I have been trying to write this piece for a few weeks now. Navigating through writer’s block while trying to make sense of numbers, charts and tables has been a whole ordeal - and a not-so-exciting one. And yet, as I was walking down the Environmental Science Centre one cold Wednesday morning, coffee in hand and mind fixed on finding a will to live, I caught a glimpse of the name ‘Petro-Canada’ proudly engraved on what seemed like a gilded panel out the corner of my eye. These neatly carved names shamelessly staring at me. As I stopped, and looked more closely, I saw other names like ‘Toronto Dominion Bank’, ‘Bank of Montreal’, ‘Imperial Oil Limited’, ‘TransCanada Pipelines’ among many others. These were Trent’s patrons, benefactors, partners. And there they had been, hiding in plain sight, audaciously standing like a monument, while a couple of feet away, articles of Trent’s grand ecological achievements and research were pinned on the boards extending all across the hallway. This was the perfect metaphor. The perfect paradox. 

Once on my quest to figure out where Trent's money comes from and goes, reading the university’s financial statements, budgets and projects, I found myself lost in translation, discombobulated at the sight of numbers, technical language and vague descriptions. However, little by little, it all started to fit in together, allowing me to dive deeper into the long-forgotten question, “Where does Trent’s money go?”. Who are we, as students, supporting by coming to this school?  In what ways does Trent continue to invest in fossil fuels and in what ways is the University working towards climate action? 

Well, let me give you an idea. 

Although university financial statements tend to maintain a certain amount of detail discretion,  obstructing useful insights to important analyses,  I was nonetheless able to dive into their most recent money and resource allocations. 

As you may (or may not) know, Trent’s Financial Statements provide the assets, liabilities, revenues and expenses, as well as any other transactions involved in the university’s operations. The money that I am focusing on specifically, is that which is invested. Meaning, money that is saved and annually invested for future purposes. 

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Understanding Post-Secondary Institutions Financial Statements 101: 

Generally-speaking, post-secondary institutions tend to have funds such as operating funds that the university can use for any purpose consistent with the overall goals of the institution, such salaries and benefits; capital funds (which are essentially long-lived assets like lands, buildings, library collections, etc.) and endowment funds, which occasionally provide funding for things like general operating elements, but more often than not, for the funding of specific programs. Endowments usually come in the form of donations, contributions or legacies/inheritance. 

These funds are usually divided into two main categories: unrestricted funds and restricted funds. Unrestricted funds generally include things like government grants, tuition fees, as well as revenues from what we know as ancillary services (these are things like catering services, our Trent Bookstore and student residence services). This category includes the operating funds that can be used for any purpose that falls in line with the University’s mission. These usually translate to the operating expenses or to a particular project. For example, most of Trent’s revenue coming from unrestricted funds is usually spent on operating costs including things like salaries, services, building maintenance, etc. Restricted funds on the other hand, can only be used for specific purposes identified by a donor. These involve things like plans related to the capital funds. 

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Trent’s institutional investment: how does it work?

In reading Sustainable Trent’s 2014 report on the Analysis of the Legal and Policy Implications Related to Investment and Divestment, I found out that Trent manages four different funds: the Pension Fund (which is where Trent’s biggest chunk of money lies), Supplemental Retirement Arrangement Fund (SRA), Special Investment Fund and Endowment Fund. These funds are divided into two different investment policies: one for the endowment funds and another for the other three, which we can generally refer to as ‘pension funds.’ 

All funds were managed as TD Asset Management (TDAM) pooled funds. 

This was the case in 2012, and continued to be so in 2021, according to the Board of Governors Open Session on June, 21, 2021. This, however, is not the case in 2022 for pension and retirement funds. Most of the endowment funds nonetheless continue to be managed through these pooled funds.

At this point, the student-exhausted mind is probably wondering, what am I here for? And why the hell have you (me), a person who barely understands how taxes work, let alone the investment strategies of a whole institution, spent almost four weeks figuring this out? 

