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Endowment and Investment Management

The College has a substantial endowment. In common with other high-profile institutional investors, the College is often asked about its management of its investments. This summary provides information on the College’s policy and practices including its approach to investment responsibility.

Investments Committee

The Endowment is the responsibility of the Investments Committee which reports to the College Council.  The Investments Committee comprises the Master, the Senior Bursar, three other Fellows of the College and four external members, who are expert in investment management. Decisions on membership of the Investment Committee are taken by the College Council. The Investments Committee adheres to an Investment Policy Statement that is approved by the College Council annually.

The College is advised in its financial investments by (i) Partners Capital which invests via a wide variety of other funds and (ii) the COIF Charities Investment Fund managed by CCLA Investment Management. These arrangements mean that the College holds no direct investment in individual companies. Property investments, which are principally freeholds acquired over many centuries, are managed by Bidwells as agents with the assistance of other specialist agents.

Statement of Investment Responsibility

The primary fiduciary responsibility of the College Council in investing and managing the Endowment is to maximise the financial return on those resources, taking into account the amount of risk permitted within the College’s investment policy. There are circumstances, however, described in Charity Commission guidance and founded in judicial decisions, when the College may balance against its primary responsibility considerations of the ethical nature of investments. Therefore as an eleemosynary institution established to exist in perpetuity and a long-term investor, the College will take due care to ensure that its investment management reflects the interests and values of the College. This includes matters of sustainability and environmental, social, and governance issues (together referred to as ‘ESG issues’ or ‘responsible investment’) among the many factors that inform its investment decision-making and manager selection.

Financial Assets

The College believes that by engaging in a broad set of extra-financial considerations, the long-term financial performance of the portfolio of financial assets can be improved. The College judges the extent to which responsible investing is successfully integrated within the investment portfolio with the help of our investment managers and through scrutiny of the investment managers’ actions and success in managing those issues in the investments they make on the College’s behalf. How our investment managers consider ESG issues in their investment decisions, analysis, and monitoring on the college’s behalf varies by asset-class and investment strategy.

Where our investment managers invest on our behalf through independent third-party asset managers, they seek to integrate and manage ESG issues through an operational due diligence framework to assess such third-party asset managers. This framework includes an ESG due diligence section to ensure that ESG-related questions are assessed and considered during the due diligence process. After making an investment they continue to monitor identified ESG risks and maintain a dialogue with the third-party assets managers to ensure effective oversight and application of responsible investment best practices. The College scrutinises its investment managers in relation to the effectiveness of their application of those processes and ESG engagement with the relevant third-party asset managers.

Where our investment managers invest on our behalf in their own managed funds, we consider carefully the ethical and responsible investment policy of those funds in the process of selecting those fund managers. The College scrutinises those managers in relation to the effectiveness of their application of ESG criteria in the selection of assets for acquisition or disposal and engagements with investee companies. In this context this document at page 7 is relevant.

As a general matter, the College insists that its investment managers demonstrate a very high standard of integrity towards their clients, their staff and the relevant regulatory authorities. Where any breaches of integrity are detected, the assets under management may be moved to another fund manager.

Directly-held Property Assets

The College holds substantial property assets which it manages directly. These include residential, commercial, retail and agricultural properties. The policy for ensuring sustainable management of these assets, including particularly the rural estates, is under review. The College is actively involved with other similar property owners to determine how matters of environmental sustainability can be managed for the good of the estate in perpetuity.

Statement in relation to investment in fossil fuels

The beneficiaries of the College as a charity and the wider public express strong interest in knowing whether the College invests in companies associated with fossil fuel extraction. While information on the College’s investments is confidential and details are subject to confidentiality agreements with its investment managers, the College is able to report the following as at the date of this webpage.

In relation to the investment worth approximately £54m in the COIF Charities Investment Fund (the Fund):

  • Information on the Fund’s climate change policies can be found here.
  • The Fund publishes a complete list of its holdings semi-annually. The latest available is as at 31.12.19. Additionally we are permitted to disclose that at the date this webpage was updated, the fund had disposed of its remaining interests in extractive fossil fuel companies (Shell and Total) on the grounds that climate change does not make it attractive to hold such shares. We draw attention to the investments in wind, solar and other renewable energy companies.

In relation to the investments worth approximately £85m managed by Partners Capital:

  • At 30th June 2020 fossil fuel represented 1.5% or £1.3m.
  • Half of this arises from holdings in index-tracker funds which are scheduled for imminent disposal. The funds in which the sale proceeds will be reinvested do not include fossil fuel companies on the grounds that climate change makes such investment unattractive. Therefore we confidently expect the exposure to fossil fuel to be substantially eliminated.
  • The other half is residual interests in older, maturing private equity funds which were established to have an emphasis on the oil industry. There are no plans to commit to funds with such aims as climate change does not make it attractive to invest in this sector. The timescale for disposal of the residual interests cannot be predicted.
  • The portfolio has investments in renewable energy sector investments.

 

6th August 2020