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“We have a responsibility to take decisive action on climate change”: University of Toronto president

March 30, 2016

Meric Gertler announces climate change challenge, new investing strategy

Toron­to, ON — Uni­ver­si­ty of Toron­to Pres­i­dent Mer­ic Gertler today unveiled a 14-point plan of spe­cif­ic, tar­get­ed actions that aim to make a dif­fer­ence on cli­mate change now.

Gertler out­lined U of T’s plan to bat­tle cli­mate change in a bold report, Beyond Divest­ment: Tak­ing Deci­sive Action on Cli­mate Change.

Read the report

Gertler said U of T’s approach to the invest­ment of its endow­ment and pen­sion funds should be broad­ened to con­sid­er envi­ron­men­tal, social and gov­er­nance (ESG) fac­tors when apprais­ing the long-term per­for­mance of firms in which it holds direct invest­ments.

Beyond Divest­ment also out­lines a plan of deci­sive action that calls on every facet of the Uni­ver­si­ty – as a leader in research, teach­ing, and as an ener­gy con­sumer – to join in the fight against cli­mate change.

“We must take action to lim­it the rise in glob­al tem­per­a­tures if we are to avoid cat­a­stroph­ic impacts on the plan­et and human­i­ty,” Gertler said. “Uni­ver­si­ties in par­tic­u­lar have a cru­cial and unique role to play in help­ing to meet that chal­lenge, and as a pub­licly sup­port­ed aca­d­e­m­ic insti­tu­tion, the Uni­ver­si­ty of Toron­to has a respon­si­bil­i­ty to take deci­sive action.”

Beyond Divest­ment is a response to the President’s Advi­so­ry Com­mit­tee on Divest­ment from Fos­sil Fuels. That com­mit­tee, led by envi­ron­men­tal engi­neer­ing pro­fes­sor Bryan Kar­ney, released its own rec­om­men­da­tions last Decem­ber. The com­mit­tee rec­om­mend­ed that the Uni­ver­si­ty adopt a strat­e­gy of tar­get­ed and prin­ci­pled divest­ment as well as a num­ber of ini­tia­tives in the broad­er field of sus­tain­abil­i­ty.

U of T’s $6.5 bil­lion long-term invest­ments, most­ly in pen­sion and endow­ment funds, are man­aged by the Uni­ver­si­ty of Toron­to Asset Man­age­ment Cor­po­ra­tion (UTAM). Gertler said he will ask UTAM to:

  • Artic­u­late prin­ci­ples that will enable con­sid­er­a­tion of ESG fac­tors in under­tak­ing direct long-term invest­ments;
  • Ini­ti­ate the process to become a sig­na­to­ry to CDP (for­mer­ly known as the Car­bon Dis­clo­sure Project);
  • Eval­u­ate sign­ing onto the Unit­ed Nations-sup­port­ed Prin­ci­ples for Respon­si­ble Invest­ment ini­tia­tive;
  • Deter­mine ways in which it can vote proac­tive­ly and delib­er­ate­ly on share­hold­er res­o­lu­tions aimed at reduc­ing cli­mate-relat­ed risk for firms in which they are direct­ly invest­ed;
  • Eval­u­ate sign­ing the Mon­tre­al Car­bon Pledge, which com­mits investors to mea­sur­ing and pub­licly dis­clos­ing the car­bon foot­print of their invest­ment port­fo­lios every year;
  • Report annu­al­ly on its efforts to assess ESG fac­tors in mak­ing its invest­ment deci­sions.

Final­ly, giv­en the grow­ing recog­ni­tion of the impor­tance of cli­mate-relat­ed risk, the Uni­ver­si­ty should give seri­ous con­sid­er­a­tion to extend­ing a sim­i­lar ESG fac­tor-based approach to its indi­rect invest­ments.

Gertler thanked Kar­ney and the com­mit­tee for their work.

Kar­ney wel­comed Beyond Divest­ment. “It is a thought­ful, ambi­tious, trans­par­ent and prac­ti­cal report, which cer­tain­ly cre­ative­ly takes our essen­tial prin­ci­ples and works them out for the Uni­ver­si­ty. Sig­nif­i­cant­ly, the report calls on every part of the Uni­ver­si­ty to join in the fight against cli­mate change and cre­ates prin­ci­ples and approach­es that will intel­li­gent­ly guide us to be pro­gres­sive­ly more sus­tain­able in the future,” he said.

