Two colleges from the universities of Cambridge and Oxford have partnered with Amundi to launch a customised low-carbon ESG index fund that is entirely fossil-fuel free.
The Amundi ESG Global Low Carbon fund will track the performance of the MSCI All Country World index while removing all fossil fuel reserves, energy sector stocks and thermal coal companies.
The index fund will also look to improve green revenues by 50% and reduce carbon emission intensity by 30% while removing the risk of exposure to areas such as controversial weapons.
Clare College, Cambridge is set to move all of the endowment fund’s equity allocation to this strategy as part of its plans to achieve zero carbon and reduce the long-term risk of stranded assets.
As part of the partnership, Amundi and Clare and Corpus Christi College, Oxford's investment teams will work together over time in order to remain in line with the ever-changing ESG investment landscape.
The index fund has been seeded by Clare College.
Paul Warren, bursar of Clare College Cambridge, commented: “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.”
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Ashley Fagan (pictured), head of ETF, indexing and smart beta strategy and business development for UK and Ireland at Amundi, added: “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 cost-effective approach to reduce climate exposure in their portfolios.”
The French asset manager has been selected to run a number of customised ESG index funds for institutional clients this year.
In June, 12 French institutional investors chose Amundi to manage a European equity index fund, the Euro iSTOXX Ambition Climat PAB index, that aligned with the Paris Agreement.