In conversation with Sophie Leblanc  

McGill’s Chief Investment Officer & Treasurer discusses shareholder engagement, impact investments, and the advantages of the decarbonization strategy 
According to Sophie Leblanc, Chief Investment Officer & Treasurer, McGill “exerts its influence as a shareholder to push companies to accelerate the reduction of their respective carbon footprints and increase their spending related to cleaner energy”

Since 2019, McGill has cut in half the carbon footprint of its investment portfolio, eliminating approximately 73,000 tonnes of carbon emissions per year. These findings were highlighted in the 2022 Socially Responsible Investing (SRI) report. The report was issued by McGill’s Investment Committee and discussed yesterday by the McGill Board of Governors.   

This was not the only good news. According to the report, McGill has achieved or surpassed all of its SRI targets – two years ahead of schedule.  

“In realizing our sustainable investing objectives, we have made a material environmental impact that supports the University’s commitment to fighting climate change and achieving carbon neutrality by 2040,” said Sophie Leblanc, McGill’s Chief Investment Officer & Treasurer, in a press release.  

Leblanc spoke with the McGill Reporter about the strategies adopted by McGill to significantly decarbonize the McGill Investment Portfolio (MIP).   

McGill had set a target of decreasing the carbon intensity of the MIP by at least 33 per cent below benchmark by 2025. According to yesterday’s report, the University has surpassed that goal – at almost 37 per cent – two years ahead of schedule. How did McGill achieve that?  

It has been a very engaged process, but that engagement is one of the keys to this achievement.   

In some ways it would have been easier to simply divest from the top 200 publicly traded oil and gas companies (Carbon Underground 200). But the actual impact on decarbonization would have been less.  

Instead, we adopted a more holistic strategy to reduce the carbon footprint of the MIP. Yes, we removed some fossil fuel companies from the portfolio, but we also divested from companies outside the energy sector that are much more intense in terms of their carbon emissions.   

So, the MIP still has some fossil fuel holdings? What percentage?  

The MIP’s current holdings include less than 1 per cent exposure to the Carbon Underground 200 fossil fuel companies.   

Then why not divest completely?  

Again, it’s a question of engaging with the portfolio’s companies and setting carbon reduction targets.  

Realistically, the world can’t stop using fossil fuels today. That will come down the road, maybe 40 or 50 years from now. McGill wants to be part of that transition by exerting its influence as a shareholder to push companies to accelerate the reduction of their respective carbon footprints and increase their spending related to cleaner energy.   

Once you divest from a company, you no longer have a say in its direction.  

As a shareholder, how does McGill exert that influence? 

One way we do this is by working with SHARE (Shareholder Association for Research and Education). In 2021, we hired them as our shareholder service provider to engage with our portfolio companies on climate-related issues on McGill’s behalf along with other investors to amplify our voice as shareholders. Engagements cover topics such as reducing gas emissions, political spending, transitioning to cleaner energy, and improved disclosures.  

So, if McGill had divested from the outset, the results wouldn’t have been as good as the ones highlighted in yesterday’s report? 

When we first started this journey, the carbon footprint of the MIP listed equities was about 160 million tons of CO2 per million dollars invested. If we were to divest from CU 200, that number would be reduced by somewhere between 20 and 25 per cent. By choosing the decarbonization strategy, we have reduced that number by 50 per cent since 2019.   

Divestment simply would have not provided the same level of carbon emissions’ reduction.  

McGill also exceeded its target for Impact Investments. Why is this important? 

One of the commitments from the CAMSR Report was to invest more than 5 per cent of the assets of the MIP into funds that contribute to the decarbonization (impact funds) by 2025. As of December 2022, 7.8 per cent of the MIP is now in Impact Investments.    

Impact Investments are made with the joint objective of generating positive, measurable social and environmental impact alongside a financial return.   

McGill’s Impact Investments include companies that derive most of their revenues from sustainable solutions and help the transition to a sustainable future. Examples include circular economy investments (recycling, waste management, water treatment); alternative energy and renewable energy infrastructures; sustainable real estate; and green bonds.  

These are companies that are making the world a better, greener place and we’ve dedicated more than $140 million in them.   

Learn more on McGill Office of Investments website.