With natural disasters happening around the world due to climate disruption, and 2024 set to be the hottest year on record (beating 2023), I began to look at the institutions close to me that may contribute to making our Earth’s future hotter and hotter.
And where closer than UTS?
Students have, on average, $27,600 in HECS debt at the end of their degree. So it makes sense that we should be curious about where our university’s ~$100 million investment funds are going, and compare that to other big Sydney universities.
When we discuss investments, we’re referring purely to the funds that UTS’ financial body gives to an external investment fund manager, who then buys shares in companies in order to generate profit and financial returns. Looking into the publicly available information on annual reports, investment reports, and investment policies of UTS, UNSW, and USYD, you get the following:
UTS | USYD | UNSW | |
Policy | Other than UTS’ financial body, UTS’ sustainability body has a significant say on what external fund manager is chosen and what investments are allowed or not. UTS Sustainability has had an incredibly large focus on the SDGs (Sustainable Development Goals) and diverting from fossil fuels over the past years. In 2022, UTS switched its external funds manager, from NSW Treasury Corporation to Australian Ethical. | The Chief Investment Officer will manage portfolio emissions and fossil fuel exposure by excluding investments in companies or investment managers that are extensively involved in the extraction of, or generation of power from fossil fuels, unless the companies or investment managers can demonstrate their alignment with a low carbon transition. | UNSW will not invest, directly or indirectly, in: by 2025, the public equities and corporate bonds of companies whose primary business is the ownership and exploitation of fossil fuel reserves. |
While this may seem like many words essentially saying the same thing, there is a distinct difference in the language and transparency in each of these. UNSW and USYD use weasel words to (badly) hide their slow action in reducing their investments. Language such as “primary business” and “extensively involved” means there’s no concrete definition for how much fossil fuel revenue is too much. By promising to try and manage the investments, but still having their investment managers be internal for both UNSW and USYD,with USYD’s policies even behind staff access wall, there is little transparency that allows for accountability.
UTS on the other hand, has been much more transparent about the details of its policy, having publicly announced the transition between its external funds managers. Australian Ethical has been certified by the Responsible Investment Association Australasia as one of the top ethical investment companies in Australia. The transparency from UTS gives some confidence that UTS Sustainability is happy to represent Australian Ethical loudly, not expecting to be harshly criticised for the choice.
But who are Australian Ethical, and what is their investment approach for some of the more environmentally destructive industries and activities?
Sector | Exclusion Examples | Thresholds and Policy |
Fossil fuel mining, generation | Woodside, Whitehaven Coal, Santos, Origin and AGL | Immediate exclusion if: Coal >5% revenue from coal mining or power generation
Oil >10% revenue from oil extraction or power generation Gas >10% revenue from unconventional gas extraction |
Finance for fossil fuels | None given | Exclude banks who are not taking action to align their institutional lending with the objectives of the Paris Climate Agreement |
High Emissions Transport | Don’t currently invest in any airlines or conventional auto companies | Exclude companies if they are investing insufficiently in electric or other renewable energy sources to transition their business to net zero |
Old growth logging | SCA (Svenska Cellulosa) | Exclude companies who log old growth forest except for conservation, fire risk or other acceptable forest management purposes. |
Nuclear fission energy generation & uranium mining | BHP Billiton | Exclude company (0% tolerance threshold). |
If you want a TL;DR on the table, it’s that overall, Australian Ethical is – as the name would suggest – a pretty ethical funds manager!
The existence of minimal thresholds means that UTS is held accountable to more specific numbers (seen above) while other universities can invest in companies of up to 49% as long as it’s technically not the majority of their revenue. While it would be incredible to have a 0% tolerance threshold for each category (especially fossil fuel mining and generation), the comparatively low thresholds to other investment managers is good to see. To have made this switch in 2022 whilst other universities are still playing catch up, shows that there’s positive change being made on the ground at UTS. UTS’ approach is transparent and something to be proud of – it’s comforting to know our HECS isn’t going directly into the fire heating our planet.