| Overall Rating | Platinum |
|---|---|
| Overall Score | 86.26 |
| Liaison | Karen Oberer |
| Submission Date | Jan. 17, 2024 |
McGill University
PA-10: Sustainable Investment
| Status | Score | Responsible Party |
|---|---|---|
|
3.46 / 5.00 |
Sophie
Leblanc Chief Investment Officer Office of Investments |
"---"
indicates that no data was submitted for this field
Part 1. Positive sustainability investment
1,758,100,000
US/Canadian $
Value of holdings in each of the following categories:
| Value of holdings | |
| Sustainable industries (e.g., renewable energy or sustainable forestry) | 102,400,000 US/Canadian $ |
| Businesses selected for exemplary sustainability performance (e.g., using criteria specified in a sustainable investment policy) | 176,914,099 US/Canadian $ |
| Sustainability investment funds (e.g., a renewable energy or impact investment fund) | 10,841,818 US/Canadian $ |
| Community development financial institutions (CDFIs) or the equivalent | 0 US/Canadian $ |
| Socially responsible mutual funds with positive screens (or the equivalent) | 0 US/Canadian $ |
| Green revolving funds funded from the endowment | 0 US/Canadian $ |
If any of the above is greater than zero, provide:
Holdings in sustainable industries:
- Investments through external equity managers which hold stocks of companies that derive most of their revenues from sustainable solutions
- Exposure through private funds to either water treatment, alternative energy, sustainable real estate, renewable energy infrastructure, etc.
- Investments in green bonds (financial instruments specifically marketed to raise money for climate & environmental projects)
Holdings in sustainability investment funds:
- Fossil Fuel Free equity fund managed by an external manager
- SRI Fund managed by McGill’s Students
RE: Businesses selected for exemplary sustainability performance:
Companies listed in McGill's investment holdings were cross listed against four major sustainability indices:
- Corporate Sustainability Assessment & Dow Jones Sustainability Index*
- UN Global Compact 100
- Jantzi Index
- Corporate Knights Top 100
- and/or submitted a Global Reporting Initiative report from 2016-2020.
*i.e., Industry leaders in each of the 61 industries represented in the SAM Corporate Sustainability Assessment (CSA) and the Dow Jones Sustainability Indices.
Companies in McGill's investment holdings were also cross-listed with the following ESG Leaders indices:
- MSCI Canada ESG Leaders Index
- S&P 500 ESG Leaders Index
- MSCI EAFE ESG Leaders Index
- MSCI Emerging Markets ESG Leaders Index
- Russell 2000 ESG Enhanced Target Exposure
- MSCI ACWI ESG Leaders Index
Total investment in these companies equal $176,914,099.
The company lists were pulled from the following websites:
- CSA & Dow Jones Sustainability Index (as of Nov. 13, 2020):
https://www.spglobal.com/esg/csa/csa-resources/industry-leaders
- Jantzi Social Index Constituents (as of Sept. 2020):
https://connect.sustainalytics.com/jantzi-social-index-constiuents
- The Global Compact 100 Index Constituents (accessed March 2022):
https://unglobalcompact.org/news/421-09-18-2013
- Corporate Knights Global 100 constituents (2022):
https://www.corporateknights.com/rankings/global-100-rankings/2022-global-100-rankings/100-most-sustainable-corporations-of-2022/
- Global Reporting Initiative (GRI) report (accessed Aug. 4, 2020) [note that GRI no longer maintains a reporting database, so the 2020 list of companies was used for this exercise].
- Investments through external equity managers which hold stocks of companies that derive most of their revenues from sustainable solutions
- Exposure through private funds to either water treatment, alternative energy, sustainable real estate, renewable energy infrastructure, etc.
- Investments in green bonds (financial instruments specifically marketed to raise money for climate & environmental projects)
Holdings in sustainability investment funds:
- Fossil Fuel Free equity fund managed by an external manager
- SRI Fund managed by McGill’s Students
RE: Businesses selected for exemplary sustainability performance:
Companies listed in McGill's investment holdings were cross listed against four major sustainability indices:
- Corporate Sustainability Assessment & Dow Jones Sustainability Index*
- UN Global Compact 100
- Jantzi Index
- Corporate Knights Top 100
- and/or submitted a Global Reporting Initiative report from 2016-2020.
