A group of Canadian Universities announced that they have signed a charter committing them to address climate change through responsible investment practices. The charter, initiated by the University of Toronto, and signed by 14 other institutions, calls on universities to incorporate ESG factors into their investment practices, measure the carbon footprints of investment portfolios on a regular basis – with targets set to reduce these over time – and to engage with companies to encourage reducing emissions.
The charter outlines the challenges that businesses will face from climate change, and the need for appropriate disclosure of these risks from companies:
“There is a growing consensus that climate change will have significant implications for investment management. Climate-related risks are now recognized as having material consequences for businesses in every corner of the economy, with regulators encouraging individual companies to disclose these risks in a more transparent and comprehensive way. This development is part of a larger shift towards responsible investing, which takes into account a broad set of environmental, social and governance (ESG) factors.”
Going on to describe the management of these new risks as key to investment managers’ fiduciary duties, and the impact a responsible-investing approach by managers can have, the charter continues:
“Prudent practice now requires institutional stewards of long-term investments to adopt processes that take into account material climate-related investment risks. Failure to do so may constitute a dereliction of fiduciary duty by investment managers, who have an obligation to serve the best long-term interests of beneficiaries.
“Moreover, such a responsible investing approach will also foster the transition to a low-carbon economy, by directing capital to investments in promising areas that are poised to offer alternative, more sustainable solutions. Furthermore, by applying a responsible investing framework to their entire portfolio, investors ensure that the carbon-emitting behaviour of all businesses and sectors of the economy are subjected to equal and rigorous scrutiny.”
University of Toronto Asset Management Corp. (UTAM) has already adopted measures outlined in the charter, stating earlier this year that it plans to reduce the carbon footprint of the endowment and pension investment portfolios by at least 40 per cent by 2030. UTAM manages a pension fund of approximately $10 billion.
Commenting on the new charter, U of T President Meric Gertler said:
“Climate change is one of the most urgent challenges facing our world, so it is absolutely vital that Canada’s universities work together to address it – and responsible investing practices like those adopted by UTAM are one way to make an impact.
“By signing this charter, the University of Toronto and other universities across Canada are setting an important standard for others to follow. We very much hope that other institutions will join this effort, now that the Charter has been launched.”
Other signatories to the charter include University of British Columbia, Dalhousie University, University of Guelph, McMaster University, Université de Montréal, Queen’s University, Simon Fraser University, University of Victoria, Université Laval, University of Waterloo, University of Ottawa and Western University.
To view the charter, click here.