University of Sydney to reduce its share portfolio's carbon footprint

The University of Sydney will substantially reduce the carbon footprint of its listed share portfolio over the next three years, with a reduction target of 20% relative to the footprint of its current listed equity composite benchmark. The decision follows a comprehensive review taking into account leading practice on sensitive investments, and the current global views and actions surrounding fossil fuel investments.

The review highlighted the complexities of reducing an investment portfolio’s carbon footprint. For example, divesting entirely from all companies with an interest in fossil fuels could result in divesting from companies that are also committed to building renewable energy sources. In addition, many companies that do not produce fossil fuels are nonetheless heavy emitters.

Based on the review’s findings, the University of Sydney believes a whole-of-portfolio approach to reducing its carbon footprint is an effective and meaningful way to address climate change. The university will ask its listed equity fund managers to build a portfolio of investments that enables the university to reduce its carbon footprint by 20% in three years and will measure and report progress towards this goal annually.

“This strategy will give the university a legitimate voice in the conversation on how organisations can best address climate change risks,” said University of Sydney Vice-Principal (Operations) Sara Watts. “The university’s strategy signals to the entire market that investors are concerned about the impact of climate change and expect contributing sectors to respond with plans to reduce their emissions.”

In addition, the university:

• has become a signatory to the CDP, the world’s largest source of company-reported emissions data, and a global movement urging companies to disclose carbon emissions and set targets to reduce them;
• has joined the UN-led Portfolio Decarbonisation Coalition, a coalition of investors who collectively are committed to decarbonising US$100 billion of its investment assets;
• will incorporate carbon footprint reporting capability into the selection and review of listed equity investment managers; and
• will 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.

The University of Sydney believes its strategy to be a first in Australia - certainly for an Australian university - and hopes other organisations will adopt a similar approach.

For more information about the initiative, click here.