Amundi, Europe’s largest asset manager, Clare College, Cambridge and Corpus Christi College, Oxford announce that they have partnered to develop a customised low-carbon ESG index fund that will be open to other charities and endowment funds.
Clare College will transition all of the endowment fund’s equity allocation to this new strategy as part of their plans to achieve zero carbon and reduce the long-term risk of stranded assets.
The Amundi ESG Global Low Carbon Fund (“the Fund”), seeded by Clare College, was developed by Amundi in collaboration with the bursars of a number of University of Cambridge and University of Oxford Colleges. It is a cost-effective index-tracker, carefully designed to offer an improved sustainability profile to address the financial risk of climate change.
The strategy seeks to replicate the performance of the MSCI ACWI Index while incorporating a number of ESG focused objectives:
- Remove all fossil fuel reserves; energy sector stocks; and thermal coal within the portfolio
- Look to significantly improve green revenues and reduce carbon emission intensity
- Reduce the risk of exposure to controversies
The Fund also monitors value factor exposure to ensure it does not deviate significantly from the benchmark and to reduce the risk of any unintended bias.
As with all of Amundi’s index-managed strategies, the solution will benefit from the Group’s engagement capabilities when it comes to shareholder dialogue with investee companies on ESG matters. A focus on engagement and voting drives positive sustainable change for the benefit of companies, their investors, and wider society.
Amundi and the Oxford and Cambridge College investment teams will work together to evolve the Fund over time in response to the ever-changing ESG investment landscape. This dynamic approach will ensure it continues to be positioned to seek to deliver optimal risk-adjusted returns.
Amundi has extensive experience in developing and managing custom climate and ESG index strategies for investors around the world and recently launched the first index strategies aligned to the 2°C goals of the Paris Agreement.
Paul Warren, Bursar of Clare College, Cambridge, said: “Clare College is passionate about achieving the best possible returns for the endowment to ensure we can continue to support our diverse student population to achieve their potential. Transitioning our equity allocation to this solution will play an important role in delivering this objective by reducing our climate-risk exposure. Amundi was carefully selected based on its flexibility, experience managing climate solutions and indexing expertise.”
Ashley Fagan, Head of ETF, Indexing & Smart Beta Strategy & Business Development for UK & Ireland – Amundi, said: “We are delighted to be working with the Oxford and Cambridge colleges to launch and manage a bespoke ESG index solution to meet the needs of the endowments. The strategy we have developed together offers UK endowments, charities and professional investors a simple and cost-effective approach to reduce climate exposure in their portfolios over the long-term.”
- ^  Source: IPE “Top 500 asset managers” published in June 2020, based on assets under management as at 31/12/2019
- ^  The fund will seek to improve green revenues by 50% and reduce carbon emissions intensity by 30%
- ^  In addition to the exclusion of fossil fuel reserves, energy sector and thermal coal, the fund also excludes companies involved in significant controversies (breaches of UN Global Compact), companies involved in controversial weapon manufacturing or sales, companies deriving >0% of their revenue/power generation from thermal coal, tobacco and adult entertainment.
Clare College was founded in 1326 and was the first of the Oxford and Cambridge foundations to provide for a Master, Fellows and Scholars in a single community. It remains today a society of academics and students brought together by a common interest in learning, teaching and research. The College has 95 Fellows, 300 graduate students and approximately 460 undergraduate students. Clare's Endowment – currently around £130 million – is designed to ensure the College’s Financial sustainability and independence, now and for the future.
Corpus Christi College was founded in 1517. Unusually, it was founded to advance humanist education which was forward looking at the time and the College continues to be forward looking in its outlook and strategy. The College’s endowment of £200m plays a fundamental part in its educational mission 500 years after foundation and subsidises the College in all aspects of it vibrant daily life. Corpus is committed to responsibility in its endowment investments and is working to reduce its carbon footprint and wider impact on the environment.
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- Source: IPE “Top 500 Asset Managers” published in June 2021, based on assets under management as at 31/12/2020
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- Amundi data including Lyxor as at 31/03/2022