The University of Manitoba believes that responsible investing includes, but is not limited to, the integration of environmental, social and governance factors, also known as ESG factors, in investment decision making. UM’s responsibility as an investor is not only to assess and respond to material risks arising from ESG considerations, but also to be aware of, and act to mitigate or prevent the social and environmental harms arising from the practices of its investees.
The responsible investment policy was approved March 28, 2023 by the Board of Governors, aligning with the University of Manitoba’s commitment to advancing Reconciliation, sustainability and climate action.
The Incorporating Responsible Investment Principles at the University of Manitoba report (PDF) details actions that give priority to social and environmental issues in decisions related to the University’s investments, such as the University Investment Trust (endowment fund).
Both the report and the new policy fulfill recommendations forwarded by the Responsible Investment Committee established in fall 2020. The recommendations were approved by the Trust Investment Committee in fall 2022 and by BOG in January 2023.
The University of Manitoba has recognized the need for urgent action in the face of climate change and environmental issues, and has made commitments to undertake several climate initiatives. These commitments outline several actions related to responsible investing.
1) Investing to Address Climate Change: A Charter for Canadian Universities
In 2020, alongside 19 other leading Canadian educational institutions, the University of Manitoba became a signatory of Investing to Address Climate Change: A Charter for Canadian Universities. The Charter recognizes that as stewards of long-term investments, Canadian universities have a responsibility to take action and manage their capital in ways that accelerate the transition to a low-carbon economy and mitigate the increasing risks associated with climate change.
As a signatory, the UM pledged to abide by the following principles and practices set out in the Charter:
- Adopt a responsible investing framework to guide investment decision making, in line with recognized standards such as the UN Principles of Responsible Investing (UN PRI). Such a framework should:
- Incorporate ESG factors into investment management practices; and
- Encourage active engagement with companies to foster disclosure of ESG and climate related risks, and adoption of operational practices that reduce carbon emissions and foster ESG-positive behavior more broadly.
- Regularly measure the carbon intensity of our investment portfolios and set meaningful targets for their reduction over time.
- Evaluate progress towards these objectives on a regular basis and share the results of such assessments publicly.
- Ensure that the performance evaluation of UM investment managers takes into account their success in achieving such objectives, alongside the normal criteria for assessing their performance.
2) Race To Zero Campaign for Universities and Colleges
The Global Universities and Colleges Climate Letter signed by UM in 2020 declared the need to take immediate action to mitigate the effects of climate change in the education sector. It's also the officially recognized route for universities and colleges to commit to the Race To Zero campaign.
Race to Zero is a UN-backed global campaign to mobilize companies, cities, regions, and financial and educational institutions to take decisive action on climate change to deliver a healthy, resilient and zero carbon future. As of September 2022, there are 1,125 universities and colleges from around the world engaged in the Race to Zero campaign.
The global initiative requires universities and colleges to collectively take action by supporting a three-point plan, in line with the Race to Zero criteria, which includes:
- Mobilizing more resources for action-oriented climate change research and skills creation;
- Pledging to reach net-zero by 2030, or 2050 at the very latest; and
- Increasing the delivery of environmental and sustainability education across curriculum, campus and community outreach programs.
In support of our pledge, the UM Sustainability Strategy outlines steps to fulfill UM’s commitments of 50 per cent emissions reduction by 2030 and net-zero emissions by 2050, including the creation of a Climate Action Plan.
While this campaign does not explicitly reference responsible investing, our pledge as signatories aligns our commitments to addressing climate change as an institution with our responsibilities as investors, and that transitioning investments may advance these efforts to achieve global net-zero.
UN Principles of Responsible Investing (UN PRI)
The University of Manitoba is proud to have become a signatory to the UN Principles of Responsible Investing (UN PRI) in 2023 as part of its responsible investing commitments.
The UN PRI is an investor initiative in partnership with the United Nations Environment Programme Finance Initiative and the UN Global Compact. It was established in 2005 by then United Nations Secretary-General Kofi Annan, who invited 20 of the world’s largest institutional investors and 70 experts from the investment industry, intergovernmental organizations, and civil society to work together to develop its six guiding principles. These are intended to achieve an economically efficient, sustainable global financial system by enabling good governance and by reducing the barriers to a sustainable financial system.
The six Principles for Responsible Investment are:
- Incorporating ESG issues into investment analysis and decision-making processes.
- Active ownership and incorporating ESG into ownership policies and practices.
- Seeking appropriate disclosure on ESG issues from investee companies.
- Promoting acceptance and implementation of the Principles within the investment industry.
- Working with other signatories to enhance the effectiveness of implementing the Principles.
- Reporting on activities and progress toward implementing the Principles.
Signatories to the UN PRI commit to applying the Principles, in acknowledgement that ESG issues affect the performance of investment portfolios and that applying the Principles will better align investors with societal objectives.
The UN PRI provides signatories with services and tools to support the implementation of the Principles and advance its mission. These services include thematic support by asset class, a reporting framework, regulatory insights, local events, online training courses and opportunities for collaboration through the Collaboration Platform and the Academic Network. The UN PRI has over 4000 signatories globally, including many universities and pension funds.
Divestment is the process of selling off assets or investments. In the context of responsible investment, divestment typically refers to the practice of selling assets that are associated with companies or industries that are considered harmful to society or the environment.
The university believes that by divesting of fossil fuel companies, it sends a message to those companies that energy needs transition; that alternative energy needs to be prioritized. Many educational institutions are demonstrating leadership in the face of the climate crisis by divesting investment funds from the fossil fuel industry and reallocating those funds to sustainable and just alternatives.
The endowment fund uses MSCI ESG Research to measure the carbon emissions of its public equity investments. The preferred metric is tonnes of CO2 emitted per one million USD invested, or simply tCO2e/$M, and represents Scope 1 and Scope 2 emissions of the companies in our equity portfolios.
|UM Endowment equities||60.5|
The Benchmark represents the carbon emissions of the stock market indices weighted in proportion to the endowment fund equities, and the results were very positive as our portfolio of stocks was 35 per cent lower than the Benchmark. The Leaders Benchmark has an objective to achieve a 50 per cent reduction in the carbon footprint of the parent indices by excluding companies with the highest carbon emissions and the largest owners of carbon reserves. The UM endowment equities are only 20 per cent higher than this aspirational and low carbon benchmark, another favourable result.
For the other investments in bonds, real estate and infrastructure, the UM endowment currently relies on its external managers to report on carbon emissions. Only our infrastructure manager, Brookfield, currently reports scope 1 and 2 emissions per million invested, and as of December 31, 2021 the investment in the Brookfield Super Core Infrastructure Fund had a low 16.0 tCO2e/$1M.
Under section 2.5 of the Responsible Investment Policy (PDF), the University committed to make meaningful and prudent allocations to endowment fund investments that will advance positive social and environmental changes while still seeking financial returns. The first of these investments was made in December 2021 when the endowment fund committed $35 million USD to the Brookfield Global Transition Fund. This fund will invest large-scale capital in renewable energy, and invest in the transformation of carbon-intensive businesses to achieve the goals under the Paris agreement.