In a first for Australian universities, by setting a reduction target of 20% relative to the footprint of its current listed equity composite benchmark, the University is visibly demonstrating its commitment to addressing climate change.
The decision follows a comprehensive review taking into account leading practice on sensitive investments, and the current global views and actions surrounding fossil fuel investments.
The review considered a number of options, including whether to divest entirely from the fossil fuels industry. It also highlighted the complexities of reducing an investment portfolio’s carbon footprint. For example, divesting entirely from all companies with an interest in fossil fuels could result in divesting from companies that are also committed to building renewable energy sources. In addition, there are many companies that do not produce fossil fuels who are nonetheless heavy emitters.
Based on the review’s findings, the University of Sydney believes a whole of portfolio approach to reducing its carbon footprint is an effective and meaningful way to address climate change.
In an innovative step, the University will ask its listed equity fund managers to build a portfolio of investments that enables the University to reduce its carbon footprint by 20 percent – in just three years. The University will measure and publicly report progress towards this goal annually.
The University’s Vice-Principal (Operations) Sara Watts said: ‘The new strategy balances the University’s obligation to manage funds wisely on behalf of our students, staff, donors and alumni with its desire to address climate change and protect Australia’s heritage.
‘This strategy will give the University a legitimate voice in the conversation on how organisations can best address climate change risks. The University’s strategy signals to the entire market that investors are concerned about the impact of climate change and expect contributing sectors to respond with plans to reduce their emissions.’
In addition, the University:
• Has become a signatory to the CDP (formerly known as the Carbon Disclosure Project), the world’s largest source of company-reported emissions data, and a global movement urging companies to disclose carbon emissions and set targets to reduce them;
• Has joined the UN-led Portfolio Decarbonisation Coalition, a coalition of investors who collectively are committed to decarbonising $US100 billion of its investment assets;
• Will incorporate carbon footprint reporting capability into the selection and review of listed equity investment managers; and
• Will further expand its Environmental, Social and Governance (ESG) framework to put in place ethical investment standards that support the economic and social rights of Aboriginal and Torres Strait Islander people.