Well, think about this for a minute. 

According to Trent’s Operating Budget Report for the years 2021-2022, Trent was anticipating an increase in student enrolment by 1.3%. That is an increase of 146 full-time equivalents from 2020-2021. Trent’s student enrollment population has been steadily growing for years. In the academic year of 2020-2021 for example, it grew to 11,068 full-time equivalents, which meant a budget increase of 4.6% and an enrollment increase of 6.9% from the previous academic year despite the ongoing COVID-19 pandemic. 

But why does this matter? 

 The university’s financial statements of 2021 expose how student tuition is a key driver of Trent’s income with an equivalent of 45.3% of Trent’s overall 2021 revenue and 56% of Trent’s operating fund - a percentage that will only increase as the student population rises. Shouldn’t this be enough of a reason to allow us as students to take a greater role in certain decision-making processes? 

Understanding how the university operates and what it does behind the scenes is crucial in being able to make impactful change from within the system. By expanding our knowledge on how the university operates, we are able to act as catalysts for change. We infiltrate the system and explode from the inside. And this is why expanding this knowledge coded with daunting,  pompous vocabulary and little to no description to the student body is of great importance. Especially as the threat of climate change continues to worsen. 

Navigating information about Trent's institutional investment in the oil and gas industry can be difficult, but as the 2014 Sustainable Trent Report explained, TDAM pooled funds denote a link between them through its affiliation and investment bodies in banks. In this case, through the Toronto-Dominion (TD) Bank, one of Canada’s notorious ‘Big 5’ - the largest banks that dominate the industry in Canada. 

In 2021, the report Banking on Climate Chaos identified TD, RBC, CIBC and Scotiabank to be among the top 25 funders of fossil fuel companies between the years of 2016-2020. To further explain the severity of this, a 2021 GreenPeace report exposed how Canadian banks provided over thirteen times more financial support to the fossil fuel industry than the federal government has spent on achieving its Paris climate commitments. Although according to this report, Toronto-Dominion bank has decreased its total exposure to fossil fuel company shares, shrinking the value of the bank’s oil and gas investments by 19% in the last five years, another report released in 2020 by the Corporate Mapping project called Fossilized Finance found that Canada’s Big Five banks increased their lending to the fossil fuel industry by more than 50 per cent—to $137 billion in 2020. TD Bank led the pack with a lending increase of 160 per cent.  

When asking Trent Communications via email if their TDAM pooled funds meant a direct affiliation or active involvement with TD or any other of Canada’s ‘Big 5’, the question was subtly avoided and redirected towards the fact that the University’s investments policies for endowment funds are currently under review. 

However, things do not necessarily look so bleak when it comes to Trent’s investments. As I will show, despite the University’s unwillingness to divest, its investment strategies are slowly shifting towards an active investment. Active investing refers to a specific investment strategy that involves an ongoing buying and selling activity by the investor. This means that investors are continuously purchasing investments with the purpose of monitoring their activity in order to exploit profitable conditions in the market.

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Endowment Funds: 

Trent University’s endowment funds primarily consist of donations. The endowment principal amount is maintained in perpetuity and it is the income it produces that is used in accordance with the donor’s desired purposes.  According to the Board of Governors Open Session held in October 2021, the University’s endowments consist of more than 900 funds established by donors, with unique individual purposes for distributions. Overall, there are two endowment funds: the general endowment and the Socially-Responsible Investment (SRI) sub-fund. The latter allows donors to choose if they want a fund whose investment aligns with environmental, social and governance goals. In other words, choose an investment that goes in accordance with ESG strategies. 

The performance of both the general and SRI sub-fund, according to the open session, exceed the 4% target for real rate of return (which is the amount that the donated capital needs to earn to be able to offset the impact of inflation and investment fees), achieving 17% for the general endowment and 21% for the SRI fund. With this, over $2.5 million was distributed last year to support students with scholarships and bursaries, academic programs, athletics, Bata Library, experiential learning, student services and college programming.

