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University continues to reduce carbon footprint of listed investments

17 December 2018
University continues to manage emissions intensity of listed investments
The University of Sydney has moved beyond a three-year commitment to ensure the carbon footprint of its share portfolio remains at least 20 percent below its listed equity composite benchmark.

In February 2015 the University set the three-year goal of ensuring the carbon footprint of its listed equities is 20 percent below the benchmark, which measures the emissions intensity of a hypothetical passive share portfolio with an asset allocation similar to the university’s. The benchmark’s proportionate mix roughly represents the university’s allocation to Australian shares, overseas developed market shares and emerging market shares.

This goal was met late last year and the University has since moved to maintain its position and record it both annually and on a rolling three-year basis.

”Taking a fourth annual measure allows us to build a medium term as well as a short term picture of how the University’s relative carbon footprint is tracking against the market,” said the University’s Chief Investment Officer Miles Collins. Latest figures show the portfolio’s absolute emissions measure was 56% below the benchmark (48% on a rolling three year basis), while the emissions intensity was 34% below in 2018 (28% rolling three years). 

Mr Collins said the ongoing outperformance of the target reflects both a change to some of the underlying investment strategies and the disruption occurring in energy markets, which has made energy resource companies more challenging investments in recent years.

“We’ve actively changed the managers of our shares in emerging markets, increasing our exposure to firms who target sustainable industries and business practices and placing greater focus on the phenomenal economic change ongoing in Asia and India”.

Mr Collins said the university has also completed the fourth annual survey of its portfolio managers. This showed 85 percent encouraging portfolio companies to disclose material environmental, social and governance (ESG) risks and how these are managed.

We’ve actively changed the managers of our shares in emerging markets, increasing our exposure to firms who target sustainable industries and business practices.
Miles Collins, Chief Investment Officer

Through its membership of the Carbon Disclosure Project (CDP), alongside 650 other institutional investors holding US$87 trillion in assets, the University has also supported engagement with companies, asking them to publish their greenhouse gas emissions and report on their climate change strategies.

“Our portfolio’s carbon emissions intensity was just 3.4 percent below the benchmark when we started on this journey in 2015, compared with 34% in 2018. As more and more organisations turn their attention to managing the environmental impact of their activities we’re encouraged to be exceeding our goals.  2019 will see us finding further ways to use the university’s institutional reputation to shine a light on ESG risks. The widespread adoption of the United Nations Sustainable Development Goals provides us with a useful framework to gain further insights into the underlying activity of our portfolio companies,” said Mr Collins.

“We will continue with this commitment, while ensuring our funds endowed by donors and alumni are used wisely for the benefit of our students and staff.”

The carbon footprint intensity of the University’s portfolio is measured in the fourth quarter of each calendar year. Latest results can be found here.

Jocelyn Prasad

Media and Public Relations Advisor

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