors within its investments, reflecting the ambitious sustainability agenda within the University.

3. SCOPE OF THE POLICY:

The following investment policy is applied to the University endowments; portfolios (“the Portfolios”). To reflect that this is a constantly developing area, the sustainable investment policy will be reviewed on an ongoing basis, and at least annually, by the Investment Committee of Imam Abdulrahman Bin Faisal university.

4. POLICY:

4.1. As part of the IAU 2030 Strategy, the University is committed to Green University without carbon footprint, and with a view to be carbon neutral before 2030. In line with this ambitious target, the University is committed to ensuring that its portfolios are invested according to the highest ESG standards. Our strategy recognizes that a responsible approach to sustainability and financial returns are not mutually exclusive and that companies which embrace a sustainable approach to environmental and social issues are more effective stewards of long-term capital.

4.2. The University intends to sign up various contracts and MOU, which will support IAU’s knowledge and decision making in the field of green environment in the university.

5. INVESTMENT POLICY AND GUIDELINES:

5.1. The University’s embodiment of the Islamic traditions of social justice, its commitment to sustainability, and the aspiration to contribute to a more just, humane and sustainable world require consideration in its investment policy and practices.

5.2. The University will be a responsible steward of its financial resources and will prudently exercise ethical and social stewardship in its investment policy and practices, consistent with its mission and strategic priorities and abiding by the fiduciary and investment standards applicable to institutional funds.

5.3. Consistent with achieving the University’s investment objectives, and in acknowledgement of the Islamic principles, the University’s investment policy will be implemented within the sustainable investment framework outlined below:

5.3.1 The University will not make direct investments in any security, strategy or fund whose primary mandate is the exploration or extraction of fossil

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Date: January 2022

Revision: New IAU 01-003 DEPARTMENT: ADMINISTRATION

fuels, and will divest from companies and strategies engaged in these activities.

5.3.2 Directly held marketable and liquid securities and funds will be divested in a manner that is financially responsible, yet expeditious.

5.3.3 Private and illiquid investments in fossil fuel-oriented funds will be allowed to wind down in accordance with the terms of the partnership agreement.

5.4. The University will monitor indirect exposure to fossil fuel companies in commingled investment funds and will prudently evaluate these funds on a case- by-case basis.

5.5. The Committee have considered full divestment from fossil fuels but have decided to use the unique position and influence of the University to engage with the sector and encourage the transition to the low carbon economy. However, the University will aim, on a best endeavours’ basis, to not invest in companies who have significant interest in fracking.

5.6. The portfolios will not directly invest in companies whose business has a significant interest in:

5.6.1. Tobacco - manufacture, distribution or retailing

5.6.2. Weapons – manufacture of controversial weapons including cluster bombs, landmines, nuclear weapons (systems of components) and companies that manufacture civilian firearms

5.6.3. Coal and Tar Sands

5.7. The University will proactively seek opportunities to invest in funds or companies that reduce carbon emissions and greenhouse gases, promote social responsibility, and seek solutions for climate change.

5.8. The University will integrate Environmental, Social and Governance (“ESG”) considerations into manager evaluation and analysis of underlying portfolio holdings to better understand risk and complement traditional investment decision making.

5.9. The University will communicate to investment managers its commitment to sustainable investing and encourage them to engage with corporate management to promote corporate responsibility.

5.10. As part of a balanced portfolio that has an appropriate risk and liquidity spread, the endowment portfolios (University and Development Trust) have committed 6% of the portfolio to an impact investing program. This program will invest in businesses and sectors which are explicitly aiming to deliver an environmental and social return in addition to a financial return and will be diversified across eight sustainability themes:

5.10.1. Clean energy

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Date: January 2022

Revision: New IAU 01-003 DEPARTMENT: ADMINISTRATION

5.10.2. Sustainable Transport 5.10.3. Food & Agriculture 5.10.4. Waste & Materials 5.10.5. Ecosystem Services 5.10.6. Education

5.10.7. Health

5.10.8. Financial Inclusion

5.11. The university audit committee will regularly review the ESG characteristics of its investment portfolios and underlying funds and consider sustainability among factors for material consideration

6. REPORTING:

The University will make available on an annual basis an impact report highlighting the how the University’s is working to meet the framework set out within the Sustainable Investment Policy.

7. ATTACHMENTS: None

8. DISTRIBUTION:

8.1. All Colleges, Administrative Units and University Hospital

8.2. Signed original copy is maintained in IAU-Documents Control Unit 8.3. Available in the IAU website

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Date: January 2022

Revision: New IAU 01-003 DEPARTMENT: ADMINISTRATION

REVIEW/REVISION

DATE REVISION NUMBER SUMMARY OF CHANGES NAME OF PROPONENT