College announces move to ESG funds

Last week, Merton College completed an important step in the implementation of its socially responsible investment policies. The College sold all of its developed market listed equity holdings in L&G’s pooled index funds and reinvested the proceeds in L&G’s Future World ESG Developed Market Index Fund. This move will significantly reduce the carbon emissions intensity and carbon reserves intensity of the College’s listed equity holdings, and ensure that the College’s listed equity investments have no exposure to pure play coal miners, manufacturers of controversial weapons and companies in perennial breach of the UN Global Compact. The College intends to implement the same change with regard to its holding in emerging market equities when the Future World ESG Emerging Markets Index Fund becomes available, hopefully later this year.

The College’s investment policy states:

“the College is committed to ensuring that it makes investment decisions responsibly and with integrity. To this end, the College will follow certain principles and practices to guide the investment decision-making process…. When investing through passive investment vehicles where investments are determined by the composition of financial markets (such as equity trackers), then the College will consider, where appropriate, passive investment strategies that positively select holdings on ethical grounds, provided that the Investment Committee judges that so doing will not have a negative impact on expected returns.”

The entire policy may be found in Appendix B of the College bylaws.
Merton is delighted that the L&G’s Future World ESG Index Fund range has provided the opportunity to meet this key objective of the College’s investment policy. L&G’s commitment to active engagement with companies around the world regarding climate change, governance and sustainable strategies remains a key factor in Merton’s choice of L&G’s index funds for the College’s listed equity investments.