While the divest­ment com­mit­tee chaired by Kar­ney had con­clud­ed a “a blan­ket divest­ment strat­e­gy would be unprin­ci­pled and inap­pro­pri­ate” it had rec­om­mend­ed that U of T divest imme­di­ate­ly from fos­sil fuels com­pa­nies that show “bla­tant dis­re­gard” for the 1.5 degree C thresh­old that forms the basis of the Paris Agree­ment.

Gertler con­firmed that the Uni­ver­si­ty does not hold direct invest­ments in any of the com­pa­nies cit­ed by the com­mit­tee but he also said that U of T should broad­en its focus beyond fos­sil fuel com­pa­nies, since such com­pa­nies only account for a quar­ter of Canada’s green­house gas emis­sions, with the bal­ance pro­duced by oth­er sec­tors such as trans­porta­tion, hous­ing and man­u­fac­tur­ing.

“An approach that con­sid­ers ESG fac­tors – includ­ing cli­mate-relat­ed risk – as they per­tain to all sec­tors of our econ­o­my would seem to offer the best chance of suc­cess in meet­ing the chal­lenge of cli­mate change, while ful­fill­ing our fidu­cia­ry duties” to the University’s pen­sion and endow­ment fund ben­e­fi­cia­ries, the pres­i­dent argued. Such an approach would allow U of T to direct its invest­ments active­ly, in a tar­get­ed and dynam­ic way, apprais­ing the long-term per­for­mance of indi­vid­ual firms in a man­ner that accounts for their ESG prac­tices, includ­ing cli­mate-relat­ed risk. It could also take into con­sid­er­a­tion social con­sid­er­a­tions, such as the rights and well­be­ing of Indige­nous com­mu­ni­ties.

Read the report of the President’s Advisory Committee on Divestment from Fossil Fuels

Read the president’s response, Beyond Divestment: Taking Decisive Action on Climate Change

Although the Kar­ney com­mit­tee had rec­om­mend­ed that U of T devel­op its own method of eval­u­at­ing fos­sil fuels com­pa­nies to deter­mine whether they have dis­re­gard­ed the 1.5‑degree thresh­old, Gertler con­clud­ed it would be more effec­tive for the Uni­ver­si­ty to work with third-par­ty orga­ni­za­tions that have already devel­oped tools and met­rics by which to assess the ESG prac­tices of firms. In con­sid­er­ing a broad­er advo­ca­cy and lead­er­ship role for the Uni­ver­si­ty, he argued that it would be most effec­tive for U of T to join with oth­er groups pro­mot­ing broad­er dis­clo­sure of car­bon use and the adop­tion of mea­sures to pro­mote a low-car­bon econ­o­my.

In par­tic­u­lar, U of T would have more clout if it joined glob­al coali­tions such as the Unit­ed King­dom-based CDP, which “aims to inform investor deci­sion-mak­ing, facil­i­tate share­hold­er engage­ment, and encour­age cor­po­ra­tions to man­age their car­bon emis­sions more effec­tive­ly.” Sev­er­al of Canada’s largest pen­sion funds, such as the Cana­di­an Pen­sion Plan Invest­ment Board, are already CDP sig­na­to­ries and U of T would show lead­er­ship by becom­ing one of the first Cana­di­an uni­ver­si­ties to become involved with the group, he said.

John Switzer, who chairs the UTAM board of direc­tors, agreed that U of T should become a CDP sig­na­to­ry. “UTAM believes it is fit­ting that Canada’s lead­ing research-inten­sive Uni­ver­si­ty intends to become a sig­na­to­ry and we will work with the Uni­ver­si­ty as it becomes one of the first Cana­di­an uni­ver­si­ties to join this orga­ni­za­tion.” He said that UTAM agrees that con­sid­er­a­tion of ESG-based fac­tors is an impor­tant com­po­nent of pru­dent invest­ment man­age­ment. “Although UTAM already incor­po­rates many of these fac­tors in its man­age­ment of the University’s pen­sion and endow­ment assets, we will work close­ly with the Uni­ver­si­ty to ful­ly imple­ment the President’s vision.”

