Image Credit: Elliot Parker

Oxford increased fossil fuel investments to £31.2m in 2022

The University of Oxford has recently come under fire after its endowment fund increased the proportion of indirect investment in fossil fuels, less than three years after setting its Net Zero target. According to the UN, fossil fuels account for over 90% of CO2 emissions contributing to climate change.

The Oxford University Endowment Management (OUem) is a £6bn investment entity representing the vast majority of the University’s generation of investment income. According to the University’s financial statements, only an estimated £4bn are Oxford University endowments, with the remaining £2bn being endowments from other actors, including many Oxford colleges.

The share of fossil fuel exposure had been regularly decreasing since 2008 and represented 0.32% of all investments in 2021, but increased to 0.52% in 2022. 

Although these numbers are small, this means an increase in investments related to fossil fuels of around £12m in a year, reaching £31.2m in a year. Proportionally, roughly £1 of every £200 invested by the OUem goes to the fossil fuels industry. The OUem had an average nominal return on investment rate of 8.8% since it opened, meaning that ties to the fossil fuel industry could have generated around £2.64m of profit in 2022. 

The 2021 OUem report stated that it had “no direct holdings” in fossil fuel holdings, and that it had reduced its “indirect exposure to fossil fuels” to 0.32%, with a breakdown of where this exposure came from and the plans to achieve Net Zero targets. The 2022 report had a limited section on investment links to fossil fuels, stating: “Exposure is low with a total 0.52% indirect exposure to fossil fuels.”

In its divestment decision in 2020, the University stated its fossil fuel investments only accounted for 0.6% of the endowment fund – with the proportion now being 0.52%, this means that total indirect fossil fuel investments have decreased by 0.08% in the last four years. At the time, the University described itself as a “world leader in the battle against climate change.”

The 2021 and 2022 reports also highlighted a significant decrease in OUem’s ESG engagements, falling from 379 in 2021 to 275 in 2022.

The University had approved a Net Zero target for 2035 as part of its Environmental Sustainability Strategy in March 2021. The Vice-Chancellor at the time commented: “The Oxford Endowment Fund has been actively managed for over a decade to be part of the solution to sustainability.”

Environmental sustainability is not listed as one of the OUem’s objectives or philosophies in any of its reports, favouring instead “real returns”, “investment research”, “partnerships”, “risk management”, and “funding charitable activities.”

A statement from Student Organising for Sustainability (SOS) stated that “the 2020 policy change left loopholes for continuing fossil fuel investment” because the commitment taken was only to divest from direct investments, and because other fossil fuel investments should only be “avoided”. SOS also stated that this increase from 0.32% to 0.52% was due to new investments, and not an increase in the existing investments.

Mia Clement, VP Activities and Community of the Oxford SU, commented that the SU had been “actively working with the university administration on the adherence to Oxford’s 2020 divestment and ethical pledges”, and that the SU was “look[ing] forward to engaging in meaningful discussions regarding fossil fuel divestment with the University.”

Clement also stated: “Students will be disappointed to see this decrease in ethical engagement, the absence of a clear strategy for escalating such engagements, and significantly increased active investment in fossil fuels.”

The Oxford Climate Society said they were “deeply concerned and disappointed”, that “at the same time as [students] are taught about the importance of sustainable investing for climate action, the University is dishonouring its own words and the research of its members”, and that “the University should be focusing its efforts and significant material resources on investing in these instead of finding loopholes to support the status quo.”

The Oxford Climate Justice Campaign called this “a shocking example of institutional greenwashing”, stating they could not “overstate how disappointed [they were]” that OUem “sought to hide this backsliding from students and the public”, and called for OUem to “take immediate action to rectify this.”

SOS commented: “This just isn’t good enough from Oxford. Over 72% of UK universities are now committed to full divestment from fossil fuels. It’s the clear sector standard, including for universities like Cambridge, which has a very similar investment structure to Oxford.”

“The University’s attempts to mislead and cover up this fact whilst rebuffing constructive student engagement is a concerning example of institutional greenwashing. As we witness an accelerating climate catastrophe driven by fossil fuel companies, [we] sincerely hope the university will dramatically change course and begin to take real ethical investment leadership.”

The University declined to comment, forwarding the request to the OUem instead. OUem claimed to have “fully implemented the University’s 2020 divestment and engagement commitments. The Oxford Endowment Fund has no direct exposure to fossil fuels and indirect exposure is a fraction of a percentage. This will fluctuate for a variety of reasons on a year-by-year basis, in 2022 by 0.2%, when energy markets increased by nearly 50% as equity markets dropped.”

“Fossil fuel commitments are only one part of OUem’s extensive work to integrate sustainability across investments. This involves engagement with investment groups on a wide range of ESG activity and investments in sustainability solutions across the portfolio.”

OUem also noted that “while the Oxford Endowment Fund’s indirect exposure to fossil fuels is 0.52%, Oxford University’s exposure is 0.45% since the University also has investments in a separate Capital Account which has zero fossil fuel exposure.” OUem later added that they “report on [divestment commitments] publicly,” and that “2021 happened to be an exceptional year for ESG engagements.”

The University has been under increasing criticism for failing to sever ties with the fossil fuels industry, notably with Just Stop Oil painting the Radcliffe Camera orange in October, and a report showing Oxford accepted £1.2m in funding from fossil fuel companies in 2022.

Image Description: Radcliffe Camera