The exchange took a step in that direction in December with a proposal that at least two members of most listed companies’ boards cannot be straight white men. Small boards with five or fewer members will be allowed to have just one “diverse” director.

The move has drawn praise from the American Civil Liberties Union – hardly known as a friend of big business. “By pushing its listed companies to address racial and gender equity in corporate boards, Nasdaq is heeding the call of the moment,” said Anthony Romero, the ACLU’s executive director. “Incremental change and window-dressing isn’t going to cut it anymore as consumers, stakeholders and the government increasingly hold corporate America’s feet to the fire.”

Critics accuse Nasdaq of trying to set quotas for corporate boards, but the exchange has noted that more than two dozen studies have found links between diverse boards and improved financial performance and corporate governance.

Under the proposal, all Nasdaq-listed companies will have between two and five years to comply with the new rules, or explain in writing why they have not. The Securities and Exchange Commission is set to rule on the proposal this summer.

Quartz estimates that the move will add at least 570 women to corporate boards, plus at least the same number who identify as Black, Hispanic, Asian, Indigenous, LGBTQ or other minorities.

Welcome as Nasdaq’s move is, it is not the first – nor the most aggressive – push for boardroom diversity. California passed one law in 2018 and another last year stipulating that, among other requirements, companies with nine or more directors must include at least three from under-represented groups. Goldman Sachs, a Wall Street powerhouse, said last July that it would take a company public only if the board includes at least one woman or member of a racial minority.

Such initiatives are bearing fruit. A record number of women took the reins of Fortune 500 companies last year, including at UPS, Clorox, Gap and Citigroup. Forty-one Fortune 500 companies now have female CEOs, up from 24 in 2018 and just two at the start of the millennium. The ball may be rolling more slowly than many would like. But at least it is rolling – and in the right direction.

Vanguard Group and Fidelity Investments are not putting their climate-change mouths where their money is.

The two asset-management giants, which together manage close to US$10 trillion, clearly recognize the benefit of investing in companies with strong environmental records. Fidelity’s vast stable of mutual funds, for example, includes a water sustainability fund centred on new technologies to improve the availability of safe and affordable water.

“Investors are increasingly seeking to meet their financial goals while contributing to positive social and environmental outcomes,” Fidelity proclaims in its promotional material. “As stewards of our clients’ capital, we endeavour to satisfy these aspirations.”

One may be forgiven, however, for wondering whether these endeavours amount to much. Neither Vanguard nor Fidelity Investments signed a pledge by 30 mostly European money managers last December to invest only in companies with net-zero carbon dioxide emissions by 2050. (One signatory is Fidelity International, which was spun off in the 1980s.) Nor have they joined Climate Action 100+, a five-year global initiative by 400 investors to prod the largest corporate greenhouse-gas emitters to mend their ways.

InfluenceMap, a London-based climate-action advocacy group, notes in its latest Asset Managers and Climate Change report that the two firms lag their main U.S. rivals, BlackRock and State Street Global Advisors: “Their transparency on the climate engagement process is poor with minimal references to transitioning companies in line with Paris goals or governance of lobbying practices.”

Fidelity was the worst performer of 30 groups assessed by InfluenceMap in 2020, prompting the rebuke that it “continues to show limited to no evidence of engaging on climate.”

In contrast to the water sustainability fund, the report singles out Fidelity’s Contrafund as “particularly misaligned” with the goals of the Paris Agreement, given the fund’s holdings in oil production and the lack of investment in electric vehicle technology.

Vanguard supported just 21% and Fidelity 23% of all climate-related shareholder resolutions that they voted on during the 2020 proxy season. Together with Los Angeles–based Capital Group, they opposed every resolution related to climate policy lobbying – as they had in the previous two years. By contrast, most leading European asset managers backed the vast majority of such resolutions.

As InfluenceMap puts it, “The lack of support from the world’s largest asset managers on resolutions relating to lobbying, energy transition plans, and other key climate issues remains a barrier for forceful stewardship by investors on the climate emergency.”

The post Heroes & zeros: Who’s advancing diversity and who’s selling out the climate? appeared first on Corporate Knights.

Polman took heat for making social purpose as important as profit. But in his nine years as CEO, the company’s stock price nearly tripled, so when he stepped down in 2019, he left as a visionary. He also got a say in his successor, Alan Jope, a Unilever lifer who has run the company’s operations in China, Russia and India and who shares Polman’s social concerns.

In January, Jope finally stepped out of Polman’s shadow by revealing what the next phase of social responsibility looks like as Unilever announced a host of bold commitments aimed at building a more equitable and inclusive society. Among its initiatives:

• ensuring that everyone who directly provides goods and services to Unilever earns “at least a living wage or income” by 2030;
• spending US$3 billion annually, by 2025, with suppliers owned and managed by people from under-represented groups;
• helping five million small and medium-sized businesses grow through access to skills, finance and technology, by 2025; and
• training 10 million young people to prepare them for job opportunities, by 2030.

In keeping with these values, Unilever also promised to ensure that its employees are trained so they have a “future-fit skillset,” to help them access better employment options. As the world’s second-largest advertiser, Unilever will also boost the diversity of people involved in production of its ads, “both on-screen and behind the camera.”

“Without a healthy society, there cannot be a healthy business,” Jope said in a statement. “Decisive and collective action is needed to build a society that helps to improve livelihoods, embraces diversity, nurtures talent and offers opportunities for everyone.”

Unilever said it already pays its employees at least a living wage, but now “we want to secure the same for more people beyond our workforce, specifically focusing on the most vulnerable workers in manufacturing and agriculture. We’ll work with our suppliers, other businesses, governments and NGOs to create system-wide change and encourage the global adoption of living-wage practices.”

