Following Lancaster University’s declaration of the climate emergency, the University has taken further steps in its commitment to sustainability by transferring all its managed investment portfolios to two new funds.
The first is called ‘Responsible Multi-Asset Fund’ managed by Cazenove Capital and is designed to have a positive impact on people and the planet by avoiding harm through Environmental Social and Governance (ESG) integration and exclusions, benefiting stakeholders through responsible business activities. This fund is designed specifically for charities and aims to avoid harm by active screening of investments, including for climate change, tobacco and armaments.
The second fund is called the ‘Advance Strategy Fund’ managed by Brooks Macdonald. This portfolio invests in funds which provide investment exposure to businesses providing direct solutions to the sustainability challenges that the world is facing and is framed around eight core themes: cleaner energy, resource efficiency, water and waste management, sustainable transport, health and wellbeing, safety, education and financial inclusion.
Our screening criteria is based on the proportion of a company’s revenue derived from fossil fuel extraction, production or power generation. For our Cazenove portfolios, companies deriving more than 10% of revenues from fossil fuel activities are flagged as fossil fuel related and we have zero exposure to fossil-fuel companies based on this criteria. For our Brooks MacDonald fund where a lower 5% threshold is set, we currently have a 2.4% exposure to fossil-fuel related companies. However, we have chosen to accommodate these companies as they have been selected only where they meet the strict screening criteria of the sustainability agenda and the Paris climate targets. For example, where they supply natural gas to aid in the transitioning from fossil-fuel to renewables and have plans to phase out natural gas.
We wish to acknowledge the time and effort from the University’s Finance Division, Lancaster University Extinction Rebellion (LUXR) group, Lancaster University Ethical Investments campaign group, People and Planet NGO in making this divestment a success. Many of our staff and students (both past and present) have been involved in this action. This action is a conclusion and response to the 2020 study published by the LUXR group on the amount of fossil-fuel related investment by the university.
In addition to transferring all our investments to these two new portfolios, the University has also signed the COP26 declaration on climate expectations of asset management led by Students Organising for Sustainability. Under this declaration, the minimum expectations of asset managers include:
- Strategy: An investment strategy to achieve net zero emissions by at least 2050 with at least 45% emissions reductions from 2010 levels by 2030;
- Asset allocation: An active commitment to invest in solutions to climate change, where Environmental Social Governance (ESG) impact is measured and reported alongside financial reporting. These investments should be focussed on driving solutions forward to achieve a just transition to a decarbonised economy;
- Active ownership: A presumption to vote in favour in favour of shareholder resolutions on climate change and active shareholder engagement on 1.5 degrees C aligned transition plans and;
- Transparency: Regular disclosure of holdings, voting record and engagement activity.
Lancaster’s Pro Vice-Chancellor Professor Simon Guy said: “Our teaching and research activities and our carbon reduction commitments are already well recognised as sector leading examples for supporting the challenges faced by climate change. I am therefore delighted that our investment strategies are now aligned with the University’s strategic vision of delivering transformative change.
“We recognise this is a very important issue to our students and staff, past and present, and thank them for their engagement, support and encouragement in getting to this point.”