Policy of Sustainable Institutional Investment

General provisions

The Policy of Sustainable Institutional Investment has been developed taking into account the core values and mission of V. N. Karazin Kharkiv National University and is designed to ensure maximum effect in all areas (financial, social, environmental, etc.) of investments while maintaining an acceptable level of risk for the University.

The Responsible Investment Policy of Sustainable Institutional Investment defines the purpose, goals, principles of the mission, target groups and areas of implementation of responsible investment of the University.

Definitions

Responsible investment is a process that aims to incorporate environmental, social and governance (ESG) issues when making investment decisions in order to better mitigate risk and generate sustainable long-term returns.

• Environmental: factors relating to the University's interaction with the natural environment. These include (but are not limited to) climate change; greenhouse gas emissions; biodiversity loss; deforestation; air depletion or pollution, water or resources pollution; waste management; land use change; and ocean pollution.
• Social: Factors related to business practices that affect the rights, welfare and interests of people and communities. These include (but are not limited to) respect for human rights; labor standards; prohibition of child, slave, and bonded labor; health care and safety in the workplace; freedom of association and freedom of expression; human capital management and employee relations; relations with local communities (including indigenous communities); operations in conflict zones; and consumer protection.
• Governance: factors related to the governance of the University. These include (but are not limited to) governance structure, composition, size, diversity, skills and independence; executive compensation; stakeholder rights; stakeholder engagement; transparency; business ethics; anti-bribery and corruption; internal controls; and conflicts of interest.

Impact investing is an approach that aims to achieve measurable positive social and environmental impacts (leading to significant positive change).

Human capital at the individual level is the knowledge and skills that a person has acquired through education, training, and practical experience, and which enable them to produce high-quality products and services.

At the macroeconomic level, human capital is the accumulated investments in areas of education, vocational training, career guidance and employment services, health, culture and sports, which are an important part of the country's national wealth.

Main purpose and goals of the sustainable institutional investment policy

The main purpose is to determine the directions of responsible investment policy regarding accumulation, distribution and use of financial resources and the formation of financial flows that ensure the sustainable development of the University.

The financial resources of the University are used in accordance with the Budget Code of Ukraine.

The Policy of Sustainable Institutional Investment of V. N. Karazin

Kharkiv National University applies to all investments in fixed, working and human capital.

The University is deeply committed to the philosophy of sustainable development and recognizes the existence of critical needs in addressing the challenges of achieving sustainable development goals in society and in each of the University's areas of activity (education, research, community engagement, etc.).

The main goal is to be a leader in the field of social and environmental sustainability, including responding to critical challenges and problems.

Implementing sustainable institutional investment policy, taking into account environmental, social and governance (ESG) issues, will reduce long-term risks, increase risk-adjusted revenues and improve the University's business reputation.

The goals of the policy are:

• to use the University's governance structure for decision-making for all investments in fixed, working and human capital to achieve the goals of sustainable development and support the economic development of Ukraine;
• to use investments in fixed, working and human capital of the University to eliminate the risks of environmental change and global challenges.

In making investment decisions, the University adheres to the following criteria:

• respect for human rights, equality between genders, races, religions and sexual orientations;
• protection of the environment and biodiversity, counteraction to climate change;
• promoting international cooperation and ending international conflicts.

When considering financial issues, the University will take into account environmental, social and governance (ESG) issues. Building and implementing an effective policy of responsible investment related to ESG issues will lead to long-term financial and reputational benefits.

The University will use available financial instruments to achieve its responsible investment objectives, including, but not limited to, the principles set forth below.

Principles of sustainable institutional investment policy

The University will adhere to six guiding principles:

Principle 1:

To incorporate environmental, social, and governance (ESG) issues into investment analysis and management decision-making processes regarding the University's financial resources.

Principle 2:

To manage the tangible and intangible assets of the University taking into account environmental, social and governance (ESG) issues.

Principle 3:

To provide proper and full disclosure of information on environmental, social and governance (ESG) issues in relation to areas funded by the University.

Principle 4:

To ensure adoption and implementation of these principles in financial activities at all levels.

Principle 5:

To consolidate efforts to improve the effective implementation of these principles.

Principle 6:

To submit reports on financial activities.

Objectives of the sustainable institutional investment policy

In order to achieve the main purpose and goals of responsible investment based on international principles of cooperation, the University needs to achieve the following objectives of the sustainable institutional investment policy:

1. To analyze the investment climate of the educational environment, to identify and to develop the investment potential of the University;
2. To conduct an independent assessment of the University efficiency, the choice of investment form and priority investment areas on a regular basis.
3. To conduct external and internal monitoring and audit of the University's funds use, as well as the investment policy implementation, to analyze the results and efficiency of investment implementation, based on the principles of transparency and purposefulness;
4. To model and predict possible consequences of investment based on the unity of environmental, social and corporate governance;
5. To develop quantitative and qualitative targets for investment processes, to determine the scope of investment attraction, to keep records of information on investment sources, needs for their attraction, directions and efficiency of their use; to establish a list of priority areas, objects and other parameters of investment;
6. to promote the development of public-private partnership in the field of financing and investment of the University in order to coordinate the actions of investment entities to achieve common social goals, to attract and use funds in the field of intellectual investment development;
7. To determine the degree of investment objects functioning in accordance with the accepted principles of the student-centered style of the University management; to identify the multidirectional influence of public authorities and other entities on investment processes;
8. To implement the ideology and practices of Impact Investing in the University's activities, the purpose of which is to show that investments can achieve positive (social and/or environmental and/or governance) impact and financial profitability (or at least return of capital) at the same time;
9. To participate in international scientific and economic cooperation in order to attract foreign investments, to ensure the high standard continuous education to the next generations and promote self-education;
10. To ensure collection, analysis and generalization of investment entities proposals regarding the investments provision and reception, keeping records of investors' and recipients' applications for participation in investment projects and programs;
11. To organize the examination and competitive selection of investment projects and programs, search for their implementers among the university community that accepts the ideology of start-ups for innovative development;
12. To create a basis for cooperation projects implementation among the University, the state and the business community to increase employment and labor market demands, with a special focus on measures to reduce informal employment, eliminate skills gap and increase labor mobility.

Target groups and areas of implementation of sustainable institutional investment policy

To implement the University's sustainable institutional investment policy most effectively, we plan to work with individual target groups and in all areas of implementation. This will enable to achieve the goals and objectives faster and more efficiently. In particular, all activities will be performed in compliance with all the above principles.

The target groups for the University responsible investment policy implementation are the entire university community and a number of business entities, namely: higher education students of all faculties and educational and research institutes; public and private business partners; financial intermediaries in the field of investment; international scientific community; investors and recipients; non-governmental organizations; local governments.

The implementation of the policy will be focused on specific areas of university activity, namely: educational activities, scientific activities related to modeling, analysis, monitoring and audit of investment activities, as well as the development of planned implementation indicators; university financing; intellectual investment development; impact investing; information activity and partnerships.