Continued progress towards net zero in the 2022 Carbon Footprint Report and TCFD Report

In UTAM’s recently released 2022 Carbon Footprint Report, we were pleased to show continued progress towards our goal of net zero carbon emissions associated with the Endowment portfolio by no later than 2050.

As reported, the Endowment’s 2022 carbon footprint continued its downward trend to 37.8 tonnes of CO₂ equivalent per million dollars invested (tCO₂e/$M). Absolute emissions in 2022 were 99,307.8 tCO₂e. These numbers represent reductions of 41.3% in tCO₂e/$M invested and 31.7% in absolute emissions compared to UTAM’s 2019 baseline.

“We’re committed to calculating and managing the carbon footprint of the Endowment in line with the methodologies approved by the Net-Zero Asset Owner Alliance,” says UTAM President and Chief Investment Officer Chuck O’Reilly. When UTAM joined the Alliance in 2021, we also committed to setting interim targets on the path toward the 2050 net zero goal. In 2022, UTAM set a target for 2030: a 50% reduction in the Endowment’s carbon footprint, based on a 2019 baseline.

In accordance with the Alliance’s Target Setting Protocol, beginning with the 2021 carbon footprint, carbon contributions from publicly traded corporate bonds were added to the calculation, which had previously been based on public equity and equity-like securities. At December 31, 2022, the corporate bond, equity and equity-like assets that were used in the Endowment’s carbon footprint calculation represented approximately 70% of its net asset value. Hedge fund holdings within the absolute return portfolio, as well as government bonds and alternative credit strategies, are currently excluded from the footprint calculation.

Our intent is to continue to include these asset classes and strategies in the Endowment’s carbon footprint calculation over time, and as an Alliance member we actively participate in discussions on methodologies for asset classes, including government bonds, where carbon footprinting methodologies are still being assessed. Moreover, through our active participation in other RI initiatives and our engagement with investment managers, we continue to push for enhanced transparency to enable carbon footprint calculations in other strategies, such as hedge funds.

Limited assurance review

UTAM again engaged PriceWaterhouseCoopers LLP to undertake a limited assurance review of the 2022 carbon footprint results – for public equities, equity-like securities and corporate bonds. We believe this assurance review, which examined our carbon footprint calculations and reported outcomes, builds trust in our reporting and helps enhance our own accountability.

2022 TCFD Report

Released alongside the Carbon Footprint Report and Integrated Annual Report, UTAM’s 2022 TCFD Report enhances our transparent reporting on responsible investing activities. UTAM adopted the recommendations and reporting framework of the Task Force on Climate-related Financial Disclosures (TCFD) in 2020. The TCFD Report provides detailed information on UTAM’s management of climate-related financial risks in four areas: governance, strategy, risk management, and metrics and targets.

The 2022 Carbon Footprint Report and TCFD Report reinforce UTAM’s ongoing commitment to responsible investing and our belief that environmental, social and governance considerations can have a material impact on investment risk and return, particularly over the long term. “Responsible investing – including transparent and accountable reporting – is an integral part of how we manage U of T’s assets,” says Chuck O’Reilly. “And it’s an effective way for UTAM to support the University’s vision and goals for sustainability.”

Read and download the Carbon Footprint Report and TCFD Report.