*i.e., Industry leaders in each of the 61 industries represented in the SAM Corporate Sustainability Assessment (CSA) and the Dow Jones Sustainability Indices.
Companies in McGill's investment holdings were also cross-listed with the following ESG Leaders indices:
- MSCI Canada ESG Leaders Index
- S&P 500 ESG Leaders Index
- MSCI EAFE ESG Leaders Index
- MSCI Emerging Markets ESG Leaders Index
- Russell 2000 ESG Enhanced Target Exposure
- MSCI ACWI ESG Leaders Index
Total investment in these companies equal $176,914,099.
The company lists were pulled from the following websites:
- CSA & Dow Jones Sustainability Index (as of Nov. 13, 2020):
https://www.spglobal.com/esg/csa/csa-resources/industry-leaders
- Jantzi Social Index Constituents (as of Sept. 2020):
https://connect.sustainalytics.com/jantzi-social-index-constiuents
- The Global Compact 100 Index Constituents (accessed March 2022):
https://unglobalcompact.org/news/421-09-18-2013
- Corporate Knights Global 100 constituents (2022):
https://www.corporateknights.com/rankings/global-100-rankings/2022-global-100-rankings/100-most-sustainable-corporations-of-2022/
- Global Reporting Initiative (GRI) report (accessed Aug. 4, 2020) [note that GRI no longer maintains a reporting database, so the 2020 list of companies was used for this exercise].
Percentage of the institution's investment pool in positive sustainability investments:
16.50
Part 2. Investor engagement
Sustainable investment policy
Yes
None
A copy of the sustainable investment policy:
None
The sustainable investment policy:
---
None
Does the institution use its sustainable investment policy to select and guide investment managers?:
Yes
A brief description of how the sustainable investment policy is applied:
The Investment Committee selects, when possible, external investment managers who adhere to ESG policy and/or are signatories of the United Nations Principles for Responsible Investment (UNPRI). In addition, it engages with external investment managers and encourages them to:
- Adhere to an ESG Policy and/or become signatory of the UNPRI
- Monitor the carbon footprint of their portfolio
- Exercise active stewardship through voting and corporate engagement
- Report on portfolio carbon emissions, exposure to sustainable industries and impact investments.
The Committee is also committed to reducing the carbon emissions of the McGill Investment Pool public equity portfolio and to increasing to its commitment to impact investments including low-carbon funds and funds that contribute to decarbonization of the MIP. As such, the specific commitments are as follows:
- Reduce the carbon emissions of the MIP public equity portfolio in order to achieve and sustain, by 2025, a 33% carbon emissions reduction of the MIP public equities relative to the MIP public equities benchmark, with the understanding that the majority of the reduction is to be achieved within the first two years.
- Commit by 2025, 5% of the MIP to impact investments through public or private markets in funds, equity, debt or real assets that are generating a measurable environmental impact.
- Adhere to an ESG Policy and/or become signatory of the UNPRI
- Monitor the carbon footprint of their portfolio
- Exercise active stewardship through voting and corporate engagement
- Report on portfolio carbon emissions, exposure to sustainable industries and impact investments.
The Committee is also committed to reducing the carbon emissions of the McGill Investment Pool public equity portfolio and to increasing to its commitment to impact investments including low-carbon funds and funds that contribute to decarbonization of the MIP. As such, the specific commitments are as follows:
- Reduce the carbon emissions of the MIP public equity portfolio in order to achieve and sustain, by 2025, a 33% carbon emissions reduction of the MIP public equities relative to the MIP public equities benchmark, with the understanding that the majority of the reduction is to be achieved within the first two years.
- Commit by 2025, 5% of the MIP to impact investments through public or private markets in funds, equity, debt or real assets that are generating a measurable environmental impact.
Proxy voting
No
None
A copy of the proxy voting guidelines or proxy record:
---
None
A brief description of how managers are adhering to proxy voting guidelines:
---
Shareholder resolutions
Yes
Examples of how the institution has engaged with corporations in its portfolio about sustainability issues during the previous three years:
Throughout past two years, SHARE, McGill’s shareholder engagement service provider, has engaged with numerous companies on topics such as reducing greenhouse gas emissions, sustainable finance, political spending and oversight, and ensuring a just transition. These considerations align with the issues raised by Climate Action 100+, a global engagement initiative of which SHARE is a member, so that investors speak with a consistent message and that engagement efforts are coordinated globally to maximize impact. SHARE’s engagement activities include filing and/or co-filing shareholder proposals and submitting letters to companies on behalf of its clients.
