Jan 28, 2015 - 12:01am
The Climate Institute welcomes the first global index rating universities on their management of climate investment risk, but the results show Australian universities are mostly disappointing laggards.
Only three Australian universities – Charles Sturt University, University of Sydney and Australian National University (ANU) – received any points in the index, which was built from a survey sent to 278 universities around the world, and from publicly available information about the institutions’ investment decisions.
“It’s unacceptable that the university sector, which plays a leading role in advancing our economy and society, is so far behind on this critical investment issue,” said John Connor, CEO of The Climate Institute.
“Many Australian universities are pioneers in climate change research, so these institutions should be well aware of the unique risks to investments posed by the potential impacts of climate change itself, and the regulations that will inevitably ramp up to stave off those impacts.”
“University endowments in Australia are small compared to superannuation funds, but they invest for future education and research to benefit all of society.” See The Climate Institute’s Climate Smart Super report about how Australians’ superannuation is affected by climate change.
The global universities index was developed by the Asset Owners Disclosure Project (AODP), a sister organisation to The Climate Institute. The AODP ranks the world’s largest 1,000 asset owners - mostly superannuation funds - on howthey consider climate-related risks, such as vulnerability to “stranded assets”, in which carbon-intensive holdings are devalued because of restrictions required to keep the climate within a safe range.
In the AODP’s first universities index, Charles Sturt University ranked equal 13th, scoring points for active share ownership and incentivising its investment managers to consider climate risk. The University of Sydney ranked equal 28th, receiving points for its proxy voting policy. However both universities only received a D rating. ANU, which recently attracted attention for announcing it would sell some mining stocks, also scored a D rating, because there was limited evidence that climate risk factored into its decision.
Similarly, some overseas universities that talked publicly about divestment plans, such as Stanford and Glasgow, scored few points because of limited information on how they would act on their commitments. Monash University, which drew notoriety for its reaction to the survey, received an X rating.
“This index looks past statements and focuses on actions when it comes to managing climate risk,” Connor said. “Some recent commitments from universities are welcome, but they’re not enough.”
“Proper management of climate risk typically involves a number of tactics such as targeted divestment, low or zero carbon investment, measuring portfolio carbon intensity, risk-weighting carbon intensive assets, active ownership of companies in portfolio and various means of hedging.”
The top ranked universities are in the US. The University of California was ranked first, mostly due to its extensive proxy voting activity and its effort to educate trustees and executives about climate risk. Unity College and Green Mountain College were second and third respectively, having divested from the largest 200 coal, oil and gas companies, and invested considerably in low carbon assets. Ivy League universities Harvard ranked 6th and Columbia placed 9th.
The index and other AODP information can be found at www.aodproject.net or www.climateinstitute.org.au/asset-owners-disclosure-project.html.
For more information
John Connor, CEO, 02 8239 6299