Energy related investments and fossil fuels
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.
Recent 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 welcomes the resolutions, having been focused on actively managing the OEF 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, OUem will now work with the trustees of the Fund to implement these resolutions in an appropriate manner.
Lower energy investments compared to other investors
The outcome of our investment philosophy and active investment approach is that the OEF has few fossil fuel investments compared to other investment portfolios. At 31 December 2019, just 0.03% of the portfolio was held in fossil fuel public equities. There is an additional 0.5% held in private strategies. This is significantly lower than fossil fuels’ natural weighting in public equity markets. By way of example, had the Fund been passively invested over the same period in the FTSE 100 Index or MSCI World Index, the fossil fuel exposure would have been 10.5% or 3.6% respectively.
Backing energy efficient groups
In 2010, we invested in the fund of a group 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 and Institutional Investors Group on Climate Change (IIGCC)
OUem is a member of the CDP (Carbon Disclosure Project) and the IIGCC, a group of institutional investors focused on climate change.