More than 630 million workers worldwide did not earn enough to lift themselves and their families out of poverty in 2019. The company believes a living wage should cover food, housing, education, healthcare, transportation, clothing, and unexpected emergencies.

With a global platform, 65,000 direct suppliers, and revenues of US$78 billion a year, Unilever has the potential to lift millions out of poverty. Will other businesses follow its example? After all, it’s only been two years since McDonald’s in the U.S. announced it would no longer actively oppose local initiatives to increase the minimum wage – let alone a living wage. In 2013, H&M committed to paying its 850,000 supply chain workers a living wage by 2018; that pledge has yet to be met. And all of Canada watched last summer as national grocery firms – doing boffo business during the pandemic – scrapped the extra $2-an-hour “hero pay” granted to frontline retail workers in the first months of lockdown.

We look forward to a healthy debate.

Related reading: Why Walmart’s minimum wage increase is actually in shareholder interests

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The post Vanguard, BlackRock and State Street knee-deep in dirty investments appeared first on Corporate Knights.

1760:
John Wesley, the founder of the Methodist movement within the Church of England, delivers his sermon “The Use of Money,” outlining the basic tenets of social investing, including we “ought not to gain money at the expense of life or by losing our souls.”

1928:

Former World War I aviator Philip Carret launches the Fidelity Mutual Trust (which later became the Pioneer Fund), the first publicly offered socially responsible investment fund. It has earned average annual returns of 12% since inception, besting the S&P 500.

1960:
Martin Luther King Jr. proposes that the AFL-CIO labour union invest its pension assets in housing to lessen economic inequality. With more than US$4.5 billion in net assets, the AFL-CIO Housing Investment Trust has since helped finance more than 100,000 affordable housing units.

1968:
The Medical Committee for Human Rights acquires shares in Dow Chemical and submits a proxy statement proposal to amend Dow’s corporate charter to prohibit sales of napalm to any buyer unwilling to assure the substance would not be used against human beings. Dow quietly ceased production of napalm in 1969.

1970:
Wielding just 12 of 285 million General Motors shares, the Ralph Nader–supported Campaign GM submits shareholder proposals. Six months later, Reverend Leon Sullivan joins GM’s board, becoming the first African-American on the board of a major U.S. corporation. GM also establishes a public interest committee.

1971:
Lawyer Paul Neuhauser, a founding member of the Interfaith Center on Corporate Responsibility, files the first shareholder resolution on behalf of a religious organization, requesting that GM withdraw its business from South Africa until apartheid is abolished.

1978:
Jeremy Rifkin and Randy Barber, envisioning a new strategy for American labour, publish The North Will Rise Again: Pensions, Politics and Power in the 1980’s as a movement builds to democratize pension funds to serve a more holistic economic function.

1980:
Widespread divestiture of economic holdings in South Africa is directly credited with the collapse of apartheid and the Afrikaner minority government. By 1993, when the de Klerk administration took steps to end apartheid, US$625 billion was being screened to exclude investment in South Africa.

1989:
In the wake of the 1989 Exxon Valdez oil spill, social investment executive Joan Bavaria mobilizes a coalition of investors and environmentalists to launch the Valdez Principles, a green code of conduct for business subsequently called the CERES (Coalition for Environmentally Responsible Economies) Principles.

2006:
Secretary-General Kofi Annan rings the bell at the New York Stock Exchange to launch the UN–supported Principles for Responsible Investment organization, which promotes the incorporation of ESG factors into investment decisions and now counts more than 3,000 signatories with US$100 trillion in assets under management.

2008:
The World Bank launches the first green bond. The idea came about after a group of Swedish pension funds wanted to invest in climate projects and went to the World Bank for assistance. By the end of 2020, global green bond issuance topped out over US$265 billion.

2012:
Bill McKibben’s article in Rolling Stone magazine, “Global Warming’s Terrifying New Math,” based on work by the non-profit Carbon Tracker Initiative, launches the fossil fuel divestment movement. By 2020, investors with assets of US$12 trillion had pledged to divest some or all of their fossil fuel holdings.

2015:
Bank of England Governor Mark Carney delivers his “tragedy of horizons” speech, defining climate change as a financial stability issue. By 2020, US$150 trillion in assets had signed on in support of the Task Force on Climate-Related Financial Disclosure, led by Carney and Mike Bloomberg.

2018:
Larry Fink, CEO of BlackRock, the world’s largest asset manager, writes in his annual letter to CEOs that companies had better contribute to society or risk losing BlackRock’s support. Without a “sense of purpose,” he noted, companies will “ultimately lose the license to operate from key stakeholders.”

2019:
In an effort to eliminate greenwashing in sustainable investments, EU governments and the European Parliament sign a landmark agreement on how to classify green investments – the first time a global regulator has designed a labelling system for what counts as a sustainable financial product.

2020:
Morningstar reports that global sustainable funds, which invest based on environmental, social and governance (ESG) themes, climbed to a record US$1.65 trillion by the fourth quarter of 2020, when US$347 billion of new money poured into ESG-focused funds – an all-time high.

2021:
The U.K. government instructs the Bank of England to align its monetary policy with the government’s net-zero emissions target. The BoE says it will adjust its approach to corporate bond buying “to account for the climate impact of the issuers of the bonds we hold.”

The post A short history of responsible investing appeared first on Corporate Knights.

Hippie musicians Kurt Listug and Bob Taylor were young coworkers at a small guitar shop called the American Dream when the owner quit to go backpacking (it was 1974, after all). The pair bought the store for $3,700, including machinery and parts, and renamed it. Nearly 50 years later, Taylor Guitars has 1,200 employees and factories in El Cajon, California, and Tecate, Mexico.

