How do we invest?

• LSE is invested in funds, which are in turn invested in underlying companies.
• Unlike some universities with larger endowments, LSE does not invest directly in companies. Instead we invest indirectly via fund managers, who invest on LSE’s behalf, in line with our ESG policy and filters.
• This strategy eliminates the risk of manager concentration and also ensures that LSE is able to benefit from the skills and expertise of multiple fund managers across geographies, sectors and asset classes.

In 2015, the School became a signatory to the UN Principles of Responsible Investment (PRI) and set similar criteria for its fund managers. From that time, it began to develop a positive ESG screening approach. ​ 

LSE revised the 2015 Socially Responsible Investment Strategy and published a new Environmental, Social and Governance (ESG) Policy in November 2022 which retained the existing strategy’s positive screening approach.The policy was also reviewed by Council as part of their wider ESG review in the 2024/25 academic session. Our ESG policy minimises our investment exposure to companies deriving revenues from the following items: ​

• Investments are not made in companies from states that are under sanctions or owned/managed by individuals subject to Magnitsky-style sanctions issued under the Global Human Rights Sanctions Regulations 2020.​
• Oil and gas production, oil and gas power generation, oil and gas refining and marketing, oil and gas midstream, oil and gas integrated, oil and gas equipment and services, oil and gas E&P and oil and gas drilling​ - for all oil and gas companies that fall in the lowest two Transition Pathway Initiative Carbon Performance ratings.
• Tobacco manufacture​
• Indiscriminate weapons manufacture​
• Thermal coal; mining of thermal coal (including lignite, bituminous, anthracite and steam coal)​
• Tar sands; a highly energy and carbon intensive approach to oil extraction.

All of LSE’s investment portfolios are screened against our ESG policy by our investment advisers on a regular basis to confirm we are in compliance. We are currently fully compliant against all the filters as measured at individual fund level and overall. ​ 

As outlined in further detail above, the ESG policy minimises the School's exposure to Tobacco manufacture, indiscriminate Weapons, Thermal coal and Tar sands (which are commonly abbreviated to TWTT), ​as well as exposure to the worst rated oil and gas companies according to the Transitions Pathway Initiative (TPI). The current TWTT and TPI exposure filters are:​

• Aggregated portfolios should remain under 3%​
• Individual funds should remain below 5%​

In July 2024, LSE’s Council moved a planned review of our School’s Environmental, Social and Governance (ESG) policy forward by a year, to the 2024/25 academic session. 

Amongst other matters focused on transparency and community engagement an outcome was assessing LSE’s current investment filters related to fossil fuels, tobacco, and armaments to further reduce our exposure to these sectors, as appropriate. This is alongside a further proposed change to the School’s ESG Policy, broadening the definition of controversial weapons presently excluded from LSE’s investments.

Council believes there is a consensus in our School community for such amendments and that they can be done in a manner consistent with its fiduciary responsibilities. As required by proper governance, however, Council referred these matters back to the relevant committee with delegated authority for confirmation during the 2025/26 academic year.

LSE’s endowments, in line with the donors’ wishes, are used to support important charitable activities across the School community, such as: 

• Named chairs and lectureships​
• Scholarships and bursaries​
• Research​
• LSE Library​
• Widening Participation​
• Support for academic activities

Student fee income is not channeled into LSE's endowment.