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Governance Structure of CSU and Auxiliary Investments - FAQ

The California State University makes every attempt to ensure that its investment policies align with the values of the institution, while balancing its fiduciary responsibility to protect the university’s assets for the long-term success of the CSU and the students we serve. Consideration of environmental, social and governance (ESG) factors arecentral to maintaining that balance. The Master Investment Policy of the California State University, which was approved by the CSU Board of Trustees (Board) at its November 2017 meeting and revised at its March 2023 meeting, guides the assessment of ESGrisks. The policy requires consideration of ESG factors to be integrated into the investment decision processes of the CSU. In addition, the CSU Investment Advisory Committee regularly monitors how each of the CSU’s investment managers integrate the consideration of ESG factors into the investment process, including receipt of an annual report from staff and the CSU’s investment advisor regarding an ESG assessment of each investment manager.

We are sharing the following FAQ in the spirit of transparency and communication, and to provide clarity on the structure of the CSU investments and those of our 23 campuses.

What is the relationship between the CSU’s investments and that of its 23 universities (auxiliary investments)?

Consistent with their legal structures, CSU investments and auxiliary investments are distinct from one another. While each university president has considerable responsibility for, engagement with, and oversight of their auxiliaries, each auxiliary has its own governance structure and board, its own investment policies, and its own fiduciary responsibility for the management of auxiliary investment assets.

​This means that CSU investment policy is not binding on auxiliaries and the investment policy of one auxiliary is not binding upon any other auxiliary within the CSU system. However, auxiliaries must be mindful of CSU investment policy and the impact that their investment policy decisions may have on the CSU and other auxiliaries at other universities. CSU guidance on the elements of a strong investment policy for auxiliaries can be found at this link: Investment Policy for Auxiliary Organizations​.


How does it impact the CSU or other universities when one campus makes a policy change to its investments?

The investment policy of one auxiliary is not binding upon any other auxiliary within the CSU system.


What is the CSU’s ESG policy?

Section six of the Board’s M​aster Investment Policy contains the Board’s ESG policy, which governs the CSU investments. The policy reads: “…the Board acknowledges the importance of understanding the potential risks and value that environmental, social, and governance (“ESG”) factors may have on CSU investments. Therefore, the Board expects that the consideration of ESG factors shall be integrated into the investment decision processes of the CSU.”

ESG factors are considered as part of the evaluation processes of the CSU Investment Advisory Committee, staff, and our investment advisor when selecting investment managers. Again, this policy is not binding upon auxiliaries, each of which sets its own ESG policy based upon its unique circumstances. It should be noted that in 1978, the Board approved a resolution that urges auxiliary organization boards to issue statements of social responsibility and to follow those precepts when examining past and considering future investment policies. And auxiliaries have incorporated ESG language in their policies, ranging from broad, flexible statements to those that are mo​re specific as to the kinds of investments they shall or shall not make.


What are the CSU’s investments comprised of?

CSU investments, which do not include auxiliary investments, are comprised of the cash associated with various operating activities of the CSU, including education and enterprise activities, such as student housing, parking, or continuing education. This is cash of the CSU only and does not include cash held by our auxiliaries.

Aerospace and Defense

As of March 31, 2024, the CSU had direct ownership of approximately $20.8 million of corporate bonds in the aerospace and defense industries through our Liquidity and Intermediate Duration Portfolios. The CSU alsohad about $30.6 million of investment exposure through mutual funds in the Total Return Portfolio. Altogether, these positions total $51.4 million, or 0.62% of total CSU investments. Of this amount, it is not possible to determine what part of total aerospace and defense investments are related to Israel, although it is extremely minimal.

Please see link where you can find the CSU's Statement on Divestment.



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