Listug and Taylor aren’t quite ready for retirement, but they’re serious about ensuring that their departure won’t hurt the company’s fortunes, its products or its employees. Taylor Guitars is too big for individual employees to buy, which usually means Wall Street or private equity would end up pulling the strings. (Rival guitar maker Gibson endured several ownership teams and fell into bankruptcy protection; it’s now owned by KKR, the world’s top leveraged-buyout firm.)

Instead, early this year the former hippies formed an employee ownership trust (EOT) that helps transfer company shares to all employees, based on seniority and tenure, funded by an innovative form of long-term debt. But the deal came together only because a small group of Canadians think employee ownership is the best form of capitalism.

Our Winter 2021 issue included a story on Toronto-based Social Capital Partners (SCP), an entrepreneurial not-for-profit that has spent two decades looking for social-development tools that work. Recently, SCP decided that the best way to fight income inequality is to give workers a share of the equity they build for their employers. “Employee-owned firms grow faster, default less often, are far more resilient in economic downturns, and pay their people more – even before you factor in the wealth-generating effects of ownership,” says SCP managing director Jon Shell.

The Taylor deal was partly funded by Listug and Taylor, and also by a duo that wants to make lots more music together: SCP and HOOPP, the Healthcare of Ontario Pension Plan. Essentially, Taylor Guitars borrowed the money to give shares to all its employees – and will pay back its lenders through future profits. As Bob Taylor announced, employee ownership “allows us to ensure our independence for the long-term future, and continue to realize our vision.”

“Taylor is a terrific first deal for us,” says SCP’s Shell. “The owners are wonderful people, the company is a top performer, the structure of the deal is great for the new employee-owners, and Taylor Guitars are a well-known, sexy brand.”

Employee ownership is more than a passion for SCP – it’s a road to wealth redistribution. “We think an economy owned by oligopolists, monopolists and financial firms motivated with the wrong incentives is an existential threat to society,” says Shell. “We spend every day thinking about what we can do to get in the way of that.”

Unfortunately, the SCP-HOOPP solution doesn’t work in Canada, where EOT regulations are different. So SCP is actively lobbying to change Canada’s Income Tax Act to support EOTs that can borrow to invest primarily in employer shares, and hold those shares for the long-term without tax penalties to the employees. “We have had some great conversations across the political spectrum,” says Shell. “Everyone likes it. It’s everything ‘building back better’ is supposed to be.”

Related read: Is employee ownership a better way for businesses to beat the Big Quit?

The post Meet the Canadians who pulled strings to make Taylor Guitars employee-owned appeared first on Corporate Knights.

“It was 2015, and I had this crazy dream about lip gloss and little native girls. I woke up in the middle of the night and started writing out all these ideas that came flooding from the dream.”

Her first thought was to create liquid lipstick to fund a scholarship in her grandmother’s name. Harper’s Anishinaabe grandmother was a residential school survivor and suffered great trauma as a result of the experience. Harper had a long-held desire to do something meaningful, something that would make an impact in her Indigenous community. But it wasn’t enough to create another line of lipsticks; she wanted to disrupt the $40-billion cosmetic industry. Harper wanted young Indigenous women to see themselves reflected in the products they used, to feel pride and “empowered to do great things.”

With social purpose and sustainability baked into the business model, Harper began seeking out investors to help her grow her fledgling business. After her third audition for Dragon’s Den, she was invited to pitch to the show’s panellists, thrusting her brand into the spotlight. When a “Dragon” offered her $125,000 for a 50% stake in her company, without hesitation she said, “No, thank you.”

It turned out Cheekbone Beauty had just been offered a $350,000 investment from Vancouver’s Raven Indigenous Capital Partners, a deal in which she maintained 100% ownership of the company, as well as $50,000 from Desjardins to create scholarships for First Nations children.

“We have a shared vision toward building economic reconciliation in Canada,” Raven managing partner Jeff Cyr said in a statement announcing the deal. “It’s inspiring Indigenous entrepreneurs like Jenn Harper, driving systemic change, and building dynamic and resilient Indigenous communities.”

Cheekbone Beauty is now in R&D mode, sharply focused on incorporating Indigenous knowledge and sustainability values into every aspect of its business. The company has set out to eliminate all single-use plastics and shift all raw ingredients to plant- or bio-based sources by 2023. The cruelty-free cosmetics company also donates 10% of proceeds to First Nations non-profits, including First Nations Child & Family Caring Society.

Cheekbone Beauty launched its new sub-line of Sustain lipsticks, packaged with 85% less plastic in recyclable paper tubes, in March 2020, right before the pandemic took the wind out of global lipstick sales. But while COVID affected the supply chain and operations, Cheekbone Beauty recovered quickly. The company saw a 350% increase in revenue in 2020 as media interest from Vogue, Elle and other major beauty magazines poured in. “Brands that focus on BIPOC communities really felt a big push in attention,” CEO Harper says from her office in St. Catharines, Ontario.

Representation matters. It’s important for Indigenous people to see themselves in the world around them, creating a sense of belonging. “Our North Star, our reason for getting up in the morning, is how our business is impacting and resonating with Indigenous youth,” Harper says.

“We want youth to see themselves in our products and know that they are beautiful and worthy.”

Shilpa Tiwari is the founder of Her Climb, a social enterprise with the mission to increase the number of racialized women in senior positions in corporations.

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Around the world, investment firms, corporations and governments are scrambling to respond to calls for increased climate action and societal justice with pledges to measure everything against an environmental, social and governance (ESG) yardstick. But in the ESG stampede, insiders warn that too many stocks are getting tossed into green funds without enough oversight.

There have been grumblings about “greenwash” in the sector for years, but Tariq Fancy turned it up to 11, so to speak, when the former chief investment officer for sustainable investing at BlackRock (the world’s largest asset manager), raked the industry over the coals in a March op-ed.

