In April 2020, McGill’s Board of Governors approved an eight-point implementation plan for how the University will decarbonize its endowment portfolio, based on recommendations put forth in the final report of the Committee to Advise on Matters of Social Responsibility (CAMSR). The plan included the Investment Committee’s commitment to publishing an annual Socially Responsible Investment (SRI) Report beginning in spring 2021. The first such report is now available on the Secretariat website.
The 2021 Investment Committee Report on Socially Responsible Investing tracks “key accomplishments across all asset classes, such as equities, fixed income, real estate, and infrastructure.” Highlights of the implementation status (as of Dec. 31, 2020) of the CAMSR report’s eight recommendations include:
- Decarbonization: The McGill Investment Pool (MIP) listed equity portfolio carbon emissions relative reduction stands at 20 per cent, which puts the University ahead of schedule in meeting its target of achieving a minimum of 33 per cent carbon emissions reduction of the MIP public equities (relative to the MIP public equities benchmark) by 2025.
- Impact investment: Including commitments, 4.4 per cent of the MIP’s assets are now in impact investments, which puts the University ahead of schedule in meeting its target of a minimum of 5 per cent by 2025.
- Screening: At the end of October 2020, University Advancement launched a branding effort to increase investment in McGill’s Fossil Free Fund.
- Engagement: The Committee appointed SHARE as a shareholder engagement provider. The MIP’s ESG integration by investment managers is currently at 99 per cent.
- ESG integration: The CAMSR report called for a review of the MIP’s Statement of Investment Policy to reflect Environmental, Social and Governance (ESG) goals and objectives. In June 2020, the policy was amended to reflect ESG goals and objectives, including modifying the Investment Objective section to consider ESG commitments with the aim to implementing the proposed CAMSR recommendations.
- SRI review: The CAMSR report called for a thorough review of the University’s current SRI practices to take place at least every five years. A review has been added to the Board of Governor’s calendar of business in Spring 2025.
- Institutional leadership: In 2020, McGill signed a charter to address climate change. Senior administration made presentations to CAUBO and U15.
“Over the past five years, the University has made important progress in developing a framework for sustainably investing the MIP, and the Investment Committee and the Office of Investments continue to work together to pro-actively include ESG considerations in all decision-making,” says Sophie Leblanc, McGill’s Chief Investment Officer & Treasurer. She says that this collaboration has two important objectives. “Of course, we recognize that, without doubt, climate change poses a serious threat to life on earth – so we have an urgent duty to help society reduce its overall carbon footprint, and that includes managing the MIP according to principles and practices that mitigate the negative impact of human activities on the environment. At the same time, we have a fiduciary responsibility to ensure the sound governance and trusteeship of the University’s financial, property and human resource assets.
“In other words, as investors recognize that switching to a more sustainable energy is essential to fight climate change, we have made commitments not only to reduce the carbon footprint of our portfolio but to invest in the energy transition that we believe makes sound economic sense, too. The 2021 SRI report reflects the considerable progress the University has made toward honouring these two important, interconnected duties.”
See the full 2021 Investment Committee Report on Socially Responsible Investing for more details.
The Investment Committee is one of 10 standing Board of Governor committees. The Committee’s mandate is to assist the Board in fulfilling its governance responsibilities with respect to the University’s investments.
The Investment Committee’s implementation of the CAMSR recommendations is part of McGill’s climate change and sustainability efforts. This includes the University’s commitment to achieve carbon neutrality by 2040.
It is actually impressive to see the positive impact this aggressive and focused carbon reduction approach has had in curtailing by half McGill’s MIP investments in the equity of the top 200 companies listed in the Carbon Underground 200 index — from about 2% or approximately $32M in September 2019, to about 1% or approximately $17M. This is great news!