Oxford University and fossil fuel divestment

Oxford University is a world leader in the battle against climate change.

Our researchers are playing a key part in understanding climate change and its link to man-made carbon emissions. The University’s sector-leading research spans fields from climate economics to biodiversity, resource security and climate change modelling.

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 Carbon Management Strategy has been shrinking the carbon footprint of our considerable estate since 2011. We have set ourselves the target of reducing our carbon emissions by fifty per cent by 2030 with University funding of £1million per annum.

In April 2020, the University announced landmark plans to divest its endowment formally from the fossil fuel industry and ask its endowment managers to engage with fund managers to request evidence of net zero carbon business plans across their portfolios. There will also be a new member of its Investment Committee, with experience of both endowment management, but with an additional focus on climate-conscious investment. The decision came in response to a motion posed to the University’s Congregation co-ordinated by the Oxford University Student Union (OUSU). 

The University’s charitable endowment exists to support 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. Most of the University’s perpetuity endowment is invested in the Oxford Endowment Fund, which is managed by a University subsidiary, OU Endowment Management (OUem). University Council delegates management of its holdings to the Investment Committee, which provides oversight and sets investment policies. Council is also a legal trustee on behalf of over 30 collegiate investors in the Oxford Endowment Fund. OUem will work within the oversight framework to implement these resolutions in an appropriate manner.

Announcing its decision on the issue, the University’s governing Council noted that the growing threat of climate change to society and the environment, drastic actions were now needed for the University to be part of the climate-crisis solution. However, it had high praise for OUem’s work to date in significantly reducing the endowment’s exposure to fossil fuels, which is already well below that of many other institutions. Since 2007, OUem investment in the energy sector has declined from an estimated 8.5% of the endowment to 2.6%. This includes renewable energy with just 0.6% of the endowment now in fossil fuel extractors.  OUem has also made substantial investments in solutions to climate change and in sustainability.

The new resolutions are the result of intensive engagement among stakeholders across the University, including the Student Union, other student-led organisations, academic researchers and OUem.

Council has therefore agreed the following with respect to its investments: 

• Divestment: Council to divest from the fossil fuel industry, including but not limited to the Carbon Underground’s top 200 (https://fossilfreefunds.org/carbonunderground-200) requiring an immediate restriction on all direct investment in any fossil fuel exploration and extraction companies and an immediate restriction on new investments in funds which invest primarily in fossil fuel extraction companies (including coal, oil and gas, exploration and extraction, as an addition to Oxford University’s existing restriction on thermal coal and tar sands).
•  Engagement:  Council to require the University’s endowment managers to actively engage with fund managers per the Oxford Martin Principles (www.oxfordmartin.ox.ac. uk/blog/investing-for-a-stable-climateadopting-the-oxford-martin-principles) to request evidence of net zero business plans across Oxford’s entire portfolio of investments, including but not limited to fossil fuel companies. Congregation instructs Council to require an annual review of any remaining fossil fuel investments for Paris- and IPCC-aligned, “hard” net zero plans, and to request that the University’s endowment managers communicate a restriction on any fossil fuel companies which fail to meet that standard to all fund managers, and review and reallocate investments as appropriate.
• Oversight: Council to amend the regulations for the Investment Committee (Part 23 of Council Regulations 15 of 2002) to create a third nominated member of the Investment Committee (who may be internal or external) who shall have recent and relevant expertise in investment management, as well as recent and relevant expertise in climate-conscious investment. Starting from the passage of this resolution, this member on behalf of the Investment Committee, will review and engage with progress on 1 through 2 and report this to the chair of the Investment Committee. This will be set out in the Investment Committee’s annual SRI report to Council, which will be made available publicly. This engagement process will refer to ongoing Oxford University research on companies’ alignment with net zero per the Oxford Martin Principles, in line with the University’s own net zero trajectory.

Oxford University’s chosen approach is based on its own world-leading research on climate-conscious business practices, the Oxford Martin Principles for Climate Conscious Investment. These provide a framework for engagement between climate conscious investors and companies across the world, helping them to assess whether investments are compatible with transition to a more stable climate and the goals of the Paris Agreement on climate change. 

The University is also developing its own ambitious new environmental sustainability strategy, giving further impetus to its commitment to cutting carbon emissions. The strategy will be published later in the year.

The University believes this balanced investment policy, coupled with its own sector-leading environmental research and approach to cutting its own carbon emissions, will enhance Oxford’s position as a world leader in reducing carbon emissions and tackling climate change before it is too late.