Responsible Investing

The University acknowledges that within its stewardship of University and Pension investments, it has a fiduciary duty to act reasonably and prudently. As a result, the University integrates environmental, social and governance (ESG) factors into investment decision based on the belief that this approach is expected to enhance the long-term value of investment performance and reduce the risk of loss.

For more information please refer to the University’s ESG Principles and Guidelines and Responsible Investment Policy.

UNITED NATIONS’ PRINCIPLES FOR RESPONSIBLE INVESTMENT

The UNPRI is the world’s leading proponent of responsible investment. 

The University signed its declaration to the United Nation’s Principles for Responsible Investing (UN PRI) on February 13, 2020, confirming its commitment to responsible investing, and was accepted as an official signatory on May 11, 2020.

As a separate legal entity, the Pension Plan for Faculty and Staff applied to the UN PRI separately and was registered as a signatory to the UN PRI on June 2, 2020.

As part of this commitment, the University is required to complete annual reporting on our responsible investment activities, leading to transparency reports available through the UN PRI website for both the University and for the Pension Plan for Faculty and Staff.

RESPONSIBLE INVESTMENT CHARTER FOR CANADIAN UNIVERSITIES

By leveraging their many assets, universities can devise comprehensive strategies to address climate change. As educators, our teaching has the power to enhance understanding of the principles of sustainability. As knowledge producers across a wide range of disciplines, our research is essential in advancing knowledge about climate change and helping identify effective, evidence-based solutions. As major owners of property and facilities, we have an important opportunity to reduce the carbon emissions arising from our own operations. And, as stewards of long-term investments, we have a responsibility to manage our capital in ways that accelerate the transition to a low-carbon economy and protect our stakeholders from the growing risks associated with climate change.

With these considerations in mind, the University signed on to the Responsible Investment Charter for Canadian Universities. By signing this charter, the University has committed to:

  1. Adopting a responsible investing framework to guide decision-making, in line with recognized standards such as the UN-supported Principles of Responsible Investment
  2. Regularly measure the carbon intensity of our investment portfolios and set meaningful targets for their reduction over time
  3. Evaluate progress towards these objectives on a regular basis and share the results of such assessments publicly
  4. Ensure that the performance evaluation of our investment managers takes into account their success in achieving such objectives, alongside the other criteria for assessing their performance

CARBON REDUCTION STRATEGY

The science of climate change is irrefutable. Increased concentrations of greenhouse gas emissions in the atmosphere continue to increase global temperatures to levels that elevate risks for humanity, the environment and all living creatures. As a science-based institution, the University of Waterloo acknowledges the grave realities of a warming planet. As a publicly funded educational institution, the University of Waterloo also recognizes its responsibility to contribute to climate change mitigation to allow past, present and future students to live in a sustainable and habitable world. As a fiduciary responsible for the investment of endowment and pension funds, the University of Waterloo has a duty to manage the financial risks and opportunities associated with climate change in its investment portfolios.

To this end, the Board of Governors for the University of Waterloo has endorsed the following targets/aspirational goals for both the Endowment Fund and the Pension Plan:

  • Reduce the carbon footprint (Scope 1 & 2) of the Endowment and Pension Funds’ investments, by at least 50% by 2030, relative December 31, 2018, and
  • Set an aspirational goal of achieving a net-neutral carbon footprint for Endowment and Pension Fund investments by 2040.

Carbon Measurements include all asset classes within the investment portfolio, which includes equity, fixed income and real asset classes.

Carbon Measurements

  • Total Carbon Emissions = The absolute greenhouse gas emissions associated with a portfolio, expressed in tons CO2e.
  • Carbon Footprint = Total carbon emissions for a portfolio, normalized by the market value of the portfolio, expressed in tons CO2e / $M USD invested.
  • Weighted Average Carbon Intensity = The portfolio’s exposure to carbon-intensive companies, expressed in tons CO2e / $M USD revenue.

UW Pension Plan Carbon Scorecard

Pension Full Portfolio Scorecard with 2023 benchmarks

UW Endowment Carbon Scorecard

Endowment Full Portfolio Scorecard with 2023 benchmarks

FOSSIL FUEL INVESTMENTS

As part of its UN PRI commitments, and in conjunction with its carbon reduction strategy, the Board of Governors has endorsed commitments related to energy sector holdings and reporting within its active equity portfolio to include:

  • That any material direct investments in fossil fuel companies be avoided
  • It is expected that with ESG integration and the phased carbon exposure reduction strategy, the University’s active equity managers will not hold any material positions in fossil fuel exploration and extraction companies by 2025

As part of this commitment, the University was monitoring and reporting on its exposure to the energy sector. This reporting has been discontinued in favour of a Fossil Fuel Exposure report.

UW Energy Exposure Report

Fossil Fuel Exposure Reports

The University is now able to track and monitor its exposure to the broader fossil fuel industry, reporting on holdings and related revenues associated with fossil fuels within its equity portfolios. This report allows the University to better monitor its holdings in relation to its commitments regarding fossil fuel exposure.

INVESTMENT MANAGERS AND FUNDS

The majority of the investment assets of the endowment and the registered pension plan are invested within pooled funds that are managed by external investment managers.  The endowment and the registered pension plan have few direct investments.

The University expects that all investment managers are signatories to the United Nations Principles for Responsible Investment (UN PRI).

Direct Investments

  • Brookfield Infrastructure Partners L.P. (BIP-UN.TO)
  • Brookfield Renewable Partners L.P. (BEP-UN.TO)
  • iShares S&P/TSX Capped REIT Index EFT (XRE.TO)

Investment Managers and Funds

  • CBRE Global Investors
    • CBRE Global Alpha Fund
  • Fiera Capital Corporation
    • Fiera Global Equity Fund
    • Mirova Global Sustainable Equity Fund
  • IFM Investors
    • IFM Global Infrastructure Fund
  • Phillips, Hager & North Investment Management Ltd. (a division of RBC Global Asset Management)
    • PH&N Canadian Equity Fund
    • PH&N Total Return Bond Fund
    • RBC Global Equity Focus Pension
  • TD Asset Management
    • Active Short-Term Corporate Bonds*
    • TD Emerald All Country World Equity Index Non-Taxable Investor Pooled Fund
    • TD Emerald Canadian Bond Index Fund
    • TD Emerald Canadian Equity Index Fund
    • TD Emerald Canadian Long Bond Broad Market Pooled Fund
    • TD Emerald International Equity Index Fund
    • TD Emerald US Pooled Fund
  • Walter Scott & Partners Limited (a division of BNY Mellon Investment Advisors)
    • NCS Global Equity Fund

*Mandate is a segregated short-term Canadian corporate bond fund. This mandate is being liquidated in tranches to facilitate investment in other investment funds.

Finance

Last updated: 17-June-2024