In 2021, SHARE engaged with Suncor Energy, one of Canada’s largest Oil Sands producers. SHARE, with fellow investors in Climate Action 100+ held multiple meetings with Suncor’s senior management and board of directors in 2020 and 2021. Engagement priorities included: net-zero commitment with interim milestones; disclosure of and targets to reduce GHG emissions across all relevant scopes of the company’s operations and activities; and aligning executive compensation.
In May 2021, Suncor set emissions reduction targets of 10 million tons per year (34%) by 2030, becoming the first Canadian energy company to set absolute emissions reduction targets as opposed to ‘emissions per barrel’. The company also disclosed its scope 3 emissions for the first time and committed to a capital spending plan focused on “carbon competitiveness” rather than building new projects.
Source: https://www.mcgill.ca/boardofgovernors/files/boardofgovernors/sri_report_2021_final.pdf
In 2022, SHARE engaged with Canadian Solar, a global renewable energy company that had come under scrutiny for allegations of forced labour in its supply chain. In line with its just transition engagement objective, SHARE filed a proposal at Canadian Solar calling for an independent assessment of the company’s policies and procedures to protect against forced labour. The company has agreed to undertake a third-party investigation similar to requested in the proposal. SHARE will continue to monitor the situation and report on future progress.
Source: https://www.mcgill.ca/investments/files/investments/sri_report_2022.pdf
In 2021, SHARE engaged with Suncor Energy, one of Canada’s largest Oil Sands producers. SHARE, with fellow investors in Climate Action 100+ held multiple meetings with Suncor’s senior management and board of directors in 2020 and 2021. Engagement priorities included: net-zero commitment with interim milestones; disclosure of and targets to reduce GHG emissions across all relevant scopes of the company’s operations and activities; and aligning executive compensation.
In May 2021, Suncor set emissions reduction targets of 10 million tons per year (34%) by 2030, becoming the first Canadian energy company to set absolute emissions reduction targets as opposed to ‘emissions per barrel’. The company also disclosed its scope 3 emissions for the first time and committed to a capital spending plan focused on “carbon competitiveness” rather than building new projects.
Source: https://www.mcgill.ca/boardofgovernors/files/boardofgovernors/sri_report_2021_final.pdf
In 2022, SHARE engaged with Canadian Solar, a global renewable energy company that had come under scrutiny for allegations of forced labour in its supply chain. In line with its just transition engagement objective, SHARE filed a proposal at Canadian Solar calling for an independent assessment of the company’s policies and procedures to protect against forced labour. The company has agreed to undertake a third-party investigation similar to requested in the proposal. SHARE will continue to monitor the situation and report on future progress.
Source: https://www.mcgill.ca/investments/files/investments/sri_report_2022.pdf
Divestment efforts and negative screens
Yes
A brief description of the divestment effort or negative screens and how they have been implemented:
Decarbonization and Divestment Efforts
In January 2024, McGill announced that it would completely divest from remaining 1% of funds that are directly invested in the Carbon Underground 200 (CU200) firms. These divestment measures build on the success of Phase 1 of McGill's decarbonization strategy, which saw the McGill Investment Pool’s listed equities carbon footprint decreased by 55% between 2019 and 2023, and direct holdings in the CU200 reduced to just 1% of the MIP as of December 31, 2023.
For more information see the McGill Office of Investment's 2023 SRI Commitments: https://www.mcgill.ca/investments/mipendowment/socially-responsible-investing/initiatives
The Green Century Fund
In 2017, the Investment Committee established a fossil fuel free fund that is available to McGill’s donors. The Fund’s investment manager applies a rigorous screening to exclude companies directly involved in extracting, processing or transporting coal, oil or natural gas, as well as companies included in The Carbon Underground 200, i.e. a list of the 100 top coal and 100 top oil and gas publicly traded companies. University Advancement (“UA”) continued to promote The Green Century Fund throughout 2022 and was successful in attracting $4M in additional donations ($2M of which will be invested in the Green Century Fund in 2023, the rest will be invested in the subsequent years). Furthermore, additional training on the fund is going to be given to UA staff in early 2023. Prior to this donation, the fund had $6.3M in assets under management as at December 31, 2022. Amount invested in fossil fuel free funds as of December 31, 2022, is $8.7 million.