In an email to Arthur, Trent Communications also expressed how in October 2021, the Board of Governors also endorsed moving all endowment funds to an “actively managed portfolio, with a focus on ESG criteria in the investment strategy.” 

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ESG strategies vs. Divestment

‘Environment, Social, Governance’ - this is what ESG stands for. It refers to these factors that may impact or be influenced by corporate or investment activities.

Let me give you some examples. Environmental factors may include climate change, greenhouse gas emissions, biodiversity, water and air pollution. Social factors involve human and labour rights in operations and supply chains as well as equity, diversity and inclusion. And finally, governance factors involve corruption, corporate oversight, risk management, shareholder and stakeholder rights, among many others. These factors are then considered in decision-making processes.

In 2015, the Board decided to establish the SRI sub-fund of the endowment, which would be actively managed through ESG criteria. This ESG investment strategy, for the University’s endowment fund, was guided by the United Nations Principles for Responsible Investment. 

Since then, Trent has carefully tread the way towards a more environmentally-friendly and sustainable approach to investment. This move towards an active investment strategy has gone from only covering around 10% of the then-existing endowment fund assets in 2015 towards a ‘desire’ to apply ESG principles across all endowment funds in 2021. Trent Communications explained that this was a result of  “considerable analysis of returns given current market conditions and the desire to apply ESG principles across all endowment funds.” This inclination towards a more ‘sustainable’ investment strategy however, appears to be a result of its safety and profitable possibilities more so than an ethical appeal towards the urgency of a radical shift.

With almost a decade of students voicing their concern for global warming and their desire for Trent to fully divest from fossil fuels, some are left wondering if ESG is a half-measure. In a Twitter thread, Alyssa Scanga, member of levy group Sustainable Trent, explains how “low-carbon” investing or ESG strategies might not be as promising as they may seem at first glance, and rather, bring forth false solutions to the problem of fossil fuel investment. This is because ESG is very limited when it comes to actually addressing environmental, social and governance issues as the strategy itself is faulty. 

Let me explain why: 

As explained in the article Scanga attached to her thread, investors rely on a number of ESG rating agencies to assess and compare public companies' performances. According to an analysis done by the American Council for Capital Formation, ESG ratings are inherently subjective. As Scanga so thoroughly  explained  in her thread, what this means is that “ESG ratings are not standardized or regulated.” As a result, rating firms use different methodologies and metrics that lead to inconsistent, and in Scanga’s words, “wildly contradictory” ratings, allowing companies to claim that they are leaders in ESG while in reality, they are not adhering to consistent comparative standards. This suggests that rather than ensuring actual ESG practices are being implemented, these ratings are “likely to be a reflection of availability of information.” Looks like ESG strategies might be yet another ecological mirage. 

In the same email, Trent Communications continued to make the case that the Board decided that “a move toward active investment would better allow the University to direct our investments to fund managers who have strong, industry-leading approaches to ESG, and is the most appropriate way forward.” They then proceeded to explain how “active engagement with industry and support of research into alternatives and mitigation strategies allow the University to continue its important role as an active solution provider to the negative impacts of fossil fuel usage.”

Some of their efforts towards the reduction of the environmental ramifications of campus operations include a partnership with Ameresco to install various energy efficient upgrants on the Peterborough campus in order to reduce its carbon footprint, the Forensics Crime Scene Facility, opened in 2020, which aims to be Canada’s first zero-carbon building certified by the International Living Future Institute, and the approval of the Trent Lands and Nature Areas Plan, approved in February 2021, which included Trent’s commitment to maintain 60% (only 60%, really Trent?) of the campus lands as natural areas. In regards to this last example, Trent has also secured more than $420,000 in funding to hire a lands stewardship officer who will work with faculty, students, the community and First Nations to implement active management plans to support biodiversity and a healthy ecosystem.

