Backgrounder: FAQ: UVic Responsible investment policy

1. Why is UVic proposing a responsible investment policy for its short-term investments?
UVic believes climate change is a key global issue of our time.

We have world-leading and widely respected research and academic programming related to climate change and environmental stewardship. We also manage our campus operations to high sustainability standards. 

Our responsible investment policy for short-term investments is one more way the university can address climate change and support sustainable futures. 

2. How was the responsible investment policy developed?

The administration worked for several months on policy options for the Board of Governors that are consistent with the goals in our Strategic Framework, of which Sustainable Futures is one of six strategies, and our fiduciary responsibility to steward these funds. 

This work involved extensive research, including submissions from student groups; analysis; consultation with the students, faculty members, other campus members and stakeholders; and education sessions with external experts for the board members in September and November. 

3. What are the policy’s main elements?
  • Materially lower the carbon emissions across the entire portfolio by 45 per cent by 2030
  • Participate in engagement activities to encourage carbon emission reductions
  • Allocate 25 per cent of the funds to thematic impact investments including in energy companies that will be part of the required transition, and investments that support Indigenous economic development
  • Encourage better disclosure of carbon emissions and climate-related risks
4. How did you set the target of a 45 per cent reduction by 2030?

The 45 per cent reduction aligns with targets set by the UN’s Intergovernmental Panel on Climate Change (IPCC) and Paris Climate Agreement to keep the global temperature rise to 1.5 C.

This is an ambitious goal that will challenge the university as this is a new and developing area and much of the data required is not available, however we believe it was an important goal to set. 

5. Will the policy result in divestment from fossil fuel companies?

The policy will result in the university divesting from high-carbon-emitting companies regardless of their industry sector, including the fossil fuel industry. The policy’s reach across all sectors of the economy, and the investment in renewable energy and other clean technology, is a holistic and comprehensive approach that also encourages low-carbon practices as we transition to a greener economy. 

We need policies that affect the demand side of climate change. Based on data from the US, roughly 80 per cent of greenhouse gas emissions come from human activity. 20 per cent comes from the production of fossil fuels. 

6. What are examples of high-carbon-emission industries?

Canada’s top 15 emissions-intensive industries*

  • Miscellaneous chemical product manufacturing
  • Basic chemical manufacturing
  • Pulp, paper and paperboard mills
  • Electricity
  • Crop and animal production
  • Agricultural chemicals manufacturing
  • Water-based manufacturing
  • Meat product manufacturing
  • Air transportation
  • Dairy product manufacturing
  • Petroleum and coal product manufacturing
  • Oil and gas extraction
  • Animal food manufacturing
  • Converted paper product manufacturing

*Sources: The Conference Board of Canada, Natural Resources Canada, Statistics Canada 

7. Why are you not divesting outright from all fossil fuel companies?

We agree with divestment campaigners that the university has an important role in addressing the climate crisis. We disagree on what approach to take. 

The new policy will result in UVic divesting from high-carbon-emitting companies and allow us to increase our investments in renewable technology. This will have a direct impact on lowering greenhouse emissions, the cause of climate change, and allow us to support companies that are building the low-carbon economy. 

A carbon footprint approach focuses on the greenhouse gas emissions of all of our investments rather than the narrower universe of fossil fuel producers. By taking into account both companies that supply energy and also those that use energy, we are able to promote more sustainable and efficient practices from all. 

The approach requires our investment managers and decision-makers to take into account climate risk, including the fact that many fossil fuel assets will be left in the ground (stranded) and rendered valueless as the world shifts ever more strongly towards clean energy alternatives. 

 And it incorporates other environmental, social and governance issues in decision-making in a way that is consistent with their fiduciary duty. 

The carbon footprint approach has the virtues of both divestment and engagement. It provides for disinvestment in the more emissions-intensive enterprises and through shareholder engagement and strategic investments allows us to continue to influence the corporate behaviour of those entities which are still in the portfolio, including those energy producers and users who are driving towards climate solutions. 

8. What is thematic impact investing?

Thematic impact investments are investments made in areas where there are societal or environmental impact along with financial returns. 

The university’s policy not only reduces investments in high-carbon emitters, it allocates funds for thematic impact investments. Our thematic impact investments will align with the university’s Strategic Framework and further the UN Sustainable Development Goals. 

9. Why is Indigenous economic development included in thematic investments?

Our thematic impact investments will align with the university’s Strategic Framework and further the UN Sustainable Development Goals. Indigenous economic development fits in both cases since fostering respect and reconciliation is one of our framework’s six strategic goals. 

Other examples of possible thematic impact investing opportunities include passive housing (the most rigorous global building standard) and green bonds that finance renewable energy projects. 

10. How does UVic’s policy compare with other universities?

UVic is among the most progressive universities in Canada with its adoption of a policy that directly targets greenhouse emissions, lowers the carbon footprint of investments by 45 per cent and makes new investments in sustainable energy. 

Of the 17 universities researched (including UBC, SFU and Concordia), two have committed to divest of coal and oil and gas producers, one has chosen to partially divest of fossil fuel companies, 12 have an Environmental Social and Governance (ESG)/Socially Responsible Investing (SRI) policy, two (and McGill pending) have a specific CO2 reduction target, and six are signatories of climate action initiatives. 

11. What happens next?

The Board of Governors is expected to make a decision on Jan. 28. 

If the policy is approved, some of the next steps for administration on the policy include:

  • conducting a carbon footprint analysis on existing investments;
  • becoming a signatory of United Nations Principles on Responsible Investment;
  • exploring opportunities to engage with companies on reducing carbon emissions; and,
  • conducting an asset mix review to assess how our targets will be met.

In addition to adopting a responsible investment policy, UVic is working on a Climate and Sustainability Action Plan. Early discussions have started to think about how UVic, as a leader in research, academic and sustainable operations, can set goals and work on an integrated climate response. 

We intend to build on excellent work and mechanisms already underway including the Climate Solutions Navigator Project that is working to identify, develop and implement climate solution activities at UVic in response to the IPCC goals. 

12. How will this affect what the University of Victoria Foundation does with its investment policy?

The foundation has taken many progressive steps to establish and update its investment policy and transparency around investment decisions. More information on how that has evolved since 2012 can be found at the link below. 

The Foundation will review the university’s renewed policy as it continues to evolve its approach on responsible investment. 

More info on the foundation

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Keywords: climate, Jamie Cassels, clean energy, environment

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