New Resource for Universities: Managing Social Risks in Investment Portfolios

Investors are recognizing that social risks—such as labour abuses, Indigenous rights, economic inequality, and geopolitical tensions – can impact the long-term performance of their investment portfolios. These risks are not confined to a single asset class or sector, and they are not always captured by conventional financial metrics. Some social risks can have direct, entity-level financial impacts, while others contribute to systemic risk through broader economic mechanisms.

While Canadian universities have become more sophisticated in how they integrate climate change risk considerations into their pension and endowment investment decision making, approaches to integrating social risk factors are still in the early stages of development.

For many universities, the challenge is not a lack of intent, but in understanding how and where social risks are surfacing across their diversified portfolios—and determining what meaningful oversight looks like in practice.

Addressing the knowledge gap: A new resource for Universities

SHARE, in collaboration with the University of British Columbia (UBC) and UBC Investment Management (UBCIM), is pleased to release Considering Social Risk Factors in Institutional Investment Portfolios – A Primer for Universities.  This resource is designed to equip investors with actionable tools and strategies to incorporate social considerations into investment decision-making.

“This primer is intended as a starting point. Universities are at different stages in their responsible investment journeys, and there is no single approach that will work for all” says Shannon Rohan, Chief Strategy Officer at SHARE. “By clarifying how social risks show up in practice—and how they can be addressed in a proportionate and credible way—we hope this primer supports more informed decision-making and stronger stewardship across university investment portfolios”.

Social risk factors are inherently complex and interconnected. The primer introduces a triple materiality framework to assess social risk factors across three key lenses:

Financial Materiality refers to social factors that can affect a company’s financial performance, such as revenues, cash flows, or liabilities, through risks like operational disruption, reputational damage, or legal exposure.

Impact Materiality considers how investment activities affect people and the environment, focusing on investors’ responsibility to identify, prevent, and mitigate adverse impacts on human and labour rights in line with international norms and standards.

Systemic Materiality addresses social factors that create risks for financial markets and the broader economy, such as inequality or armed conflict, which can cumulatively affect long-term portfolio returns and require investors to address them through collaboration, engagement, and policy influence rather than diversification alone.

Taken together, the framework helps investors better anticipate emerging risks, align their portfolios with institutional values, and support more responsible, forward-looking stewardship.

From Insight to Action: How Investors Can Respond to Social Risk Factors

According to Graham Sheppard, Senior Director at UBCIM, “social risks encompass a broad array of risk factors that can emerge in a diversified portfolio. While universities do not need to become experts in every social issue, what matters is setting clear expectations with investment managers, asking the right questions, and exercising intentional oversight. Even small, deliberate actions can help move social risk management from aspiration to practice.” He says, “we offer this resource as a guide to our peers to prompt deeper conversations on how we can support one another in this area.”

The primer concludes by outlining practical steps investors can take to move from awareness to action. These steps can include:

• Defining investment beliefs and policy commitments
• Prioritizing focus areas
• Collaborating with peers to amplify influence
• Embedding expectations into investment manager selection and oversight
• Encouraging human rights due diligence, and
• Providing clear, accessible disclosures to highlight measurable progress

Each step is designed to help investors integrate social factors into decision-making in a structured and actionable way. While investors face challenges such as inconsistent data and limited internal capacity, these practical steps provide a clear framework for better understanding and managing social risk factors.

The full report is now available. For more information, please reach out to Shannon Rohan at srohan@share.ca