Western continues to make progress toward a decarbonized Operating & Endowment Fund (the Fund), according to the newly released 2022 Western University Responsible Investing Annual Report.
The report provides metrics for the total carbon footprint of the Fund, which show that the university has reduced the carbon intensity of the Fund by 4.3 per cent and reduced carbon emissions in the public portfolio by 38.6 per cent in 2021 compared to the previous year.
“We are encouraged by these numbers, but we also know that these are early days and we can further decarbonize by continuing to reduce and remove greenhouse gas emissions from the portfolio,” said Lynn Logan, vice-president (operations and finance). “We will need to see several more years of data before we can fully understand the trendlines, but early results are promising.”
Earlier this year, Western released its first responsible investing report, which outlined the university’s responsible investing strategy and commitment to reduce carbon intensity by 45 per cent by 2030, using 2020 as a base year; achieve net-zero absolute carbon emissions by 2050 or sooner; and target a 10 per cent allocation to sustainable investments by 2025.
“Since the last report, we’ve been actively engaging with our investment managers to understand their approaches to environmental, social and governance factors and ensuring they understand our responsible investing commitments and expectations,” said Eric Mallory, associate vice-president, financial services. “Investment managers have been very receptive and responsive to our ideas.”
Logan emphasized Western has also taken a new approach to collaboration, joining the University Network for Investor Engagement (UNIE), a shareholder engagement group that engages directly with companies to accelerate the transition to a low-carbon economy.
“Together, we’re focused on key sectors where advocacy can have the greatest effect,” said Logan. “By working with like-minded institutions, we can collectively achieve some positive change and further reduce greenhouse gas emissions.”
Western is also reporting significant progress in its sustainable investing strategy, having allocated US$70 million (C$94.8 million) to investments that support the United Nations Sustainable Development Goals (SDGs). Beginning with an initial investment in 2020, the university made a second investment early in 2022, with third and fourth investments expected in early 2023.
While Western does monitor exposure to fossil fuel companies (direct investments represent 0.33 per cent), Logan underlined that measuring greenhouse gas emissions across the portfolio is much more effective in helping reach the university’s goal of net-zero emissions.
“This is why the university has committed to reporting its total portfolio carbon footprint annually. That ensures we are transparent about our progress in eliminating the emissions in our portfolio, from all sectors, not just the fossil fuels industry,” said Logan.
As the university begins to move the needle on decarbonizing its portfolio, Western has also seen overall returns that are among the best in Canada’s post-secondary sector.
“We’re very pleased that our early work here demonstrates that we can successfully select investments that support the UN SDGs, are true to our responsible investing beliefs, and take into account environmental, social and governance criteria, while also meeting our financial performance expectations,” said Logan.
“All indications are that our responsible investing strategy is on the right track.”