“Wall Street is greenwashing the economic system and, in the process, creating a deadly distraction. I should know; I was at the heart of it,” Fancy wrote in USA Today. In many instances, “existing mutual funds are cynically rebranded as ‘green’ – with no discernible change to the fund itself or its underlying strategies – simply for the sake of appearances and marketing purposes. In other cases, ESG products contain irresponsible companies.”

His charges were damning, but they weren’t news to those paying attention. Last year, UK-based ShareAction examined 75 of the most influential asset managers worldwide and concluded that “50 have a very limited approach to managing ESG risks, receiving either a D or E rating.” Though a third ranked higher than a B (BMO and HSBC Global Asset Management earned Bs, while RBC and Manulife scored Cs), BlackRock, tellingly, was slapped with a D.

Nonetheless, Hugh Wheelan, co-founder of Responsible Investor, says that Fancy is only partly right. “Do we face swathes of greenwash in ESG statements, fund compositions and company ‘assessments’? Yes, with caveats. Little of what goes into environmental funds is 100% green (nothing is), and ESG is not a science.” Still, he urged the public to reject easy cynicism and remain committed: “Now is the time to hold fund managers to account.”

At the heart of the problem is the lack of agreed-upon standards for qualifying for, say, an “ESG-aligned” investment fund. Though that’s starting to change. In March, the U.S. Securities and Exchange Commission announced a new Climate and ESG Task Force in its enforcement division, tasked with “proactively identifying ESG-related misconduct.” Across the pond, the EU’s new rules designed to stamp out ESG-fund greenwashing take effect in June.

Debate rages over whether that green taxonomy is too watered down or too tough to support higher-carbon companies as they transition to net-zero. Mark Carney’s take: “We don’t just need brown/green; we need 50 shades of green and we need a way to communicate more precisely.”

Most agree with Fancy about one thing: “We’re running out of time and need to accept the truth: To fix our system and curb a growing [climate] disaster, we need government to fix the rules.” Or rather, we need to turn up the pressure on government to fix the rules.

Fund spotlight:

BlackRock iShares MSCI ACWI Low Carbon Target ETF (CRBN)

What’s promised: This ETF “seeks to track the investment results of an index [composed of companies] with a lower carbon exposure than that of the broad market,” giving investors “exposure to a broad range of global stocks that are less dependent on fossil fuels.”

What’s inside: Traditional ethical investors might gasp when they see 15 makers of controversial weapons, including Lockheed Martin, nestled in this portfolio. Turns out even the world’s largest maker of bombs, missiles, fighter jets and nuclear subs has developed a low-carbon transition plan (net-zero thermonuclear warheads, anyone?).
Even if you generously assume the same holds true for the handful of for-profit prisons, harmful pesticide-makers and mining firms tied to severe environmental damage in this ETF’s portfolio, low-carbon purists will no doubt take issue with some of the fund’s most climate-contentious holdings, including:

• 6 thermal coal-burning companies
• 11 climate-policy-
blocking companies, including Berkshire Hathaway and Chevron
• 4 deforestation and palm oil laggards linked to clearcuts in the Amazon rainforest and Southeast Asia (deforestation is a primary contributor to climate change), and
• 6 industrial meat companies, including Tyson Foods, America’s largest beef, pork and poultry processor (animal agriculture is a significant contributor to climate change).

BlackRock’s position: BlackRock says the ETF’s MSCI weighted average carbon intensity (tons CO2e/$M sales) is just 64.74, significantly lower than the 178.5 average for benchmark MSCI ACWI Index. Whether that will convince climate-conscious investors that this fund deserves their attention remains to be seen.

Adria Vasil is the managing editor of Corporate Knights. She’s also the author of the bestselling Ecoholic book series.

The post ESG BS detector: iShares Low Carbon ETF appeared first on Corporate Knights.

“It has taken eight years of student action to get to this point,” says Emily Lowan, lead organizer of Divest UVic. “I wish the speed of action was quicker, but still it is a major victory that should be celebrated.”

The campaign is not over. Activists are now focused on UVic’s $445-million endowment foundation. Over the past four years, the endowment has cut fossil fuel investments to below 2% of its portfolio, but it has not as yet promised full divestment. “We are still only halfway there,” Lowan says.

The developments at UVic capture the state of divestment campaigns on many Canadian campuses: some high-profile wins but with miles to go for climate-change activists determined to remove the fossil fuel industry’s social licence to operate.

Despite only a few full divestment successes to date (see sidebar), momentum is with the campus activists, researchers say.

“It’s definitely picking up steam,” says Jaylene Murray, a research associate with the University of Saskatchewan’s Sustainability and Education Policy Network, which identified 38 campaigns at Canadian universities in a 2019 study on divestment activism. “We are seeing increases globally in terms of environmental stewardship and activism … and not just in terms of divestment, but social justice movements as well.”

University of Ottawa professor Darlene Himick, who received a Social Sciences and Humanities Research Council grant to examine the impact of fossil fuel divestment campaigns globally, points to the success of previous student drives to end apartheid and tobacco smoking. “The history is there,” she says. “Students know they can make change.”

Long-time divestment advocate Cam Fenton, Canada lead for 350.org, says campaigns once rooted in moral and environmental concerns have added financial considerations to the case against fossil fuel investments.

“To some degree, the financial argument has caught up with the moral argument,” he says, noting among other factors the poor performance of energy investments over the past decade.

Earlier this year, the non-profit Institute for Energy Economics and Financial Analysis reported that the oil and gas sector “placed at the bottom of the S&P [Standard and Poor] 500 in five of the last seven years and second-to-last in a sixth.”

