Acting on the net-zero carbon imperative
For decades, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) has warned that to avoid catastrophic climate-related risks to our natural and physical environment, we must limit the global rise in temperatures to no more than 1.5°C above the pre-industrial era. In its most recent report in 2023, the IPCC warned that not only must global carbon emissions decline by nearly half by 2030, but that three to six times the current climate investment is needed to rapidly reduce climate emissions. It is clear that to reach net-zero by 2050 will require large-scale mobilization of public and private capital, including philanthropic funding and investments.
With this Climate Action Plan, McConnell is publicly committing to the goal of net-zero greenhouse gas (GHG) emissions for our investment portfolio by 2050 or sooner.
We believe this is an important and necessary step in ensuring that all our assets work in harmony towards advancing our mission.
Founded in 1937 by J.W. McConnell, the McConnell Foundation works to create a resilient, inclusive and sustainable society that can successfully address its complex challenges. To that end, the decision to decarbonize our investment portfolio builds on a long history of funding and investing to address the climate crisis. As climate is one of our three thematic focus areas, we allocate roughly $8 million annually through charitable contributions to Canadian organizations addressing the climate crisis. We aim to contribute to Canada’s transition to a net-zero carbon economy in a way that produces sustainable and equitable outcomes for all. In other words, we are aiming not simply for a “transition” but a “just transition”, seeking to put equity at the centre of our climate funding. Through a systemic approach, we support organizations working on climate mitigation solutions, those promoting sustainable finance among financial institutions and asset managers and supporting organizations representing communities that are the most vulnerable to climate change.
Our commitment to net-zero carbon is a key component of our new investment strategy, which aims to allocate 100% of our $655 million endowment (as of Dec. 31, 2022) towards impact investing over the next five years. As stewards of capital, we have a fiduciary responsibility to consider all material factors that may impact the risk-adjusted returns of our investments, including climate-related financial risks and opportunities. We are also committed to increasing our investments in climate solutions, which currently represent approximately 30% of our impact investing portfolio, and to engaging with fund managers, companies and market actors to encourage them to develop credible climate plans. Finally, we are also divesting our portfolio of all companies that derive at least 10% of their revenues from fossil fuels by the end of 2023, considering climate factors as part of our due diligence and asset management processes and collaborating with other investors and stakeholders on climate action.
We are pleased to join the growing group of global investors who are committing to net-zero by 2050. In Canada, we have been inspired by the Caisse de Dépôt et de Placement du Québec, the University Pension Plan of Ontario, and in the international philanthropic sector, by the McKnight Foundation and The David Rockefeller Fund, who are leading the way in this work. We hope that by making this commitment, and by sharing what we learn as we implement this action plan, others in the philanthropic sector and in capital markets will be inspired to align their assets in support of a healthy climate.