SRI Fund Managed by McGill’s Students
The MIP has invested in the SRI Fund managed by Desautels Capital Management (DCM), a student-run registered investment management firm. The DCM SRI Fund provides a framework for students to learn about Socially Responsible Investing (“SRI”) in addition to gaining hands-on experience in portfolio management skills. The SRI fund has a dedicated sustainability team lead by a Chief of Sustainability. Former students from the program have gone on take leading roles in the sustainable finance industry.
The fund’s strategy is to invest in fundamentally strong, undervalued stocks to earn high risk-adjusted returns while satisfying ESG positive and negative screens. All holdings must respect negative screens which include, but are not limited to, fossil fuel investments, armament manufacturing, child labour, gambling, tobacco and adult entertainment. In 2022, the fund conducted its first ever carbon footprint analysis. The fund plans to continue to calculate and monitor the carbon footprint and track progress by comparing their results to different indexes such as the S&P 500 Environmental & Socially Responsible Index.
As of December 31, 2022, the MIP’s investment in the DCM SRI Fund totalled $2.4M
Burma & Tobacco: 100% of equities (60% of the McGill Investment Pool)
Fossil fuels screen: 0.5% of McGill Investment Pool
In January 2024, McGill announced that it would completely divest from remaining 1% of funds that are directly invested in the Carbon Underground 200 (CU200) firms. These divestment measures build on the success of Phase 1 of McGill's decarbonization strategy, which saw the McGill Investment Pool’s listed equities carbon footprint decreased by 55% between 2019 and 2023, and direct holdings in the CU200 reduced to just 1% of the MIP as of December 31, 2023.
For more information see the McGill Office of Investment's 2023 SRI Commitments: https://www.mcgill.ca/investments/mipendowment/socially-responsible-investing/initiatives
The Green Century Fund
In 2017, the Investment Committee established a fossil fuel free fund that is available to McGill’s donors. The Fund’s investment manager applies a rigorous screening to exclude companies directly involved in extracting, processing or transporting coal, oil or natural gas, as well as companies included in The Carbon Underground 200, i.e. a list of the 100 top coal and 100 top oil and gas publicly traded companies. University Advancement (“UA”) continued to promote The Green Century Fund throughout 2022 and was successful in attracting $4M in additional donations ($2M of which will be invested in the Green Century Fund in 2023, the rest will be invested in the subsequent years). Furthermore, additional training on the fund is going to be given to UA staff in early 2023. Prior to this donation, the fund had $6.3M in assets under management as at December 31, 2022. Amount invested in fossil fuel free funds as of December 31, 2022, is $8.7 million.
SRI Fund Managed by McGill’s Students
The MIP has invested in the SRI Fund managed by Desautels Capital Management (DCM), a student-run registered investment management firm. The DCM SRI Fund provides a framework for students to learn about Socially Responsible Investing (“SRI”) in addition to gaining hands-on experience in portfolio management skills. The SRI fund has a dedicated sustainability team lead by a Chief of Sustainability. Former students from the program have gone on take leading roles in the sustainable finance industry.
The fund’s strategy is to invest in fundamentally strong, undervalued stocks to earn high risk-adjusted returns while satisfying ESG positive and negative screens. All holdings must respect negative screens which include, but are not limited to, fossil fuel investments, armament manufacturing, child labour, gambling, tobacco and adult entertainment. In 2022, the fund conducted its first ever carbon footprint analysis. The fund plans to continue to calculate and monitor the carbon footprint and track progress by comparing their results to different indexes such as the S&P 500 Environmental & Socially Responsible Index.
As of December 31, 2022, the MIP’s investment in the DCM SRI Fund totalled $2.4M
Burma & Tobacco: 100% of equities (60% of the McGill Investment Pool)
Fossil fuels screen: 0.5% of McGill Investment Pool
Approximate percentage of endowment that the divestment effort and/or negative screens apply to:
25.80
Investor networks
Yes
None
A brief description of the investor networks and/or collaborations:
As an institutional investor, McGill takes pride in its efforts in sustainability by leading dialogues with large investment firms and by exchanging ideas with responsible investors. McGill is proud to be a member of investor groups that move the needle forward in responsible investing (RI).
