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ENVIRONMENTAL SUSTAINABILITY STAKEHOLDER/REFERENCE COMMITTEE

MINUTES OF MEETING 3/2015

Meeting 3/2015 of the Environmental Sustainability Stakeholder/Reference Committee was held at 10.00 am on 25 August in Room G21, 15 Innovation Walk at the Clayton campus of Monash University

1.  PROCEDURAL MATTERS

/ Documents & Action

1.1  apologies

Belinda Allison / Jemma Southgate
Gujji Muthuswamy

1.2  present

Those present were:
Paul Barton (Chair) / Meg Ralph(Secretary)
Nav Brah / Damon Rapke
Zachary Dorner / Nikki Silbert
Tony Hudson / Brett Walters

1.3  welcome

Paul Barton (Chair) welcomed new members and introduced them.

1.4  confirmation of minutes

The minutes of meeting 2/2015 of the Environmental Sustainability Stakeholder/Reference Committee meeting held on 12 May were confirmed. / 8/2015
Confirmed minutes to be posted at the Environmental Sustainability web site

2.  engaging communities

2.1  environmental, social and governance (ESG) factors in investment

The Chair introduced a discussion on the inclusion of ESG factors in investment portfolio selection and management. The Chair explained that this issue was currently being addressed by Monash, with a small working group of Council, chaired by Simon Crean, set up to draft a statement for the University Council and the Vice Chancellor to consider. The Chair added that this was a complex area dependent on the types of investments that organisations held and how the investment funds are managed.
The Chair invited Nav Brah, Engineering & Sustainability Manager from the University of Sydney, to speak on the implementation of the University's integrated ESG framework in its Investment Policy.
Nav explained that the process of developing the University of Sydney's ESG investment strategy commenced about 3 years ago, arising from the key governance considerations of management and prudence to manage the investment risk in certain industries, rather than a grass roots movement from the university community.
Nav noted that the University of Sydney investments are indirectly invested with external fund managers and explained the management structure.

2.1.1  Management of investment

·  The Investment & Commercialisation Committee reports directly to Senate, providing governance and oversight of investment.
·  The Investment Capital Management Team (6) reports to this committee, managing the investment processes for the University and making the external investment decisions.
·  The Mercer Responsible Investment team provides strategic investment advice to this team based on both capital return and ESG rating. Mercer has a 4 level ESG rating system for institutional funds and fund managers that they use in the advice they provide to the University of Sydney.

2.1.2  ESG Framework

The University of Sydney did not take the approach to divest from specific companies or specific industries as they preferred an integrated approach to influence fund managers and because that approach had resulted in adverse publicity for another university.
·  Under the ESG framework, the Mercer Responsible Investment team has been appointed as advisers as they have a breadth of experience across a range of funds.
·  Fund manager selection & monitoring incorporates Mercer ESG ratings.
·  A proxy voting specialist has been engaged to undertake advocacy acting on behalf of the University supporting ESG principles at share-holder meetings.
·  Annual reporting on ESG matters is required at least annually.
·  The University is aiming to improve its ESG rating of its investment portfolio with time.
The University of Sydney also has negative filters excluding investments directly involved in the manufacture of tobacco products and cluster munitions.

2.1.3  Discussion of the University of Sydney's ESG Framework

Paul Barton commented that the direct management used by the University of Sydney can result in additional cost. Nav replied that the fees were negotiated actively and that the funds were performing well and that the fees had not been questioned. He added that consideration of ESG factors would also lower the risk profile of the University's investments.
To a question from Brett Walters regarding the scrutiny of Mercer’s ESG rating system, Nav replied that the rating systems were assessed by the Investment Capital Management Team compared with other systems and funds, was independent, and that Mercer was a leader in the field. Their independence and the rating system also provide credibility to the University's position.
To a question from the Chair, Nav commented that the reception from the student body to the ESG Framework and commitment to reduce the carbon footprint by 20% relative to the footprint of its current listed equity composite benchmark had been positive.
Tony Hudson observed that he had no specific information regarding CSIRO's investments.
Paul Barton added that Monash University and CSIRO are in the unique position to undertake research on the rigour and quality of ESG rating systems and standards. Monash was presently identifying ratings and standards, but research had not as yet commenced.
To a query raised by Paul Barton about whether the investment markets would naturally divest from fossil fuels as ESG-sensitive funds are out-performing those with fossil fuels, Brett Walters commented that the pace of natural attrition was too slow and responsible investors should drive the process.
To questions from Zachary Dorner about the reduction in the carbon footprint of the investment portfolio, Nav replied that only the direct emissions of the companies in the investment portfolio were measured (Scope 1 and 2; no Scope 3), not the emissions from the sale of coal. He also explained that the amount of the carbon footprint reduction wasn't in the Investment Policy as it would change progressively and that progress in the reduction in the carbon footprint would be reported annually to the Senate.
Nikki Silbert clarified that the Fossil-Free group was requesting that the top 200 fossil fuel companies by size of reserves be excluded from investment, rather than investors having to look into the details of companies activities. / 9/2015