In 2019, after years of resistance to divestment, the University of California cited financial risk factors in deciding to make its US$13.4-billion endowment and $70-billion pension fund fossil-free. “Our job is to make money for the University of California, and we’re betting we can do that without fossil fuel investments,” UC chief investment officer Jagdeep Singh Bachher co-wrote in an op-ed for the Los Angeles Times explaining the decision. “We believe hanging on to fossil fuel assets is a financial risk.” Bachher’s position caused a stir in the investment community, considering he had previously been deputy chief investment officer at Alberta Investment Management Corp., the provincial Crown corporation that manages pension, endowment and government funds in the oil-rich province.

In Canada, relentless pressure from students, faculty and staff has prompted some universities to reconsider past opposition to fossil fuel divestment.

In 2019, the University of British Columbia reversed its previous position and promised to divest its $2-billion endowment from fossil fuels “as soon as possible,” and also declared a climate emergency.

“That was a huge victory,” says Michelle Marcus, divestment lead with Climate Justice UBC, emphasizing the significance of the declaration. “They are making a political statement that we need to get away from fossil fuel for reasons of the climate crisis,” she says.

But many universities reject calls for outright divestment.

“This is a complicated area, and divestment is such a simple solution to a very, very complicated problem,” says University of Toronto president Meric Gertler. “We don’t think we would be doing everything we could if all we had done was divest.”

Instead, his institution relies on environmental, social and governance (ESG) factors in investment decision-making; engagement with carbon emitters; and disclosure and reporting policies to curb the carbon footprint of its University of Toronto Asset Management (UTAM) Corp., which manages more than $11 billion in endowment and pension assets. U of T has pledged to reduce the “carbon intensity” (carbon emissions per dollar of investment) of its pension and endowment portfolios by 40% by 2030, compared to 2017, a target exceeding the federal government’s 30% goal.

Fossil-fuel-sector investments represent 2% of UTAM’s pension and endowment portfolios, down from 5 to 6% five years ago, says its president and chief investment officer, Daren Smith. “If you focus on oil and gas companies in the portfolio, it represents a declining share of the portfolio, and we would expect that to continue to decrease in the future.”

In December 2019, compared to 2017, UTAM reported a 12.9% reduction in absolute greenhouse gas emissions. Eliminating all equity investments in fossil fuel companies based on the 2019 carbon footprint analysis (and reinvesting the proceeds) would have reduced carbon emissions by 13%, according to the university. “[The difference is] so small because so much of the carbon footprint in any portfolio is associated with those activities that are downstream users of fossil fuels, not the firms associated with the production and distribution of fossil fuels,” Gertler says.

Campus activists are unpersuaded

Carbon-intensity measures represent a ratio, not an absolute reduction, argues Evelyn Austin, a member of multiple climate-change advocacy groups, including Divestment and Beyond at U of T. Moreover, she warns of loopholes in the university’s carbon-cutting commitments.

“This idea of shareholder engagement and ESG is the biggest hurdle that divestment is facing,” she says. The real power of divestment is as a “public statement,” she argues. “It is about removing the social licence that we grant to fossil fuel companies when we invest in them.”

University administrators say they share advocates’ sense of urgency.

In March, McMaster University president David Farrar asked his board of governors for an exit strategy from fossil fuels “as soon as possible.” The strategy would likely accelerate the university’s pledge made last October to achieve a 45% carbon reduction in public equities in its $1.3-billion portfolio by 2030 and carbon-neutral investments in publicly traded shares by 2050.

Since 2018, McMaster had cut exposure to Carbon Underground 200 companies to 2.1% from 4.5% of investments, with holdings expected to have ESG/sustainability plans and be aligned to the 2015 Paris Agreement.

“The only way the transition [to a low-carbon future] is going to happen is that everyone who needs the energy has to change, as well as everyone who makes energy,” says Deidre Henne, assistant vice-president of administration and chief financial officer at McMaster University. “So, everyone is part of the problem and the solution.”

But divestment advocates question the rationale for engagement with oil companies, given their poor returns and a global shift away from fossil fuels.

“We are going from high carbon to low carbon, and it is going to happen in a matter of years,” says Mark Campanale, founder and executive chairman of Carbon Tracker Initiative, a London-based think tank that analyzes the impact of the transition from fossil fuels on capital markets.

“In Canada, with many but not all [investment managers], I get a sense that they don’t believe what they are seeing in front of their eyes about the energy transition.”

With fossil fuel dependence waning, Campanale argues that net-zero targets that use carbon offsets to achieve a desired emission goal become less relevant measures of responsible investing. “Say we reduced our emissions,” he says. “That is not the same thing as saying you are protecting the capital of your pension fund from the downside threats of the [energy] transition.” In effect, he urges investment managers to focus on the big picture: the global move toward a lower-carbon economy.

As some Canadian universities continue to weigh their options, several institutions have chosen to incorporate divestment in a wider strategy tied to improving the economic and social well-being of society.

In 2019, Montreal’s Concordia University committed to divest its endowment from coal-, oil- and gas-sector investments by 2025, with the goal of a 100% sustainable portfolio by the same date. The university also pledged to double to 10% (from 5%) the share of investments in enterprises with social and environment impact (such as a Montreal company that recycles out-of-date food for new uses).

Divestment, alone, “just won’t solve the [climate] problem,” says Marc Gauthier, university treasurer and chief investment officer at Concordia, who prefers a sustainability-focused portfolio with social impact. The pandemic, he says, has only reinforced the strategy.

Before COVID-19, “the talk was always about climate risk,” he says. Now, “the pandemic has raised social issues that are connected to climate risk.”

