The Oxford Martin

Net Zero Carbon Investment Initiative

The Oxford Martin Net Zero Carbon Investment Initiative was established in 2015 and ended in 2021. This page is an archived resource. Programme Directors, Professor Myles Allen and Professor Cameron Hepburn remain involved with several other Oxford Martin School programmes and the Oxford Martin Principles for Climate-Conscious Investment have been taken forwards by Oxford Net Zero.

Shifting the dial on money’s climate impact

You can’t buy your way out of a climate crisis without addressing the root cause.

Climate change poses significant financial challenges for markets, asset values and shareholders. It also gives investors and shareholders an ethical conundrum - should they divest from fossil fuels?

The Oxford Martin Net Zero Carbon Investment Initiative, which ran from 2015 to 2021, was established to answer these questions, and to help investors accelerate the transition to a zero carbon economy.

By the close of the programme it had influenced the strategies of investment management companies and institutional investors that control a combined £62.5 billion (as of November 2020).

How did they do it? Read more about the initiative and its impact
Adobe Stock 457923176
© Adobe Stock

the challenge

Stabilising global temperatures and avoiding dangerous changes in the climate requires net carbon dioxide emissions to be reduced to zero. Getting to zero emissions will require dramatic changes in investments and in energy systems, which carry their own risks.

The transition to a safe climate future is all the more challenging because existing fossil carbon reserves, owned by public or private investors, likely already vastly exceed the amount that can be used if we are to meet the internationally-agreed goal of keeping global temperatures of well below 2ºC.

Investments in infrastructure, both in the energy sector and the broader economy, risk “locking in” emissions that exceed a safe cumulative total. How should investors respond?

Many are already attempting to divest from coal or from all extractive fossil fuel operations. There is considerable interest in “low-carbon” investment opportunities, but less clarity on the longer-term question of how investment can provide a route to a zero carbon economy. Some argue that what is needed is active engagement with the fossil fuel industry and that divestment only will not bring the required changes as long as the world economy remains overwhelmingly fuelled by fossil energy. Academics from the Universities of Oxford, Harvard and Columbia are consulting with the scientific and investment communities in combination with fossil fuel industry stakeholders to address the issues involved.

This Initiative aims to address a number of specific questions:

  • How do investment strategies impact on committed cumulative carbon emissions?
  • How can progress be measured to ensure a company or investment portfolio is on track to reach net zero carbon emissions before mean temperatures increase by 2°C?
  • What role does investment in carbon capture and storage (CCS) play in the solution?
  • What are the wider implications of investment strategies for the current and future ownership of fossil fuel assets?

The Oxford Martin Net-Zero Carbon Investment Initiative has been working closely with leading international governance initiatives on corporate carbon and climate risk disclosure, including the Financial Stability Board's Task Force of Climate-related Financial Disclosures (TCFD), and remains focused on embedding sound climate science within such international frameworks.

In February 2018 the programme launched The Oxford Martin Principles for Climate-Conscious Investment. Shortly after, following advocacy by the College’s undergraduate body, St Hilda’s College (University of Oxford) rewrote its investment policy and became the first institution to adopt the Principles as a framework to shape its investment decision-making. Specialist asset manager, Sarasin & Partners, have also implemented the Principles to guide their new Climate Active Endowment Fund.

The Oxford Martin Principles for Climate-Conscious Investment

Faced with climate change today, companies and investors face many complex ethical questions. Should investors continue to invest in fossil fuels? How should investors manage the legal and financial risks of the internationally-agreed transition to net-zero emissions?

In response to a very different moral dilemma in the 1970s, the Sullivan Principles were developed to help investors and companies by providing a practical set of guidelines on how to engage with businesses in the South African apartheid regime.

A new set of principles are needed to address the moral challenge of climate change. These are the Oxford Martin Principles for Climate-Conscious Investment developed by the Oxford Martin Net Zero Carbon Investment Initiative.

The principles, published in Nature Climate Change, are as follows:
1. Commit to reaching net zero emissions from their business activities
2. Develop a plausible and profitable net zero business model
3. Set out quantitative mid-term targets compatible with their net zero goals

Download the full principles

The Oxford Martin Principles were also used by activist group Market Forces as a framework to analyse energy planning in Australia in their report Business as Usual: Australian companies not planning for climate change.

9145 Principles For Climate Conscious Investment hires Page 1