SFU investment approach leads to 60% carbon footprint reduction, more environmentally and socially responsible funds
Since becoming one of the first Canadian universities to sign on to the United Nations Principles for Responsible Investment, Simon Fraser University has made significant progress in leading and modeling the way to reduce the carbon footprint of investments.
Carbon emissions, which affect climate change, are released by all industries - not solely the fossil fuel industry - so the university has focused its investment approach on reducing the carbon footprint of its investments versus committing to divestment. To date, SFU has reduced the carbon footprint of the public equity portion of its investment portfolio of $1.2 billion by 60 per cent from the 2016 baseline (double the initial target of 30 per cent by 2030). And the university continues to look at ways of further reducing the footprint, by investing in environmentally-responsible funds and transitioning away from carbon-intense public equities.
“We were one of the first universities in Canada to start measuring the carbon footprint of our investments,” says Alison Blair, associate vice-president, finance. “Responsible investment has been a priority for the university since 2014.”
SFU’s investments are split between $650 million in endowment funds and $550 million in non-endowment and working capital funds.
Moving to a lower carbon footprint
Over the past five years, SFU has worked to transition from higher carbon-pooled funds to lower carbon funds, and has not committed to any new mandates that have exposure to fossil fuel investments. The university has re-invested $340 million in fossil fuel-free global equity funds by replacing previously existing managers, and has outperformed its composite benchmark by 50 basis points on an annualized basis over the past five years.
The latest assessment from December 2020 shows remaining fossil fuel holdings are currently approximately $60 million (five per cent of total investments) and that the university holds no direct investments in fossil fuel companies. By all metrics, although SFU has not committed to full divestment, the university is currently outperforming other universities that have committed to full or partial fossil fuel divestment. And SFU is committed to further refinement of its investment portfolio.
“SFU takes climate change very seriously and strives to be a leader in responsible investment,” says Blair. “When we meet with our fund managers, we always ask about environmental, social and governance (ESG) issues and their commitment to sustainability, including dedicated ESG staff and their criteria for researching ESG issues. That commitment has been reflected in the decisions we make and has helped us exceed our goals.”
Investing in socially responsible funds
The university has $22 million in a socially-responsible global equity fund, $264 million in a fossil fuel-free global equity fund, $55 million in a fossil fuel-free US equity fund and was the first university to invest in the Raven Indigenous Impact Fund (RIIF), a B.C.-based fund supporting Indigenous entrepreneurs.
SFU is also looking to transition to a new $30 million infrastructure fund with a strong renewable energy component and will be advocating for divestment within its student-led funds.
The university’s investment approach is guided by a Responsible Investment Committee and the SFU’s Responsible Investment Policy, (which were established in 2014) with advice from the Investment Advisory Committee.
Many of the strides SFU has made are driven by the commitment of its Board of Governors, its Responsible Investment Committee and student groups, like SFU 350, who continue to raise awareness about the importance of the impact that we can make. We are very grateful to all of these groups for the progress we have made.
Mobilizing sustainability action
Beyond investments, SFU has a five-year sustainability plan that is mobilizing the entire institution to address the climate crisis. Aligning with the United Nations objective of net-zero GHG emissions by 2050, the sustainability plan includes 16 targets to reduce the university’s carbon footprint, including a shift to renewable energy sources, more aggressive energy conservation measures, and support for electrification of commuting and fleet vehicles.
SFU is committed to slashing its greenhouse gas emissions by half, and to shift half of its energy use to renewable sources by 2025.
In September 2021, SFU signed the Canadian Investor Statement on Climate Change as a founding member. Signing the statement is SFU’s pledge to integrate climate-related risk and opportunities into our investment processes and support the transition toward a net zero economy. The university has recently joined the United Nations Race to Zero campaign and will announce new, more aggressive targets later this month.