Concordia’s divestment-plus approach also plays out at UVic. In its divestment announcement, the university earmarked $10 million for a renewable-power impact fund linked to the UN’s Sustainable Development Goals. A year ago, UVic pledged to invest 25% of its portfolio assets in sustainable investments.

Through a blend of divestment and responsible investing, says UVic treasurer Andrew Coward, “we are still able to achieve our financial returns and adhere to our fiduciary duty and at the same time meet our carbon reduction [targets].”

Divestment of the working capital fund, he adds, accelerates UVic’s promise to reduce carbon emissions by 45% by 2030.

Despite gains, activists vow to remain vigilant.

Radiologist Eric Halgren, a faculty leader of University of California at San Diego’s divestment movement, says advocates continue to press the university to release implementation details of its fossil-free commitment. Still, given growing attention to the financial case for divestment, he says, “it is encouraging to see that the smarter people are deciding to get out of fossil fuels, and it will become an avalanche.”

At UVic, divestment campaigner Lowan is similarly encouraged, but watchful.

“It feels like the administration is finally listening in terms of climate action and social justice,” she says, of UVic’s divestment move. “We are really excited about the direction things are going, and we are hoping to make more progress in the future.”

How do Canadian universities fare on divestment?

After more than a decade of divestment campaigns, more than half of Britain’s public universities, including Cambridge University, have pledged to divest. In the United States, 55 universities and colleges have committed to full or partial divestment, according to 350.org. In Canada, so far, eight universities have pledged to full or partial divestment. Here’s a range of Canadian university responses to date:

• Université du Québec à Montréal is the first Canadian university to fully divest of fossil fuels, doing so in 2017. Others set their own timetables: Lakehead University, 2023; University of Guelph, 2025; University of British Columbia, “as soon as possible”; and Concordia University, 2025.
• Laval University announced divestment plans in 2017 but two years later switched to a “responsible investment” strategy, promising a 30% cut in the carbon footprint of its foundation by 2025 and 50% by 2030. “We decided to expand the scope of our commitment to greenhouse gas emissions of all sectors instead of a limited focus on the fossil fuel industry,” a Laval spokesman stated in an email.
• University of Toronto and McGill University both reject divestment, instead pursuing a multipronged approach to reduce the carbon footprint of holdings. Last June, with 13 other Canadian universities, the two institutions announced a “responsible investment” charter that commits them to consider environmental, social and governance (ESG) factors in investment decisions; measure and reduce carbon over time; and engage with carbon-emitting companies to curb climate-related risks.
• In February, a coalition of 10 Canadian university endowments and pension plans announced they would work with SHARE, a non-profit investor advocacy organization, to engage with corporations (in which they have holdings) on climate change risks.

Jennifer Lewington is an intrepid reporter and writes regularly on many topics, including business school news.

The post Canadian universities on a long road to fossil fuel divestment appeared first on Corporate Knights.

“Please mine more nickel,” he asked bluntly.

By October, Tesla was in talks with Vale, the world’s largest producer of the mineral, about securing sustainable nickel from its Canadian mines to power Tesla’s electric vehicle batteries. No firm definition of “environmentally sensitive” was given, but as minerals become increasingly critical to a low-carbon future, attention around how those minerals are extracted and produced is growing sharply.

Cleantech’s cleanest resources are not in short supply: wind is free and the sun shines, at no charge. Yet enormous amounts of copper, nickel and other minerals are required to harness their energy. Canada is one of the few countries in the world that can provide the materials required for lithium-ion batteries that are vital for EVs and other emerging low-carbon technologies. With companies like Tesla facing increased scrutiny around sourcing minerals from countries with serious human rights and environmental abuses, Canada is positioning itself as a reliable and responsible alternative.

“Those are the key ingredients – responsible and reliable – to be a supplier of choice to our allies around critical minerals and other minerals to fuel the transition to the next economy, the clean economy, the low-carbon economy,” says Ben Chalmers, senior vice-president of the Mining Association of Canada.

Compared to countries like the Democratic Republic of Congo, which produces roughly 70% of the world’s cobalt under a cloud of human rights abuses and child labour, Canada looks like the ideal country of origin. Canadian mining-industry employees earn an average of more than $110,000 annually, are protected by relatively strong safety regulations and – unlike their Congolese counterparts – aren’t forced to operate in conflict zones.

The question is, can Canada offer a steady, sustainable supply of critical minerals? Federal Minister of Innovation Navdeep Bains has spoken of the need for a “mines to mobility” strategy to join the growing EV economy. Quebec has made its plans to lead the charge clear, as part of a $6.7-billion green economy push. Unveiled in November, its Plan for the Development of Critical and Strategic Minerals [CSMs] 2020–2025 identifies more than 20 CSMs that are in high demand by countries looking to secure supply chains for low-carbon economies. Other mineral-rich provinces, including Newfoundland, B.C. and Ontario, also want in on the action.

However, satisfying increased demand for critical minerals holds its own set of challenges. Water preservation, greenhouse gas (GHG) emissions, biodiversity concerns and whether CSM mines can preserve Indigenous rights are all open questions that require satisfactory answers. A few examples:

• Nouveau Monde Graphite’s 2.7-kilometre open-pit graphite mine was authorized by the Quebec government in February. The mine, wedged between Mont-Tremblant National Park and Lac Taureau Regional Park, has raised concerns because of its potential production of millions of tons of acid waste, which would be permanently stored in the watershed of the tourist area. The opposition claims the Quebec government has ignored the advice of the Office of Environmental Public Hearings by authorizing the project before requesting that missing studies be completed. The government’s decree is being heavily criticized for failing to address concerns raised by the Atikamekw Nation of Manawan.

