At our recent University Chair of Audit Committee roundtable, we were joined by Professor Susan Lea, former Vice Chancellor at the University of Hull where we discussed Environmental, Social, and Governance (‘ESG’) issues in the sector. The below sets out some of the areas which were discussed.
Why should universities be at the forefront of climate action?
This year it has been difficult to keep up with all of the global issues having to compete for the attention of world leaders, but as we get closer to COP 27 we must look at the latest report from the Intergovernmental Panel on Climate Change (IPCC). The IPCC continues to warn that our ability to limit global warming and avoid the worst impacts of climate change will be beyond our reach without rapid action across all sectors of society. With only 30 months left to ensure that global greenhouse gas emissions start to fall by 2025, the IPCC emphasises that our planet is on its final warning. It is difficult to comprehend this gargantuan challenge, appreciate the urgency of it, and understand what our role is as universities. It is a complex matter and requires a concerted effort from all areas of society, from national governments down to individuals.
Universities can play a strong role in positively sculpting the climate agenda at home and internationally. Higher education takes on the difficult task of starting dialogues about different disciplines, different life experiences, and different knowledge traditions. Thus, understanding the causes and impact of climate change and developing solutions to ecological, economic, and social crises.
We know that universities around the world are already playing a role in shaping nationalised and globalised responses to the climate emergency in a wide variety of ways including:
In addition, included in the important role universities play is public and civic engagement. So how are we supporting the development and regeneration of our communities, particularly in relation to climate change and the pursuit of a zero carbon future?
Universities are in the business of education, and the students are at the heart of this. They will be suffering the effects of climate change as the next generation, and many of them are passionate and committed to tackling the climate emergency. The students are putting pressure on us to be more aggressive in terms of our goals; it is not just coming from the leadership teams, which of course is where the actions are primarily going to be taken. The more aggressive universities are in terms of our targets, the more they will be seen as a university that is leading the way and that will help attract undergraduates going forward. It is important for universities to have a profile which is appealing to new students.
It is tempting to say the sector is already doing a lot providing leadership through its academic mission, and providing response to climate emergency in its own environment, we must always consider whether this is enough.
Another consideration is looking at what other universities around the world are doing regarding climate action, and implementing these course of actions in the UK. However, there isn’t an exemplary institution or an exemplary country where we could point to them and say if we all follow their lead it would be fine. Many are trying to balance the cost though of improving their ESG profile because there is always a financial cost, and no university has unlimited financial resources to draw on.
Thus, how do universities balance that imperative against a constrained resource envelope? We know there is no new money here, and the government is not providing the money. We also know that universities are facing rising costs, so it really is challenging. Hence, sharing that best practice among ourselves and managing that dialogue is vital.
What does good look like?
This is made more difficult because there is a plethora of challenges. There is climate emergency, green economy just transition, net zero, carbon reduction etc so when we are talking about sustainability or environmental sustainability, are we talking about the same thing, and how do these different concepts fit together? Furthermore, how do we come to a coherent framework that helps us to address climate change with associated metrics – which will mean we can measure our performance and assure audit and risk committees that we are delivering against those objectives.
Where do we look for guidance?
The Office for Students (OFS) has taken limited action regarding sustainability; a framework for reporting carbon emissions is now promised by 2024 with targets and institutional progress to be published from 2025.
The sector did think the Department for Education’s recently published Sustainability and Climate Strategy might provide guidance but that document focussed primarily on schools with a passing reference to higher education. We have Confronting the Climate Emergency, published by Universities UK which has six actions to which all institutions have committed, which includes the setting and publishing of targets of scope 1, 2 and 3 of carbon emissions. Institutions have The HE Climate Action Toolkit to guide their wider response to the climate emergency, which was published in 2020 by the Climate Commission for UK Higher and Further Education. There is a similar guide for university chairs published by the Commission and the Alliance for Sustainability Leadership in Education which offers institutions the opportunity for leaders to complete a sustainability scorecard. Chapter Zero offers guidance for Boards in assessing their effectiveness in tackling net zero.
In the financial space, things are moving forward. There is the streamlined energy and carbon reporting framework, which is extended greenhouse gas reporting requirements, and is talking about climate related financial disclosures, many of which are still optional. There is also ISO 14001, which is the international green standard, in relation to buildings. So, there’s quite a lot in the carbon space, but it’s fractured.
Beyond that is the point around students. These are a generation whose lives will be affected. They are looking to governments, businesses, and universities to step up the scale of their climate action. In response to the 2020 Sustainability School’s Survey carried out by the Students Organising for Sustainability UK, 9 out of 10 respondents agreed that their place of study should actively incorporate and promote Sustainable Development. Furthermore, 84% of those wanted to see Sustainable Development promoted in every single course. Education for sustainable development is another important aspect, and this is a UNESCO concept. However, it is not teaching students about sustainable development, it is equipping them for sustainable development. So, we need to equip them with the knowledge, skills, and agency to address global challenges. While this is a big task, It is empowering them to take informed individual and collective action to change society.
Universities can benchmark their efforts against the QAA and Advance HE published guidance for universities on incorporating Education for Sustainable Development (ESD), and the UN’s 17 Sustainable Development Goals; as well as the Times Higher Education impact rankings.
It is easy to make promises, extol virtues, and sign pledges, but the reputational risks are high.. The strategic imperative needs to be led from the top and it needs to be a framed, institution wide approach. Efforts have to be made to ensure that the university’s position is widely understood across the institution, enabling people to take ownership and appreciate how they might contribute.
What are the matters of concern for audit and risk committees?
There isn’t a huge amount in the compliance space around this area yet, it is more around the moral imperative and the position of universities with institutions concerned with service to society. Audit and Risk committees need to be aware of reputational risks, for example, either through accusations of greenwashing or indeed failures of practice.
We’ve already talked about promises and not delivering against them. Collaborative links can be an issue, where partners may not share our sustainability credentials. Thinking more about those partnerships whether we’re prepared to engage with them. Procurement and new stakeholders – are our supply chains right for our organisation from an ethical perspective? Some universities have put in protocols for new suppliers but how far back do you go with existing suppliers that you have? In terms of finance and funding – who is funding the work and thinking about financial investment policies which are ethical moving forward? Most of us are at the early stages of getting to grips with everything so we’re in the objective setting, planning and monitoring phase. We must balance urgency with realism given resource constraints. Using internal audit mechanisms to provide assurance of governance – how do I know, how can I be assured that these things are being considered, discussed and monitored and progressed through our organisation. Those mechanisms are useful in terms of building confidence that strategic intentions and targets are being delivered against. Lastly, what is the contribution of the university itself – how are you working in your place to impact those communities that we serve.
We need to continue to ask ourselves:
The importance of authenticity and transparency
The overwhelming response from our virtual roundtable attendees was that universities should be at the forefront, and not just because it is a good thing to be doing but because it is what the students are demanding.
For most universities, getting more students through the door is very important which is a big driver for change. In terms of guidance, there is a lot available and that is part of the problem; it grows exponentially every day talking about different things.
The importance of authenticity, transparency and honesty and holding everybody to account is critical – and not being caught in that greenwashing trap is vital. In terms of what audit committees should be concerned about centres around reputational risk including making sure there aren’t undelivered statements.
For any further information, please contact Carol Rudge.
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