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. This minimised 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. ​ 

Tobacco manufacture, indiscriminate weapons, thermal coal and tar sands are commonly abbreviated to TWTT​. The current TWTT 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.

As per LSE’s Sustainable Strategic Plan, we leverage and extend our external partnerships, using our influence to advocate for positive change. We  also share our responsible investment practices with other universities.​

United Nations ​

LSE is a signatory of the United Nations Principles for Responsible Investment  and reports to UNPRI annually.​

Institutional Investors Group on Climate Change (IIGCC)

LSE is a member of IIGCC whose mission is to bring the investment community together to work towards a net zero and climate resilient future.​ 

Ellen MacArthur Foundation​

LSE has received funding from the Ellen MacArthur Foundation, which aims to create a circular economy that eliminates waste and pollution, circulates products and materials, and regenerates nature, creating an economy that benefits people, business and the natural world​ 

Global Alliance of Universities on Climate (GAUC)​

LSE is a co-founder and member of GAUC, a collaboration of 15 world-leading universities, whose mission is to advance climate change solutions through research, education, and public outreach, and to partner with industry, non-profit and government organizations to promote rapid implementation from local to global scales. GAUC will pursue this mission by promoting exchange and cooperation among member universities and providing leadership of global higher education efforts addressing climate change.​ 

University of Cambridge​

LSE has expressed an initial interest in the University of Cambridge’s initiative to engage financial institutions to develop cash products (such as money market funds) which are ESG-friendly. These products will only be available to Higher Education and other not for profit sectors.​ 

LSE is also a co-signatory of the new corporate bond index that the University of Cambridge has developed and is available for Higher Education Institutions to subscribe to. The index offers investment options in bonds which avoid financing fossil fuel expansion. These investments will be most likely to be held in our Current Investments or Liquidity funds, due to their shorter term dates of maturity. Cambridge have published further information about this on their on their website.

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.