3.  Monitoring and review

3.1  environmental performance indicators

The Chair provided a summary of the draft environmental performance indicators for the first half of 2015.
The Chair reported that carbon emissions have trended down when compared to the same period in 2014, decreasing by 0.2% with the Gippsland and Monash Medical Centre campuses moving to other organisations. The University is aiming to keep energy consumption flat, even though the University is growing. This can be seen in the increasing gap between annual energy consumption and that calculated for business as usual in previous years.
Total potable water consumed has increased by 5% during the first half of 2015, in comparison with the same period of 2014. Brett Walters informed members that a storm water harvesting and distribution system that will produce 163 ML harvested water and distribution would assist to decrease Clayton campus water consumption in the future. Approximately 30% of total waste was recycled in the first half of 2015 with small annual decreases in total waste. The energy cost analysis shows cost saving of $1.6m last year due to energy efficiencies and generation.
The detailed analysis of energy consumption for the first 6 months of the year shows electricity has decreased by 2% with gas increasing, resulting in a decrease on carbon emissions due to the lower impact of gas versus brown coal generation.
The Chair reported that we were now reporting the cogeneration plant output. Nav Brah asked if the plant was co - or tri - generation, to which the Chair replied that it was cogeneration, the performance of which was continuing to be optimised. / 10/2015

4.  legislative impacts

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The Chair noted a range of legislative impacts, which included:

4.1  renewable energy target

Legislation to reduce the Renewable Energy Target had passed Federal Parliament in June, reducing the target from 41,000 to 33,000 GWh to reflect lower overall energy demand. Trade exposed industries have been made exempt from the target and two-yearly reviews have been replaced by an annual statement by the Clean Energy Regulator.

4.2  australia's national inventory report 2013

The Department of Environment released Australia’s National Greenhouse Accounts representing national, state and territory as well as industry emissions estimates for 1990-2013.
Tony Hudson commented that the focus of the current government appeared to have moved from environmental legislation as CSIRO's reporting requirements have decreased from government agencies.

5.  next meeting

The last meeting of the committee for 2015 is scheduled for 10 - 11.30 am on Tuesday, 20 October. Members were invited to provide suggestions for topics of interest to be discussed at the last meeting of the year.
The meeting will be held in Room G21, 15 Innovation Walk, at the Clayton campus of Monash University and video conferenced to a number of participants.

Distribution List:

Paul Barton (Chair) / Director, Business Support, Facilities and Services, Monash University
Belinda Allison / Education for Sustainability Program Manager, Monash Sustainability Institute, Monash University
Nav Brah / Engineering & Sustainability Manager, Campus Infrastructure & Services,The University of Sydney
Zachary Dorner / Postgraduate student representative, Monash University
Dr Tony Hudson / Environmental Sustainability Manager, CSIRO
Jun Li / Acting Building Performance Analyst, Planning, Facilities and Services, Monash University
Joanne Ly / Engineering Support Officer, Facilities and Services, Monash University
Gujji Muthuswamy / Industry Fellow, Faculty of Business and Economics, Monash University
Meg Ralph (Secretary) / Project Manager, Business Support, Facilities and Services, Monash University
Damon Rapke / Category Manager, Travel and Fleet, Strategic Procurement, Monash University
Nikki Silbert / Environment and Social Justice Collective representative, Monash Student Association
Jemma Southgate / Environmental Manager, Westpac Banking Corporation
Brett Walters / Manager, Engineering and Sustainability, Planning, Facilities and Services, Monash University

151006_ESSRCMinutes 3_2015.docx AUTHOR: Business Support, Facilities and Services Date: 27/07/2015