Universities leveraging shareholder power to promote climate action
Collective effort focused on holding companies in which universities invest, accountable and achieve sustainability goals.
With the climate crisis now at our doorstep, several universities in Canada have decided to turn up the heat on unsustainable businesses with a “money talks” approach.
The University Network for Investor Engagement, or UNIE, is a joint effort by 11 universities across the country to leverage their collective shareholder power to compel businesses in which they invest to operate more sustainably. Launched in February, by the non-profit Shareholder Association for Research Education, or SHARE, the initiative advocates for businesses in the universities’ investment portfolios to reduce their emissions in line with the 2016 Paris Agreement on climate change.
Mount Allison University, a small liberal arts institution in Sackville, a rural town of about 5,000 in southeastern New Brunswick, is a member. In 2017, the university updated its investment policy to incorporate environmental, social and governance (ESG) considerations into investment decisions for its endowment fund, now worth around $200 million. The university requires external asset managers to ensure portfolio investments protect against the financial risks related to climate change, GHG emissions, resource depletion, waste and pollution and deforestation. Participating in UNIE allows Mount Allison to access specialized expertise in this area.
“We wanted to further expand on our ESG focus in investing, but at a small place like ours, the financial professionals are all generalists,” says Robert Inglis, vice-president of finance & administration at Mount Allison. “UNIE seemed like an excellent way to accomplish our goals in a way that fits a small institution without highly specialized professionals to focus on investments.”
UNIE members pay a flat fee that’s proportional to the value of their investment assets. In return, they gain access to the investment services of SHARE, which has been working with postsecondary institutions, foundations, churches and other institutional investors in Canada since 2000.
SHARE directly engages with North American companies in UNIE members’ portfolios, advocating for reducing greenhouse gas emissions, remedying the impacts of pollution, reallocating capital to low-carbon sources and more effectively regulating industries to minimize the impacts of climate change.
SHARE CEO Kevin Thomas explains that the organization seeks solutions for companies to change a policy or practice that may be damaging to the environment. SHARE’s approach, adds Mr. Thomas, may involve sharing information on the sustainable yet profitable practices of other similar businesses. If a productive dialogue doesn’t happen, he says, SHARE may encourage a member to file a shareholder proposal for a specific sustainable corporate action.
UNIE is part of a recent wave of collective climate action by higher education institutions in Canada and globally. Last June, 15 universities in the country signed onto Investing to Address Climate Change: A Charter for Canadian Universities. Among its four key principles and/or practices is following the standards of the United Nations-supported Principles of Responsible Investment. Outside of investment advocacy, universities have been agitating for change through initiatives such as the University Climate Change Coalition, or UC3, established in 2018 and accelerating place-based climate solutions; and the launch last April of the International Universities Climate Alliance, a group of 48 universities producing critical climate research to support policymakers and business leaders.
“Climate change is the issue of the day … and it makes a lot of sense for universities to collaborate on this problem that affects all of our institutions,” says Betsy Springer, director of Pension Fund Management at Carleton University.
Ms. Springer oversees a $1.5 billion pension fund and a $300 million endowment fund for Carleton, which adopted a responsible investing (RI) policy in 2010. She sees UNIE as an important complement to the university’s own efforts as an active investor, where she and her team vet asset managers and set RI standards. She adds that it also allows Carleton to respond to the growing and increasingly vocal concerns about climate change from its stakeholders, although those concerns are now global: UNESCO’s March 2021 survey of more than 15,000 people worldwide revealed 67 percent cited climate change and loss of biodiversity as humanity’s most pressing challenge.
“Climate change is the issue we get the most inquiries about from our constituents, mostly from students, faculty and staff. So there is a huge appetite for this,” Ms. Springer says. “The more people holding shares of companies make clear they expect change and movement, the more likely it is that it will happen.”
SHARE is establishing specific targets for its investment advocacy and will communicate its results to UNIE members in quarterly reports. This is important to Andrew Coward, treasurer of the University of Victoria, which has a $500 million endowment fund and a $225 million capital fund represented by UNIE. UVic has a formal goal to reduce the carbon intensity of its investments by at least 45 percent by 2030; in February, it had removed all fossil-fuel investments from its working capital fund. With climate change being an issue that touches us all, he says, it’s critical to keep constituents current on UVic’s progress.
“One of UNIE’s key deliverables is open and transparent reporting, so that we can demonstrate to our respective stakeholders the impact we are having on the climate crisis,” Mr. Coward says. “Decarbonization must take place across the economy … and we can be more effective working together to encourage companies to reduce emissions, while not sacrificing financial returns.”
Source: University Affairs