Second annual investment pool town hall advances carbon footprint discussions

Financial Affairs recently hosted a town hall inviting Faculty, staff and students to an open discussion about the investment pool. The town hall included a presentation on the University’s investment diversification strategy and estimated carbon footprint of investment pool holdings.

The town hall also provided an update on the evolution of McMaster’s investment initiatives that focus across a broad spectrum of environmental, social, and governance (ESG) issues. Annual town hall events will occur each year, the first hosted in 2018, as just one of the actions from the 2017 President’s Advisory Committee on Fossil Fuels Divestment recommendations.

The carbon footprint of McMaster’s investment pool has been measured as of April 30, 2018 by a third-party, MSCI, which estimated the carbon emissions for equity investments to be lower than two benchmarks: the MSCI Global Equities excluding fossil fuels and the investment pool policy benchmark portfolio.  A summary of these carbon footprint estimates is available on the Financial Affairs key performance indicators page.

Overall, 4.5% of the university’s investments relate to 29 companies identified on the carbon underground top 200 (CU200) companies list, compared to 6.0% a year prior. Investment managers hired by McMaster are asked to explain to the Investment Committee its analysis related to any holdings of CU200 companies, including specifically ESG actions of the company and renewable or clean energy investments.

Dee Henne, AVP (Administration) and Chief Financial Officer, spoke about the carbon footprint being one aspect of social responsibility the university considers when evaluating investments and identified several other critical considerations in addition to carbon, such as poverty, equity, water, and more.

“We continue to have focused discussions with investment managers and the Investment Pool Committee about our carbon footprint,” she said. “In addition, we look across a number of issues summarized more simply as the 17 United Nations Sustainable Development Goals. Overall, we encourage our investment managers to find investments that meet responsible environmental, social and governance standards.”

While McMaster continues to search for a suitable fund solely focused on commercializing carbon-free sources of energy and climate change mitigation technologies, the university recently approved a $5 million social responsibility fund investment which seeks to invest more in renewable energy than the index, while at the same time reduce portfolio carbon footprint to below the index. The university shared as part of its ongoing action plan that it will continue to explore new investments in funds focused on renewal energy.

Henne also noted that McMaster is contributing to and following the Sustainable Accounting Standards Board framework for increased transparency and reporting.

McMaster is a leader in the Canadian higher education sector regarding its sustainable investment pool actions and the university is working to move other Ontario and Canadian universities towards increased measurement and reporting.

“We are still evolving and advancing in this area,” says Henne. “While fairly ahead of provincial and national peers, we recognize that there is still more that can be done.”

The town hall also included an engaged question and answer period where several attendees raised points of concern and asked for further action.

Henne committed to posting additional information on the financial affairs website including the timeline to sign the United Nations Principles for Responsible Investments, along with staying in touch with the town hall’s attendees and continuing to work with the group to address issues of environmental and social concern.

The next Investment Town Hall will be held in late February 2020.