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Climate change and fossil fuel divestment

The Oxford Endowment Fund is designed for the perpetuity endowment of charitable investors. For the University of Oxford, the endowment supports one of its founding objectives, to sustain academic freedom. The large majority of scholarships and many research posts are funded in full or partially from the endowment. A diversified pool of assets gives the best chance of achieving an investment return to provide an income both for beneficiaries today, and for future generations.

Congregation’s climate change resolutions
In April 2020, Oxford University Council accepted a motion proposed to Congregation of three resolutions focused on climate change and the University’s investments. Full details can be found here: Oxford Gazette. OUem welcomed the resolutions, having been focused on actively managing the Oxford Endowment Fund over the past decade to ensure that, as an investor, we are part of the solution to climate change and sustainability. As the University is the largest unitholder in the Oxford Endowment Fund, following appropriate authorisations, we worked to implement these resolutions across the Oxford Endowment Fund and the University’s Capital Account. In November, the University appointment Huw van Steenis as an Investment Committee member focused on climate-conscious investment. From 2021, the Investment Committee will publish its Socially Responsible Investment Report to Council publicly, to keep members of the University informed on this area.

Divestment from fossil fuel extractors
The outcome of our investment philosophy and active investment approach is that the OEF is effectively divested from fossil fuels. At 31 December 2019, there were no direct investments in fossil fuels and just 0.03% of the portfolio was held indirectly in fossil fuel public equities. Further to this, OUem has developed a new Fossil Fuel Screened Equity Index Fund with BlackRock to formally divest the University’s Capital Account from fossil fuels.

Backing energy efficient groups
We have previously worked with groups to back the development of products that fit our specific ESG requirements. In 2010, we invested in a fund of Osmosis Investment Management, focused on companies’ resource metrics on the basis that those which minimise their water, waste and energy use will outperform less prudent peers. This followed significant research into the issue of carbon emissions, the inevitable reduction on the dependence of fossil fuels, and how this could be implemented to generate returns for the OEF. We were their first institutional backer and, in 2011, we invested in the management company at the early stages of their journey. This group now manages over £1bn for institutional investors globally including groups which are now the most vocal proponents of ESG. We backed the company’s next phase of growth in 2019, and were subsequently followed by a leading sustainable investor, eight years after our initial investment.

CDP, Investor Forum and Institutional Investors Group on Climate Change (IIGCC)
OUem is a signatory of the CDP (Carbon Disclosure Project), a member of the Investor Forum and a member of the Institutional Investors Group on Climate Change.