Frequently Asked Questions on the University's carbon reduction strategy
9 February 2015
Click here to read the University's media release on its carbon reduction strategy.
1. Who approved these changes?
The strategy was approved by the University's Investment and Commercialisation Committee (ICC), a sub-committee of the University's Senate, after a comprehensive review of the carbon footprint of its listed share investments.
2. When will this policy take effect?
We will start implementing this strategy immediately.
We became a signatory to the Carbon Disclosure Project in November 2014 and joined the Portfolio Decarbonisation Coalition in early February 2015. We are in the process of contacting our funds managers to discuss our new strategy.
3. Why aren't you divesting from coal?
Instead of targeting specific sectors, the University decided to take an innovative, whole-of-portfolio approach which looks beyond fossil fuels to reduce the carbon footprint of its share investments. It believes setting a target for reducing greenhouse gas emissions across the portfolio will effectively and meaningfully impact on efforts to reduce emissions.
4. How will you achieve the 20 percent reduction you've announced?
This goal will be attained by altering the mix of our equities holdings over time to achieve a reduction of 20 percent across our different categories of investment by 2018. The University will measure and report progress against this goal annually.
5. How will you measure whether progress has been made against this goal?
Reductions will be measured against generally accepted benchmarks. The carbon intensity of our Australian equities' will be measured against that of the ASX300. Offshore investments emissions intensity will be measured against indices set by MSCI, a global provider of investment support tools (International equities will be measured against the MSCI ACWI index, Emerging Markets equities against the MSCI EM index).
6. How will you know if that target has been met?
There will be an annual review of the carbon footprint of our share portfolio to measure its reduction against our goal to reduce it by 20 percent over three years.
7. Why can't you meet the 20 percent target AND divest from coal?
Divesting is a blunt instrument which delivers sub-optimal outcomes for all parties concerned. For instance, some fossil fuel producers are also investing heavily in renewable energy sources and therefore divesting from them would not help the uptake of low carbon sources of energy. In addition, there are many companies that do not produce fossil fuels who are nonetheless heavy emitters.
This strategy is about getting the balance between financial and environmental responsibilities right, while also making investment in clean energy a better economic proposition.
8. What is the University's share portfolio worth?
The value of our investment in listed equities was $413 million as of December 2014 (Australian equities make up $237 million of this portfolio, with global equities comprising the remaining $176 million). The University's total investment portfolio is worth $1.358 billion plus property investments.
9. What does the University do with income from these investments?
Our endowment fund is made up of a range of gifts from donors. These donations are invested in a series of funds, the income from which is reinvested. This income is spent accordance with donors' terms and conditions (where such is applicable) and to support research, scholarships and capital works.
The programme in place is broader than looking at our minority stake in Whitehaven Coal.
10. What's wrong with discriminating against the Coal and Consumable Fuels sector? How is it different from discriminating against other companies which cause harm e.g. tobacco companies?
Discriminating against one industry sector does not effectively reduce greenhouse emissions. It does not account for the fact that some fossil fuel producers also invest heavily in clean technology. Nor does it address the fact that some non-fossil fuel producers are heavy emitters of greenhouse gases.
A whole of portfolio approach signals to all sectors that we expect them to do their bit to reduce carbon emissions.
11. Why are you ignoring the results of last year's student referendum, where 80 percent voted in favour of divesting from fossil fuels?
We know our students feel passionately about this issue, and so does the University. While the wording of this referendum centered on fossil fuels the University believes most students will be in favour of the University broadly reducing the carbon footprint of its investments. This decision balances our responsibilities to reduce our overall carbon footprint with a responsibility to staff, students and the rest of the University to manage our funds wisely.
12.When did you become a signatory to the Carbon Disclosure Project?
In November 2014
13. When did you join the Portfolio Decarbonisation Coalition?
We joined the PDC in February 2015.
14. Do you know of other organisations taking a similar approach to the one you are adopting?
This is a highly innovative approach that addresses how the market as a whole addresses climate change. It's not dissimilar from the approach taken in December 2014 by the $US870bn Norwegian Sovereign Wealth Fund, which holds more than one percent of global shares. This fund also considered divestment last year.
We think such a strategy is a first in Australia, certainly for an Australian University, and hope other organisations will adopt a similar approach.
15. Are you updating your ESG framework in light of this announcement?
Yes, it is being updated and will take into account efforts the University is making to reduce the carbon footprint of its own operations and the work academics are doing across a range of disciplines to address climate change.
The University will also further expand its Environmental, Social and Governance (ESG) framework to put in place ethical investment standards that support the economic and social rights of Aboriginal and Torres Strait Islander people
16. Will the University report back on its progress towards meeting the goal of 20 percent reduction?
Yes, we will report back on our progress on an annual basis.
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