HKUST the First to Launch New ESG Investment Policy for its Net-Zero Carbon Goal

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by KnowESG
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The Hong Kong University of Science and Technology (HKUST) is the first university in Hong Kong to promise to stop investing in fossil fuels by creating an environmental, social, and corporate governance (ESG) investment strategy. This shows the university's commitment to being a leader in sustainability in the region and beyond.

As an investor with a long-term vision, HKUST will adopt a Net-Zero Carbon Investment Strategy by working closely with investment managers for whom ESG considerations are integral and manifested throughout their investment process. HKUST seeks to halve greenhouse gas (GHG) emissions by 2030 from the baseline of 2021 by gradually removing investments in fossil fuels from its “in-scope assets” – mainly public equities and public fixed income, which made up the majority of HKUST’s long-term investment portfolio. At the same time, the university will allocate around 5 per cent of its investment to companies that offer climate solutions.

This strategy is intended to ensure that the investment approach is consistent with the scientific consensus on climate change and the Paris Agreement goals, as implemented by the Science-Based Targets initiative. By 2030, 100% of in-scope assets will be invested in companies that have adopted Science-Based Targets.

The strategy has three broad goals:

  • To ensure the risks and opportunities arising from a low carbon transition are reflected in the way investments are chosen for the portfolio.

  • To seek out investments whose activities can profitably accelerate or otherwise support the low carbon transition.

  • To support and encourage all businesses to adopt business plans and strategies consistent with the goals of the Paris agreement.

Mr. Davis BOOKHART, Director of the Sustainability/Net-zero Office at HKUST, said, "This is in line with the university’s core beliefs and its ambitious climate and sustainability objectives. Investment strategies that do not align with HKUST’s core beliefs present serious risks to its reputation and standing within the community. We believe the new ESG investment policy will not only minimise such risks and facilitate good decision-making but will also help the university uncover new opportunities for value creation.”

External investment managers commissioned by the HKUST will be required to provide a well-explained, well-documented and evidenced-based process on how they incorporate climate change risks and opportunities into the investment portfolios. They shall also be active in proxy voting and engage with portfolio companies to emphasise the interests of long-term shareholders in line with ESG considerations.

HKUST has long been committed to building a sustainable culture and environment. On top of this new ESG policy, which takes climate change into the university’s investment decision-making process, HKUST has also introduced a whole range of measures - including curriculum and co-curricular activities, embedded with sustainability. The University’s 2028 Sustainability Challenge, for example, set aggressive targets of cutting energy consumption by 15 per cent and waste to the landfill reduced by 75 per cent as compared to the 2014 baseline year.

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Source: HKUST

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