BlackRock has launched the iShares Developed World Fossil Fuel Screened Equity Index Fund in close collaboration with Oxford University Endowment Management (OUem) to realise Oxford University’s commitment to divest its endowment from fossil fuel companies.
In April 2020, Oxford University announced landmark plans to divest its endowment formally from fossil fuels. Oxford University’s Permanent Endowment is invested in the Oxford Endowment Fund (OEF), which is actively managed by OUem and is already effectively divested from fossil fuels.
Following Oxford University’s announcement, OUem has worked to identify an equity investment product that fits with the resolution to divest from fossil fuels for the University’s Capital Account, while also keeping its existing portfolio composition in liquid index equity and bond mandates.
OUem selected BlackRock to create the bespoke equity index fund following the firm’s commitment to make sustainability its standard for investing and based on its capabilities in developing innovative products and solutions which help clients achieve their own sustainable investment objectives.
BlackRock has worked with MSCI, the data and index provider, to design a custom MSCI World Select Fossil Fuel Screened Index, utilising an exclusionary methodology based on a series of stringent fossil fuel screens. The use of this methodology results in a significant screening out of companies directly involved in fossil fuel extraction, production and exploration as well as those owning fossil fuel reserves.
BlackRock’s base-line screens have also been added to avoid exposure to certain companies or sectors associated with controversial nuclear and civilian weapons, tobacco, thermal coal, tar sands and companies that are not compliant with the United Nations Global Compact principles.
The new fund supports the University’s restriction on direct investment in fossil fuel exploration and extraction companies, an immediate restriction on new investments in funds which invest primarily in fossil fuel extraction companies (including coal, oil and gas, exploration and extraction), in addition to Oxford University’s existing restriction on thermal coal and tar sands.
Sarah Melvin, Head of UK at BlackRock, says: “Oxford University Endowment Management is at the forefront of sustainable investing. Given their leadership in sustainability, we are excited to have been chosen by OUem, to design and launch a new product, the iShares Developed World Fossil Fuel Screened Equity Index Fund, which incorporates precise, transparent, exclusionary screens supporting their divestment objectives. The launch of this new Fund underscores our commitment to helping our clients build well-constructed portfolios that are critical to achieving their long-term sustainability goals.”
Sandra Robertson, CEO and CIO of Oxford University Endowment Management, says: “Investing sustainably is wholly integrated in our company culture and investment process at OUem. In the actively managed Oxford Endowment Fund, for permanent endowment, over the past 12 years we have effectively divested from fossil fuels, and we have funded several innovative groups investing in solutions to climate change. This is an outcome of an active investment process, and a long-term investment theme of resource efficiency. We wanted to similarly design an equity index solution that reflects this ambition in the University’s Capital Account. With BlackRock, we have taken a strong policy statement and created an investment product that produces meaningful action, to invest in a more sustainable way.”