April 21, 2022 – In 2020, 16 major Canadian universities signed the “Climate Charter for Canadian Universities,” a commitment to manage their assets while considering climate change. However, despite this pledge, a concerted effort to understand how Canadian university endowments are responding to the rising risks presented by climate change and their commitments to alleviate them has not been undertaken to date.
In “Put to the Test: Ranking Canada’s Universities on Their Climate Change and Endowment Activities,” a new report from the C.D. Howe Institute, authors Catherine Jackson, Abhishek Kumar and Ramisha Asghar evaluate the governance and accountability mechanisms of these public institution’s endowments – assigning them stars based on three categories: governance, policy and disclosure.
McMaster University and University of British Columbia tied at the top with four stars and overall scores of 4.2, but did not achieve the top mark of five stars.
Meanwhile, McGill University, University of Toronto and Université de Montréal received three stars; Queen’s University, University of Ottawa, University of Waterloo and Western University earned two stars; University of Guelph, University of Saskatchewan, Dalhousie University and University of Manitoba each achieved one star; and the Université Laval had zero stars as it had an overall score below 1.5.
All told, three universities from BC made the top four (University of Victoria and Simon Fraser University) due to their strong alignment mechanisms between the province and its universities on climate targets. McMaster, meanwhile, was the only university to publish a Task Force on Climate-related Financial Disclosures (TCFD) report.
The authors found that most universities and their endowments consider environmental, social and governance (ESG) factors in their investment policy statements, although many do not expressly reference climate change. They also noted that great strides have been made in improving disclosure of their sustainability objectives and progress, however, disclosure is still an area that could benefit from improvement across all endowments. Additionally, all but one of the universities reviewed have specific climate-related targets and timeframes. However, there was a wide disparity in where universities were in their sustainability journeys among the group.
“There is a compelling business reason for universities to align their endowment policies and actions with responsible investing frameworks, including climate change: credible research has shown this to correlate with a 6 percent increase in donations, in addition to aligning with the university’s stakeholder interests,” explain the authors, adding that this should be taken into consideration especially with universities increasingly turning to private funding.
As Canada moves towards achieving net-zero emissions, policy recommendations from Jackson, Kumar and Asghar for both universities and governments include: (i) encouraging TCFD reporting by all Canadian universities and their investment divisions; (ii) aligning endowment targets with university sustainability targets; (iii) reporting universities’ climate commitments and progress to their respective provinces; (iv) seeking appropriately experienced individuals to serve on university governing bodies; and (v) increasing focus on responsible investment policies and practices.
For more information contact: Catherine Jackson, Principal, Head of Canada, Mosaic Governance Advisors Ltd.; or Lauren Malyk, Communications Officer, 416-865-1904 Ext. 0247, lmalyk@cdhowe.org
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.