Western University is accelerating its decarbonization efforts and integrating environmental, social and governance into all its investment decisions, as part of its commitment toward responsible investing.
It’s a key measure in Western’s inaugural Responsible Investing Annual Report, which outlines strategic policies and commitments under the university’s Responsible Investing Strategy & Pathway. Western is working to achieve a sustainable investment portfolio and a goal of net-zero carbon emissions by 2050, or sooner.
“Divestment alone does not make a truly meaningful impact when other investors can simply acquire those high-carbon investments,” said Lynn Logan, vice-president (operations and finance). “Sustainable investing requires actively pursuing the pathway to net-zero through decarbonization of the portfolio, and to strategically and actively engage, collaborate with and push companies to set meaningful carbon-reduction commitments.”
A recent analysis of Western’s long-term public equity investment shows the university’s carbon footprint is now 65 per cent less than it was in 2015. Between 2019 and 2020, the carbon footprint of its public equity investments dropped by 31 per cent.
Western intends to divest from any fossil fuel company that fails to demonstrate tangible progress toward realistic decarbonization pathways by 2030.
“We will continue to invest in companies and funds that are genuinely pursuing a progressive path toward net-zero and divest from those that will not contribute to our long-term sustainability goals,” Logan said.
In February, Western joined the University Network for Investor Engagement (UNIE), which engages organizations that are part of Western’s investment portfolio and works with them to pursue a measurable path toward sustainability and carbon reduction. The focus is to accelerate the transition to a low-carbon economy in key sectors, including energy, utilities, finance, transportation and manufacturing.
Western’s first-ever Responsible Investing Annual Report outlines the university’s progress and strategies to date and the next steps to fulfilling its commitment to reducing its investments’ carbon footprint.
In the near-term, Western has committed to invest 10 per cent of its operating and endowment fund in sustainable investment strategies by 2025. To date, 2.5 per cent of that fund has been invested in a renewable energy infrastructure fund. An additional sustainable investment of about 2.7 per cent of the operating and endowment fund has been approved by Western’s investment committee to be invested in an energy transition fund. Total investment value of these commitments is estimated at US$70 million.
“The journey toward net-zero carbon emission is long and challenging but Western is committed to these goals not only for the sake of our organization’s future but for the future of our planet,” Logan said. “Measuring our carbon footprint is essential to create a baseline to monitor our progress in the future and demonstrate our leadership in the Canadian higher education sector.”
Western uses two carbon emission measures to monitor its progress – absolute carbon emissions and weighted average carbon intensity (WACI), which measures carbon intensity of businesses by calculating tonnes of CO2 emitted per $1 million in company sales. Western has been conducting periodic carbon emission analysis of its public equity holdings since December 2015. Periodic WACI assessments of its publicly traded equity portfolio have been conducted since December 2018.
In the last year, Western performed its first analysis of its total portfolio’s carbon footprint, which included public equity, fixed income and alternative assets classes. As of Dec. 31, 2020, the weighted average carbon intensity of Western’s operating and endowment fund was 187 tons of CO2e (carbon dioxide equivalent) per $1 million sales. Western’s direct investments in the fossil fuel sector make up just 0.26 per cent of its operating and endowment fund, as of Dec. 31, 2020.
As part of its responsible investing strategy, Western will conduct a climate scenario analysis in the third quarter of 2022, to understand forward-looking climate related risks and opportunities within the operating and endowment fund.
In addition to its goal of net-zero absolute carbon emissions by 2050 or sooner, Western also aims to reduce its carbon intensity by at least 45 per cent by 2030.
Beyond responsible investing, Western is committed to pursue a path towards global sustainability in all aspects of its operation, an important pillar outlined in the university’s strategic plan Towards Western at 150.
Earlier this week, the Times Higher Education Impact Rankings placed Western number one among higher education institutions in Canada and number three in the world for its efforts on sustainability. The rankings assess each university’s work towards United Nations Sustainable Development Goals, 17 areas aimed at protecting the planet and its inhabitants.
The university is constantly implementing initiatives to reduce its carbon footprint on campus as well, and has consistently been recognized for these efforts. For the third consecutive time, Western received the STARS sustainability gold rating, the global standard for higher education that tracks progress towards sustainability in academics, engagement, operations and administration.
The 2020 Skål Sustainable Tourism Award recognized Western’s hospitality services division for its work on responsible sourcing, sustainable dining, education, awareness and collaboration, and waste management.
Western also continues to explore partnership opportunities with other higher education institutions as part of its sustainability journey. Last year, the university joined the newly formed University Climate Change Coalition (UC3), a group of leading North American research universities working to accelerate local and global solutions to climate change through teaching, research and community resilience-building.