The AODP has found a shocking lack of transparency and preparedness for climate change risk, with 98 percent of universities doing little to nothing about the financial implications of the transition to the low-carbon economy.
Almost all universities invited to participate in the Asset Owners Disclosure Project’s (AODP) Global Universities Index received poor ratings, meaning they are completely exposed to the risk of stranded assets and physical impacts of climate change.
The AODP’s 2014-15 Global Universities Index (GUI) has revealed a catastrophic picture of inaction by almost all universities invited to participate, with 98 percent of universities invited to participate receiving a D-rating for abysmal management, or an X-rating, for having no publicly available information regarding their management of climate change risk.
“This is the first survey in the world to look holistically at universities’ endeavours to manage the systemic risks posed to their portfolios,” said Dr John Hewson, Chair of the AODP.
The US led the world in the ratings, being the only country to have univerisites receive ratings above a D. Indeed, the US occupied all of the top 10 university position, and 17 of the top 25 university positions, despite the high proportion of D rated universities. However, 93 percent of universities in the US received a D- or X-rating. All universities from other jurisdictions fared extremely poorly.
“It is shocking that universities – thought to be at the cutting edge of innovation and problem-solving – cannot grasp the simple mathematics of wasted capital and the need for more transparency in investing, not less,” said Dr Hewson.
Universities in the UK and Australia were rated poorly, despite the long-running divestment campaigns in both countries having intensified in recent months and a swathe of research produced by these institutions indicating that the risks that climate change pose to financial markets are significant.
“Oxford University, Cambridge University, the London School of Economics, University College London – their academics are leading the discussion on climate change, risk and stranded assets, yet none of the universities have a plan to safeguard their finances,” said Dr Hewson.
“Universities must show that they have learnt the lessons of the Global Financial Crisis and manage the approaching sub-clime crisis transparently.”
Only five universities globally responded to requests for information.
“The US-China deal and positive outcomes from the UN Climate Summit and COP20 indicate that the 2°C limit to global warming may be imposed. Universities, like any investor, must ensure that they are prepared for the stranded asset risk that this heralds,” said Julian Poulter, Chief Executive Officer of the AODP.
“Many of the universities that we have rated lead the world in academic rankings but are lagging well behind pension funds and insurers in managing climate risk,” Mr Poulter said.
278 universities were invited to participate in the GUI.