Tes­sa Hebb, the direc­tor of the Ottawa-based Car­leton Cen­tre for Com­mu­ni­ty Inno­va­tion, also endorsed sign­ing on to the CDP. “When the CDP first start­ed in Cana­da only a hand­ful of Cana­di­an com­pa­nies respond­ed,” Hebb told U of T News.  “Our big investors then began to ask them to respond and now these com­pa­nies are tak­ing such requests seri­ous­ly.”

Hebb said U of T’s ESG approach would be more effec­tive in the fight against cli­mate change than divest­ment.

“Divest­ment is not an effec­tive strat­e­gy in the case of fos­sil fuel, it is a blunt instru­ment that doesn’t indi­cate what we want com­pa­nies to do in order to achieve the 1.5 thresh­old,” Hebb said. “Our very largest insti­tu­tion­al investors in Cana­da use an ESG approach – CPPIB, Ontario Teach­ers’ Pen­sion Plan, Caisse de Depot – to name a few. The approach being rec­om­mend­ed here has the poten­tial to be far more mean­ing­ful than sell­ing a stock that some­one else will buy.”

Ben Calde­cott, the direc­tor of the Sus­tain­able Finance Pro­gramme at the Uni­ver­si­ty of Oxford’s Smith School and a mem­ber of Oxford’s Social­ly Respon­si­ble Invest­ment Review Com­mit­tee, also endorsed the strat­e­gy out­lined by Gertler, describ­ing it as for­ward-look­ing. The U of T strat­e­gy, he said, “takes account of the lat­est work on how envi­ron­ment-relat­ed risks, includ­ing cli­mate change, could affect invest­ment port­fo­lios. It will allow the Uni­ver­si­ty of Toron­to to active­ly engage with and adopt new invest­ment prac­tices and prod­ucts as they become avail­able.”

The Kar­ney com­mit­tee report also rec­om­mend­ed that U of T increase its com­mit­ment to envi­ron­men­tal research and teach­ing and to pro­mot­ing sus­tain­abil­i­ty in the University’s own oper­a­tions. In response, Gertler pledged that U of T will strength­en its sup­port for envi­ron­men­tal research, inno­va­tion and teach­ing, and will con­tin­ue its efforts to make Uni­ver­si­ty oper­a­tions more sus­tain­able.

Read about U of T’s leading environmental research and teaching

Read about U of T’s sustainability leadership

“The University’s most valu­able and effec­tive con­tri­bu­tions to the glob­al effort to avert and mit­i­gate the con­se­quences of cli­mate change will flow from our fun­da­men­tal role as an insti­tu­tion of research and edu­ca­tion,” Gertler said. Among the ini­tia­tives he pro­posed are:

  • a tri-cam­pus clean-tech chal­lenge to encour­age envi­ron­ment- and ener­gy-relat­ed entre­pre­neur­ship;
  • $750,000 dis­trib­uted over three years for cli­mate-change relat­ed research and edu­ca­tion ini­tia­tives;
  • pri­or­i­tiz­ing cli­mate change-relat­ed themes in select­ed pro­grams and cur­ric­u­la;
  • increas­ing the Util­i­ties Reduc­tion Revolv­ing Fund by 50 per cent (from $5 mil­lion to $7.5 mil­lion) to encour­age more exten­sive imple­men­ta­tion of ener­gy-sav­ing retro­fits;
  • for­mal­ly adopt­ing sub­stan­tial­ly more rig­or­ous ener­gy effi­cien­cy stan­dards for cap­i­tal projects;
  • pur­su­ing oppor­tu­ni­ties to use our cam­pus­es as test beds for envi­ron­men­tal and sus­tain­abil­i­ty research and best prac­tices;
  • inves­ti­gat­ing the poten­tial for devel­op­ment of oth­er renew­able ener­gy projects.

Gertler also said he will estab­lish a new uni­ver­si­ty-wide com­mit­tee on the envi­ron­ment, cli­mate change and sus­tain­abil­i­ty with a man­date to coor­di­nate and advance U of T’s envi­ron­men­tal research, inno­va­tion, edu­ca­tion and ener­gy con­sump­tion ini­tia­tives.


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