• The proposed Eagle’s Nest Mine in northern Ontario’s Ring of Fire has faced years of opposition, protests and legal battles. While some First Nations in the region support the mining of nickel, palladium and copper, opposition from others who say they haven’t been adequately consulted remains strong. Scientists are also concerned about the potential impact on the area’s muskeg – one of the world’s largest sources of terrestrial carbon storage. Over a decade in the works, the project is still being evaluated with no clear end date.

So how can community needs, especially those of Indigenous communities, take a front seat in mining for the low-carbon future? The First Nations Major Projects Coalition (FNMPC) recommends having Indigenous-led environmental assessments, tapping into Indigenous-led net-zero carbon policy frameworks, and boosting access to capital so that low-carbon Indigenous infrastructure projects can secure equity ownership.

At FNMPC’s Indigenous Sustainable Investment Conference in March, chair Sharleen Gale said it’s time to put the “I” in ESG. “That means ensuring Indigenous interests and worldviews are reflected in environmental, social and governance standards that are driving investments in resource projects today.”

Mining can provide huge value to Indigenous communities when equity is rightfully shared, exemplified by companies like Nuna Group, the majority-Inuit-owned group with a track record of successful construction and mining projects.

Outside of Indigenous communities, projects near historically mining-friendly communities like Cobalt, Ontario, can find that residents are more welcoming of new projects, like Fuse Cobalt’s newly announced cobalt refinery. Greener mines like Goldcorp’s Borden Gold Mine – Canada’s first all-electric mine – could find it easier still to gain community support. Though the promise that Nouveau Monde’s graphite mine will be all-electric hasn’t smoothed over community opposition, meeting ESG standards is becoming increasingly important to everyone from clean economy allies to institutional investors.

Toward sustainable mining

Scientific innovation is already fuelling greener mining and refining practices. The use of plasma technology can potentially boost the yield of precious metal ores like gold and platinum by more than 1,000% and reduce GHG emissions and costs for iron ore pellet production. Finding alternative sources for critical minerals – such as extracting lithium from geothermal plant brine – and boosting mineral recycling rates will be essential to improving the sector’s sustainability.

But work still needs to be done to ensure Canadian mines don’t fall behind on the path to responsibility. A 2019 audit by then–federal environment commissioner Julie Gelfand concluded that Environment and Climate Change Canada’s inspections of metal mines were significantly less frequent (every 3.6 years) in Ontario, the province with the highest number of mines in Canada, and that Fisheries and Oceans Canada did only spotty monitoring to see if mining companies carried out their plans to counteract harm to fish and their habitats. Said Gelfand at the time, “When environmental effects were found, there was no requirement on anybody’s part to actually have to do anything.”

The Mining Association of Canada (MAC) launched its Towards Sustainable Mining (TSM) program in 2004 to drive performance improvement in environmental and social issues – the first program in the world to require site-level assessments. The TSM principles include calls for member companies to implement comprehensive energy and GHG emission management systems; obtain the “free, prior and informed consent” of directly affected Indigenous Peoples for new developments; and conduct annual assessments of the effectiveness of safety and health-management systems. MAC is working with mining associations in seven countries – most recently Norway and Spain – to adapt the TSM framework to their national contexts.

However, the program has been criticized for being too lax and lacking third-party oversight. For most metrics in MAC’s 2019 TSM Progress Report, 80 to 90% of members meet the A, AA or AAA thresholds of the TSM’s grading. “Energy and GHG Emissions Performance Targets” and “Operational Water Management” had the lowest grades, although both still saw 53 and 50% of members, respectively, achieving an A or higher grade.

MiningWatch Canada’s Jamie Kneen says the TSM standard isn’t being enforced consistently and companies must be held to a higher bar if Canada wants to become a genuinely sustainable supplier of choice. Where there is enforcement, he says, the industry-initiated standard is too close to the companies themselves. He adds that while the standard is purportedly mandatory for MAC members, only half of MAC’s mines currently report on it (MAC says many members are either pre- or mid-certification, while others are out of country, and therefore not required to report).

Increased demand for environmentally and socially responsible mining has been met by calls for stricter standards and certifications. The Initiative for Responsible Mining Assurance (IRMA) has gained momentum in the last year and recently completed its first audit of Carrizal Mining’s Zimapán Mine in Mexico, which produces lead, zinc, copper and silver. Its second audit of an Anglo American mine in Zimbabwe, which extracts platinum group metals, was released in February.

IRMA sets itself apart from other programs by not being industry-run and ensures transparency by sharing its audit information publicly. The standard is equitably governed by a diverse set of stakeholders, including affected communities, labour unions and mining companies. Though still in its infancy, the certification is already a selling point for companies – and nations – when searching for sustainable suppliers. IRMA’s member list already includes Microsoft, BMW Group, Ford and steelmaker ArcelorMittal.

MAC’s Ben Chalmers says there is ongoing cooperation and knowledge transfer between MAC and IRMA, with potential for more integration in the future. What’s clear is that ensuring Canada’s mines meet the highest standards will help position the Canadian mining industry for lucrative international contracts and partnerships.

Critical mineral autonomy

While Europe outpaced China on battery investments last year, it’s still short on minerals and is looking for reliable, sustainable partners who extract responsibly. COVID-19 has revealed the vulnerability of supply chains, making “strategic autonomy” a buzzword in Europe and elsewhere. China’s dominance in battery production has led other countries to fear it might withhold exports for its own production and political reasons. Many countries are developing their own or joint networks, among them the European Battery Alliance, which already counts Leading Edge Materials – a Canadian company developing projects within the EU – as a member. As a reliable ally, Canada may be able to establish itself as an external supplier of choice for the EU’s strategic autonomy efforts around batteries.

