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U of T rejects recommendation to divest from fossil fuels

King's College Road at the University of Toronto. President Meric Gertler says he is following the spirit of a report that recommended divesting from firms that “blatantly disregard” major global environmental priorities.

Fred Lum/The Globe and Mail

The University of Toronto will begin to include environmental, social and governance factors in its investment decisions, but will not specifically commit to divesting from some fossil fuel companies as a university committee had recommended.

In a 43-page report released on Wednesday morning, president Meric Gertler says he is following the spirit and logic of a December report from a 10-member advisory committee of faculty and students that had recommended the university divest any holdings in firms that "blatantly disregard" major global environmental priorities. Instead, the university will take steps to include environmental, social and governance (ESG) risks – including climate change – as considerations when it chooses direct and indirect investments.

"Activists are certainly looking for universities to lead and I hope that they will see this plan as a very strong response, where U of T is looking to take a leadership role nationally and beyond," Dr. Gertler said.

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It is the latest decision from a Canadian university to reject calls for divestment from fossil fuel companies, a movement that is finding success on some European and U.S. campuses, as well as with some investment funds. Last week, the Rockefeller Family Fund said it would eliminate its holdings in ExxonMobil Corp. The company had misled the public about the risks of climate change, it said, a charge Exxon has questioned.

The University of British Columbia, plus McGill, Dalhousie and Calgary universities have all rejected divestment. Some, such as Concordia, have instead created funds that invest in low-carbon companies. Others, such as UBC and Simon Fraser, have adopted ESG principles for their investments.

Taking social and environmental factors into account in investment decisions will likely exclude the types of companies targeted by divestment campaigns, the U of T president's report states.

"The virtue of an approach such as the one I am outlining is that it allows us to look at the practices of firms not just in fossil-fuel-producing sectors, but in the rest of economy as well," Dr. Gertler said.

At the moment, UTAM, the university's financial-investing arm, manages $6.5-billion in pension and endowment funds, but does not have any direct investments in the seven companies the advisory committee had identified as most clearly impeding efforts to limit the rise in global temperatures to 1.5 C by 2050.

That list included Conoco Phillips Co., ExxonMobil and coal-producing companies.

The university can also affect climate change through education, the faculty and student report had added. It suggested more funding for environmental projects and research on campus.

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U of T will adopt some of those measures, including an entrepreneurial competition to encourage clean tech, reducing its carbon footprint and expanding an environmental retrofit of its buildings.

Getting to a low-carbon economy cannot happen overnight, the president said.

"I agree with the committee's insight that many forms of fossil fuels will be with us for some period of time as we transition to new sources," he said.

Protests have followed at universities that have rejected calls for broad or targeted divestment. McGill students are holding a sit-in at the office of university principal Suzanne Fortier. On Tuesday, Dr. Fortier said she will meet with protesters.

Dr. Gertler said he hopes U of T will accept and embrace the response from his office.

"I am completely convinced by the need for us to move," he said. "We take very seriously the call from [Environment Minister Catherine McKenna] and other leaders to translate words into action, and this is our attempt to do so."

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