University’s vague climate action pulls the wool over the world’s eyes.
Oxford University’s ruling against future inclusion of coal and tar sands in its multi-billion pound endowment fund amounts to little in a sector crying out for rigorous climate risk management.
Although revealing that it had already, commendably, ended direct investments in coal and tar sands because of the high degree of financial risk involved, the university’s refusal to explain how it will manage climate change risk is a case study in the ivory fortress mentality on the problems facing institutional investors.
The Asset Owners Disclosure Project (AODP) gave Oxford a D-rating in its 2015 Global Universities Index, finding its climate change risk management to be very poor, after the university declined to fill out a survey regarding its practices.
The university restricted discussion of its investment processes to reaffirming that Oxford University Endowment Management took environmental risk and climate seriously. Oxford indicated that it maintained a “close and frequent engagement with fund managers on [a] range of issues” and provided percentages of the portfolio invested in subsectors of the fossil fuel industry.
“The university has not listened to the calls of students, academics and the broader community for more transparency, calling into question whether this announcement is purely designed to diffuse the calls to divest, engage and hedge their portfolio,” said Julian Poulter, AODP CEO.
The university has not indicated whether they remain invested in coal or tar sands in an indirect capacity, and has not disclosed how much of their portfolio is directly or indirectly held.
“Oxford is cherry-picking statistics to paint itself as being minimally exposed to climate risk. Their press release is meaningless without holistic disclosure of their holdings, and transparency of investment and engagement policy.”
Other questions that the university could have answered had they disclosed to the AODP for its 2015 Global Universites Index included whether it:
- continues to invest in oil or gas, directly or indirectly;
- invests in insurance companies, banks, the aviation sector, car manufacturers, renewable energy and energy efficieny companies;
- voted for recent resolutions at the Shell and BP AGMs and whether they will vote for a ‘return of capital’ resolution at Chevron’s upcoming AGM;
- explicitly includes climate change in its mandate to fund managers; and
- engages with companies to ensure appropriate diversification or managed decline.
“There continues to be no real transparency from Oxford, making it very difficult to accept their ‘trust us, we’re experts’ line.
“This ‘disclosure by media release’ approach will not allay the concerns of students, academics and the public,” Poulter said.
Many large pension funds have been forthcoming in discussing their investment strategies on climate change. Asset owners including Australia’s Local Government Super, CalPERS, the New York Common Retirement Fund and the Environmental Agency Pension Fund received the highest possible rating after disclosing to the AODP for its Global Climate 500 Index released late April.
“When we released our universities’ index in January, we concluded that universities were the worst in the world on managing climate change risk. Today’s non-announcement has only cemented this finding,” Poulter concluded.
The 2015 Global Universities Index and 2015 Global Climate 500 Index can be accessed at here.
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