By Janset An
A group of concerned students launched a campaign in February calling on LSE to divest funding from arms and fossil fuels industries as well as companies that violate international law in its investment portfolios. Research from the students suggests that LSE is not commiting to its Environmental, Social, and Governance (ESG) policies, despite assurances from the School.
LSE’s funds come from various sources including grants, donations, and capital portfolios totalling an approximate £500 million. Unlike other universities, LSE states that it does not directly invest in individual companies to generate an estimated annual return of 4.5%; instead, they manage their investment portfolios through external fund managers.
According to their ESG policy, LSE commits to managing its portfolios in a way that “strengthens human rights” and contributes to the “global effort to reduce carbon emissions” while working towards achieving its own Net Zero by 2030 aim. The policy also ensures “indiscriminate arms manufacture” is not funded as LSE is a signatory of the United Nations supported Principles for Responsible Investment. However, a representative of the campaign has told The Beaver that “LSE does not live up to its stated promises.”
Students analysed LSE’s investment portfolio by matching its investments in index funds with publicly available data on the composition of these funds. This uncovered the proportion of LSE investments parked in companies that violate ESG policy.
The group’s research shows that LSE has at least £4.4 million invested in fossil fuels and £1.7 million in arms. An additional £1.6 million were found to be invested in four companies on the UN list of companies deemed to be complicit in illegal settlement activities in the West Bank such as Booking.com.
The School’s primary fund manager, the Royal Bank of Canada, handles 60% of its investment portfolios. This bank was found to be the largest fossil fuel financier globally in 2022. JP Morgan, another significant fund manager, is known to invest in nuclear weapons, cluster munitions and landmines.
Campaigners have distributed informational pamphlets on campus with a survey to attract student interest. They state that their goal is to prompt students to express dissatisfaction in the National Student Survey, which could affect LSE’s ranking. They hope this will exert pressure on LSE to divest since a low ranking could have negative effects on the School’s reputation. This would affect donations, number of applications, and its ability to raise tuition fees.
Unless LSE is granted a gold, silver or bronze award by the TEF, a rank assessed through the National Student Survey, it cannot charge the maximum of £9,250 for its tuition fees and would instead be capped at £9,000, further threatening their revenue.
An LSE spokesperson said: “For many years, the School has rightly committed not to invest directly or- as far as possible- indirectly invest in companies engaged in tobacco manufacture, indiscriminate arms manufacture, or companies significantly engaged in the extraction of thermal coal and tar sands. Since the introduction of the previous Socially Responsible Investment policy in 2015 we have seen a significant drop- over 85 per cent – in exposure to investments in these areas.
“In 2022, with the aid of student input and consultation, LSE adopted a renewed Environmental, Social and Governance Policy (ESG) to guide our investment practices.
“This policy includes the School divesting from all fossil fuel companies that fail to align with Paris Climate Targets, or similar international pledges based on the Transition Pathway Initiatives’ ratings. This means seeking to eliminate -on direct investments- and greatly reduce exposure- on indirect investments- to the worst polluting fossil fuels, not just coal and tar sands.
“We are committed to strengthening our approach to responsible investment in line with the ESG. In addition, we have recently joined other universities and organisations to encourage the banking sector to develop more sustainable options.”