But it was only in October 2021 that the Board of Governors endorsed the extension of ESG policies to all endowments by moving them to an actively managed portfolio. Before this, researchers at the University of Saskatchewan found in 2019 that Trent has $34 million of its $41 million Endowment Fund tied up somewhere in the fossil fuel life cycle, rejecting student’s vote to support divestment and creating an advisory committee instead. 

It is also important to consider that ESG investment principles have been only applied to some of University’s endowment funds, as well as ESG  requirements in their hiring criteria for new fund managers. The Board’s desire and endorsement in implementing these across all endowment funds, however, remains to be seen. 

But what about the pension funds?

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Pension Funds: 

As mentioned earlier, Trent’s Pension Funds hold most of Trent’s invested/endowed money. 

As of January 1, 2022, Trent University’s Faculty Association (TUFA) Pension Plan and most of the retirement funds have been transferred from these TDAM pooled funds into a new jointly-sponsored pension plan called University Pension Plan (UPP). In a jointly-sponsored pension plan, the pension is managed by a board that has equal representation from the employers as well as the employee groups. 

Alongside other post-secondary institutions like Queen’s University, the University of Toronto and the University of Guelph, Trent’s assets will be now managed in accordance with UPP's investment policies. As presented on their website, their board and leadership team represents Canada’s top voices in the pension and investment sectors and is led by Barbara Zvan, a recognized leader in sustainable finance. The pension plan’s investment policies revolve around a framework that will incorporate ESG factors in their investment management and stewardship activities. According to the UPP’s Responsible Investment Policy document, responsible investment principles (PRI) are established by a United-Nations-supported international network of investors. 

Yet, as a relatively new initiative, some members remain skeptical. According to an article by University Affairs, Marcus Taylor, a Queen’s associate professor in global development studies said he and his colleagues are concerned about green-washing by taking a ‘watered-down approach’ to divestment. In his own words, “The initial statement on its policies could have been cut and pasted from the most mundane kind of mid-2010 policy.” He continues, “We’re in 2022 now and our concerns about climate change are at a very different point now. There’s a real opportunity here to set up something not bogged down by institutional baggage, but to do something really new.”

Nonetheless, high hopes surge among others as they see this new pension plan as a glimpse of hope towards a more sustainable future. The University Affairs’ article also exposed how a group of faculty members from the three universities have sent two signed research documents to the University Pension Plan for greater transparency around climate strategy as well as a commitment to divest from fossil fuels by 2025 and to achieve a zero-emission portfolio by 2040.

I had the pleasure to interview Ray Dart, Business professor at Trent and faculty member on the Board of Governors, in an attempt to gain greater insight into how to go about this research. After a long conversation enabled by his joyful nature and friendly character, it was clear to me that the issue of climate change and the desire for radical institutional transformation towards sustainability and climate mitigation is deeply rooted in the hearts of both students and faculty alike. 

During an email exchange with Dart, the professor expressed his excitement about Trent’s decision to join UPP. After attending a webinar on UPP’s investment strategy, Prof. Dart expressed his hopes of this being a step towards real change. He wrote, “Honestly, I have never heard of a big institutional investor like this that talked so articulately and significantly about investment and sustainability.” In another email he continued, “The webinar last week made me extremely hopeful about this initiative being thoughtfully committed to learning to be a part of a sustainability solution.”

Indeed, navigating the vast world of institutional investment can be overwhelming. But the fight towards a more sustainable future and more responsible investing continues. Trent University has come a long way in their path towards sustainability and climate change mitigation through new initiatives, investment portfolios and fund managements. However, in the past there has been concrete evidence of Trent’s ties to the fossil fuel industry through investment practices. And so it is critical to ask ourselves “Is this enough?” Are the institution’s current policies around investing ethically rigorous enough to ensure active steps towards addressing climate change and the threat that it poses to the future of this and  upcoming generations? Do they continue to place profit over the planet?

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