SFU wants to measure the greenhouse gas emissions associated with its investment portfolio.
Only by doing so will the university meet its target of reducing the carbon footprint of its investments by a third.
SFU’s board of governors has adopted this ambitious goal in alignment with Canada’s commitment to cut greenhouse gas emissions in the country by 30 percent below 2005 levels by 2030.
According to SFU president Andrew Petter, it will start with an assessment of the carbon footprint of the university’s investments.
“Once we do that, then we will start to develop targets so we will be able to show progress over the next few years,” Petter told the Straight in a phone interview Thursday (November 24). “And of course, the time frame we set is a floor, not a ceiling. So if we can reduce the carbon footprint more quickly or to a greater extent, then that will be great.”
As to how SFU will reduce that carbon footprint is a bit more intricate.
As Petter explained, most of the university’s investments are in pooled funds, which SFU doesn’t control.
“So what we’re hoping is that we not only are going to have some impact by ourselves, but that we will encourage other, not only universities, but other investors to think about sending a similar signal, and making similar commitments that will really have impact upon the companies that are in those pooled funds, and the investment managers, so that we will all together start to create incentives for companies to reduce their carbon footprints, and for investment managers to be aware of the carbon impacts of the companies in which they invest,” he said.
Regarding SFU’s money in fossil-fuel industries that account for the biggest volume of the greenhouse gas emissions in Canada, Petter said that the university doesn’t really know.
“They are in pooled funds. There’s no fossil-fuel investments in our direct investments. Within pooled funds, they’re these are funds that we don’t control directly. Our managers invest in them because they produce a good rate of return so that we can have the income to support bursaries, and chairs in research. But that’s exactly what we need to start measuring, so we can start to see to what extent are they representative of fossil fuel companies,” he said.
According to Petter, simply divesting from oil and gas companies is not a good strategy.
“One of the two reasons why divestment, why simple divestment was not really a realistic or effective option for us,” Petter continued, “is because the only way we could have divestment would have been to pull out of the major pooled funds, and that would have put our investment portfolio at risk in terms of producing the income we need. It would have necessitated going into much riskier investments.”
“The other reason is if you simply divest, you have no leverage,” Petter went on, “and the choice for us was do we divest – we couldn’t for the reason I’ve given – but even if we could in theory, is divestment the better strategy? We thought not, because we would really use our investment power to the extent we have it, and persuade others to use theirs to actually put some pressure on companies.”
Simple divestment will have an adverse result, according to the university president.
“If those who are interested in the environment were to divest from companies, the shareholders who were left would be those that would put no pressure on those companies,” he said.
“So we think active investment, with pressure it will hopefully bring to bear, particularly if others join with us on companies to say, ‘Look if you want us to continue to invest ,you’re going to have make improvements in your behaviour’ … this strategy is going to be more effective.”
Indicating that he feels encouraged, Petter noted that today, a number of major companies, including Suncor Energy, a company operating in the oil fields of Alberta, spoke out in favour of a carbon tax and the need for them to reduce their own carbon footprints.
“So we hope that companies acting in the spirit of Canada’s carbon commitments will start to reduce their carbon footprints of their accord,” Petter said. “We will capture that benefit. We will be encouraging our investment managers to look at portfolios that are moving in a reduced direction, and we’ll be able to give them information about that, because we’ll be measuring it.”