Oxford University is a world leader in the battle against climate change.
Our researchers have played a large part in developing the understanding of climate change and its link to man-made carbon emissions. Today, the Oxford Energy Network, an interdisciplinary group of more than 180 senior researchers, works to tackle the social, economic and political challenges of sustainable energy for all. Meanwhile, the University’s Environmental Sustainability Policy has been shrinking the carbon footprint of our considerable estate since 2008. We have set ourselves the target of reducing our carbon emissions by one third by 2021 and have ring-fenced £14.6 million to be spent on carbon reduction targets.
Last year, Oxford University Student Union (OUSU) asked the University to consider on what else could be done to counter climate change through the management of its endowment fund.
The endowment, or the Oxford Funds, exists to invest donations to the collegiate university for education and research, now and in the future. The Funds are managed by a University subsidiary, OU Endowment Management (OUem), which is supervised by the University’s Investment Committee. The University is the legal trustee of the Funds, making investment policies on behalf of itself, the 27 colleges and other collegiate University members who are investors.
The University’s executive governing body, Council, as trustee, has consulted on the issue and now considered the results. It has concluded that OUem already has robust mechanisms to ensure environmental and social factors are fully and properly considered in its investment decisions. However, given the risk of climate change to the environment and society, Council has decided to strengthen further OUem’s engagement with and reporting of the issue.
The Council has therefore agreed the following:
• Council encourages OUem to maintain its rigorous assessment of potential investments across a number of risk criteria, particularly social and environmental impacts, alongside other investment criteria. Council recognises that OUem’s Governance Policy is designed to avoid investments in sectors with the highest environmental and social risks, leading to its present situation of no direct holdings in coal and oil sands companies – one of the key points in the OUSU representation. Council has asked OUem to maintain this position and avoid any future direct investments in coal and oil sands.
• Council supports the continued inclusion of a broad range of energy investments with The Oxford Funds, where financially prudent. The Investment Committee will report annually on its voting decisions and how OUem has engaged with fund managers across all sectors.
• Council has asked OUem to continue to improve reporting on and communication of its investment strategy, including on its website and in its annual report.
As a further action, Council has also asked its Environment Sustainability team to report annually on the carbon usage of sample groups of university members and on the progress towards institutional carbon emissions targets.
The Council was clear that OUem already has a careful and considered approach to climate change. It has thorough screening and due diligence processes designed to select investments that produce long term high returns but also avoid high social and environmental risks. For this reason, the Oxford Funds already hold no direct investments in coal and oil sands. Further, the Funds hold no direct investments in the energy sector.
OUem prefers investing in fund and investment groups with holdings in a concentrated number of portfolios. Once investments have been made, OUem maintains close and frequent engagement with fund managers on range of issues, which include social, environmental and reputational concerns. As a consequence, OUem has a thorough understanding of the sector exposure of the Funds. As at 31 December, the Oxford Endowment Fund stood at £1.7 billion, with an estimated 3 per cent exposure to the wider energy sector. This comprised 1.7 per cent in exploration and extraction, 0.2 per cent in refining and marketing, 0.4 per cent in storage and transportation and 0.7 per cent in equipment and services. A full breakdown of all sector exposures will now be included in OUem’s annual report in June and every year following.
OUem is also already a member of the Institutional Investors’ Group on Climate Change, another key recommendation of the OUSU representation. Group members collaborate to encourage public policies, investment practices and corporate behaviour that tackle the risks of climate change. As a member, OUem also has access to the latest research on monitoring carbon exposure in investments.
Given its long term outlook, OUem can take global challenges into account when deciding on investments. In 2010 for example, the team thoroughly researched carbon emissions and investment possibilities in reduced dependence on fossil fuels. As a result, OUem invested in Osmosis Investment Management, which has an innovative approach to analysing the resource efficiency of quote companies and their use of energy, water and waste.
Oxford University believes this balanced investment policy strongly complements its wide-reaching research into climate change and its ambitious sustainability targets.