In 2022, McGill was involved with SHARE and 11 peer universities to develop an ESG Due Diligence questionnaire for investment managers.
McGill also joined four new associations and continues to sit on the advisory committee created by university signatories of the Climate Charter. Participation in these groups helps McGill build relationships with like-minded investors and enables institutions to learn from each other. These strategic partnerships allow McGill to stay abreast of emerging issues and share perspectives on the various ESG opportunities and risks.
1. UNPRI
The United Nations-supported Principles for Responsible Investment, is recognized as the leading global network for investors who are committed to integrating environmental, social and governance considerations into their investment practices and ownership policies. Reporting annually on the university's investment practices will provide insights as to where the university needs to focus its efforts in terms of leadership in responsible investment.
2. Climate Engagement Canada
Climate Engagement Canada is a finance-led initiative that drives dialogue between finance and industry to promote a just transition to a net zero economy. This initiative will enhance McGill's capacity for collaborative climate-related engagement.
3. Intentional Endowments Network
Intentional Endowments Network encourages and supports higher education institutions in adopting investment strategies that create an equitable, low-carbon and regenerative economy. This association will help the university stay abreast of other endowments' responsible investing best practices.
4. Responsible Investment Association Canada
Responsible Investment Association Canada drives the adoption of responsible investing in Canada’s retail and institutional markets. This association will help the university stay abreast of Canadian investors' responsible investing best practices.
In 2022, McGill was involved with SHARE and 11 peer universities to develop an ESG Due Diligence questionnaire for investment managers.
McGill also joined four new associations and continues to sit on the advisory committee created by university signatories of the Climate Charter. Participation in these groups helps McGill build relationships with like-minded investors and enables institutions to learn from each other. These strategic partnerships allow McGill to stay abreast of emerging issues and share perspectives on the various ESG opportunities and risks.
1. UNPRI
The United Nations-supported Principles for Responsible Investment, is recognized as the leading global network for investors who are committed to integrating environmental, social and governance considerations into their investment practices and ownership policies. Reporting annually on the university's investment practices will provide insights as to where the university needs to focus its efforts in terms of leadership in responsible investment.
2. Climate Engagement Canada
Climate Engagement Canada is a finance-led initiative that drives dialogue between finance and industry to promote a just transition to a net zero economy. This initiative will enhance McGill's capacity for collaborative climate-related engagement.
3. Intentional Endowments Network
Intentional Endowments Network encourages and supports higher education institutions in adopting investment strategies that create an equitable, low-carbon and regenerative economy. This association will help the university stay abreast of other endowments' responsible investing best practices.
4. Responsible Investment Association Canada
Responsible Investment Association Canada drives the adoption of responsible investing in Canada’s retail and institutional markets. This association will help the university stay abreast of Canadian investors' responsible investing best practices.
Optional Fields
Additional documentation to support the submission:
---
Data source(s) and notes about the submission:
The total value of the McGill Investment Pool (i.e., the university's endowment) is taken from a June 2022 snapshot, when the analysis of sustainable investments was completed: https://www.mcgill.ca/investments/files/investments/june_30_2022_-_english.pdf
Note the discrepancy from the amount given in PRE-4, which reflects the endowment from December 2022.
The "value of holdings in sustainable industries" and the "value of holdings in sustainability investment funds" reflect data as of August 2022. The sustainable industries holdings includes both funded and unfunded commitments.
The "value of holdings in businesses selected for exemplary sustainability performance" reflects data from the March 2022 equity holdings (Canada, US, and Non-North American holdings).
Note the discrepancy from the amount given in PRE-4, which reflects the endowment from December 2022.
The "value of holdings in sustainable industries" and the "value of holdings in sustainability investment funds" reflect data as of August 2022. The sustainable industries holdings includes both funded and unfunded commitments.
The "value of holdings in businesses selected for exemplary sustainability performance" reflects data from the March 2022 equity holdings (Canada, US, and Non-North American holdings).
The information presented here is self-reported. While AASHE staff review portions of all STARS reports and institutions are welcome to seek additional forms of review, the data in STARS reports are not verified by AASHE. If you believe any of this information is erroneous or inconsistent with credit criteria, please review the process for inquiring about the information reported by an institution or simply email your inquiry to stars@aashe.org.