While recent years have seen a lag in focus on environmental issues in the U.S., President Joe Biden’s $2-trillion climate plan will no doubt look to Canada for a reliable critical mineral supply. In February, Biden and Prime Minister Justin Trudeau released a statement vowing to strengthen the Joint Action Plan on Critical Minerals Collaboration “to target a net-zero industrial transformation, batteries for zero-emissions vehicles, and renewable energy storage.”

Supplying the green wave will require many elements to come together. The mining sector will have to get Canadian stakeholder communities on board. The Canadian government will have an important role not only in increasing incentives for low-carbon mining, but also in further tying financial benefits to sustainable mining practices. Many critical minerals, like rare earth metals and cobalt, lack the price stability and transparency of commodity minerals, making them relatively unattractive to investors looking for stable profits. Government assistance in stabilizing critical mineral prices may be valuable, as well as public procurement (such as purchasing Canadian minerals for publicly funded renewable energy projects) and supply partnerships – a strategy that has proven effective in Scandinavian countries and the EU.

Responsible mining carries costs. The competitive challenge for natural-resource exploitation cannot be ignored: countries with a history of critical mineral dominance and lax labour regulation like China or the Democratic Republic of Congo have a price advantage that is difficult to compete with under current conditions.

As Alan Young, co-director of the Materials Efficiency Research Group (MERG), says, “There is a huge opportunity to couple the imperative for clean energy and responsible mining.” He adds, “By caring for the larger context, we create a more competitive environment for us and benefit the citizens of other countries as well.” Doing so can give Canadian companies preferential access to growing markets and, as Young notes, “capital concerned with the liabilities and reputation impacts.” With institutional investors like the Climate Action 100+ (representing more than US$52 trillion in assets under management) leading the charge, Canadian mining has a tremendous opportunity to access that capital and become a go-to partner and supplier.

Maria Laura Barreto, co-director of MERG, says going beyond the status quo will be key. “Canada will be very well positioned to be one of the key suppliers of these minerals for the low-carbon future. But there is a huge risk here: just having an abundance of strategically important resources is not good enough. Canada will have to show both quality and quantity of minerals extractions to qualify for emerging responsible minerals markets.” In other words, the reserves are there, but attaining the sustained benefits of mining these minerals will require a willingness to change how we supply them.

Toby Sparwasser Soroka is a German-Canadian whose professional interests span across social entrepreneurship and disruptive technology.

The post Supplying the green wave appeared first on Corporate Knights.

However, numbers are the biggest problem with this book, starting with the first sentence: “There are two numbers you need to know about climate change. The first is 51 billion. The other is zero.” Fifty-one billion was the number of tonnes of CO2 from human activity added to the atmosphere in 2019; zero emissions are what Gates says we have to aim for to avoid the worst effects of climate change. But Gates says we still need concrete, fertilizer and natural-gas power plants (others think there are solutions for all three of these, but that’s another story), so he calls for “near net-zero,” where carbon dioxide is removed from the atmosphere with carbon-capture devices, by reducing carbon in production processes, or through some form of offsetting.

None of these exist at scale at this time, but hey, don’t worry, Bill is on it: “I’m also a technophile. Show me a problem, and I’ll look for technology to fix it.” He has put a bit of his money where his mouth is, investing more than a billion dollars in everything from low-carbon cement and steel to faux meat, and several-hundred-million dollars in next-generation nukes.

The second problematic pair of numbers in Gates’s book are 2030 and 2050. Both are targets set in the Paris Agreement; to keep the rise in global average temperature below 1.5°C at the end of the century, we have to reduce emissions by about 50% by 2030 and to about zero by 2050. Gates does not believe that 2030 is realistic and thinks aiming for it might even be counterproductive. “Why? Because the things we’d do to get small reductions by 2030 are radically different from the things we’d do to get to zero by 2050. They’re really two different pathways, with different measures of success, and we have to choose between them.”

The 2030 pathway would mean starting now with the technology we have, which might take us 80% of the way. But Gates says we should be thinking big and using the time to plan for “the big technological changes that would ensure long-term success.” There is some logic to his worry about “lock-in” with investments in problematic “bridge fuels” like natural gas, when his strategy is to go zero-carbon with renewables and nuclear power, electrifying everything, and then using carbon capture to pick the remaining CO2 out of the air and then store it somehow.

The problem with these strategies is time, given another big number: 570 billion tonnes. That’s the estimate by the Intergovernmental Panel on Climate Change back in 2018 of the total quantity of CO2 that can be added to the atmosphere if we are going to have a good chance of staying under 1.5° warming. Divide that by Bill Gates’s 51 billion tonnes and we run out of headroom before 2030, and it’s why every single molecule of CO2 emitted now matters; if we keep pushing off making changes, then his new technology is going to have to do an awful lot of CO2 sucking.

The second, bigger problem with a 2050 target is what futurist Alex Steffen calls “predatory delay.” It lets Toronto Mayor John Tory pour a billion dollars of concrete into the Gardiner Expressway or Ontario Premier Doug Ford push a highway through the greenbelt because “don’t worry, we will have electric cars.” It lets Jason Kenney and Justin Trudeau keep boiling rocks in Alberta because “don’t worry, we will have a hydrogen economy.” It lets Gates keep flying his private jet because he will be able to buy sustainable fuel. It lets us wait for some deus ex machina to drop out of the sky and save us, instead of actually giving anything up or making changes in our lives or economies now.

Notwithstanding these doubts, there is much to admire about Bill Gates. In an era of what Michael Mann calls “doom and gloomism,” he is positive, upbeat and optimistic. He really does believe that we can invent our way out of this and go from 51 billion to zero, instead of starting tomorrow with the renewable and storage technology that we have now. The problem is that we have run out of time, and the numbers don’t add up.

Lloyd Alter is design editor for Treehugger.com and author of the upcoming book Living the 1.5 Degree Lifestyle.

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