USyd’s $1.666 billion investment portfolio includes millions linked to fossil fuels
Fabian Robertson investigates.
Photography by Andy Wang.
The University of Sydney’s (USyd) investment portfolio totalled $1.666 billion on 31 December’ 2020 and includes millions indirectly invested in fossil fuel companies such as BHP and Rio Tinto. Pulp acquired documents detailing USyd’s 2020 portfolio via a successful application under the Information Access Application (GIPA) Act: a statute that requires government agencies to disclose certain operational information.
According to the released information, the vast majority of the University’s capital is in investment funds rather than individual companies. Notably, USyd has no direct investments in fossil fuel companies - a departure from 2018 in which $22.4 million was invested in fossil fuel companies like BHP, Woodside Petroleum and Santos.
However, many funds in the current portfolio use their investors’ contributions to invest in fossil fuel companies themselves. USyd therefore indirectly profits off the success of fossil fuel companies. Although private investment funds’ holdings are not typically publicly available, a Pulp investigation of various financial documents has found that at least twelve funds in the University’s portfolio invest in or have strong ties to fossil fuel companies.
BHP and Rio Tinto
USyd had invested $40.07 million in the Legg Mason Martin Currie Equity Income Fund. The fund’s June 2021 Factsheet reveals that 4.56 per cent of the fund’s capital is invested in BHP. Therefore, at least $1.83 million of the University’s funds was indirectly invested in BHP.
USyd had also invested $37.87 million in Plato Investment Management which ranked BHP and Rio Tinto as 1st and 7th respectively on the fund’s list of Top 10 Holdings in June 2021.
BHP and Rio Tinto are the 1st and 2nd largest metals and mining corporations in the world. In the 2020 financial year, BHP and Rio Tinto emitted 15.8 and 26.2 million metric tons of greenhouse gases respectively. BHP produced 360 billion cubic feet of natural gas, 49 million barrels equivalent of crude oil and 23 million tonnes of energy coal. According to the Climate Accountability Institute, BHP was the 19th highest emitter of greenhouse gases in the world from 1965 to 2017. BHP and Rio Tinto also have long histories of destroying the natural environment, with Rio Tinto most recently facing criticism for destroying 46,000-year-old sacred Aboriginal sites in the Juukan Gorge.
Santos
USyd had invested $106.03 million in MCP’s Credit Trust fund. While there is no public information on this specific fund’s investments, MCP in an August 2019 report boasted of lending a total of $6.4 billion to various entities since 2013, including fossil fuel companies Santos, Caltex, Origin Energy Australia, Whitehaven Coal, Alinta Energy and Beach Energy.
Santos is Australia’s 2nd largest producer of oil and gas. They are currently at the forefront of a $3.6 billion Federal Government-funded gas exploration project in the North-Eastern NSW region of Narrabri on Gamilaraay land. The project has faced strong criticism from environmental and First Nations activists who predict the destruction of sacred sites, the poisoning of the natural environment and the contamination of the Great Artesian Basin - in addition to its inevitable contribution to greenhouse gas emissions in lieu of transitioning to renewable energy sources.
Further fossil fuel investments
USyd had invested $71.95 million in Palisade’s Diversified Infrastructure Fund, whose website advertises interests in Merredin Energy’s gas turbine power station and Tasmanian and North Queensland gas pipelines.
USyd had invested $21.05 million in Clearlake Capital V and VI. Clearlake Capital’s portfolio features companies that service the oil and gas sector including Gravity Oilfield Services, Hi-Crush Inc, Knight Energy Services and Smartsand.
Another $35.07 million was invested in KKR Asian funds II and III. KKR’s Asia portfolio includes oil and gas industry caterer Weststar Aviation Services and petrochemical company LCY Chemical Group.
A further $31.68 million was invested in Lexington Partners funds VII and VIII. A report submitted to the U.S. Securities and Exchange Commission indicates that Lexington Partners held $2.1 million in Extraction Oil & Gas on 31 March 2020.
USyd had also invested $15.48 million in Warburg Pincus XII. Warburg Pincus’ portfolio includes investments in oil and gas companies Ensign Natural Resources, Navitas Petroleum, RimRock Oil & Gas, Stronghold Energy II, Sundyne, Tall City Exploration II, Terra Energy Partners and Trident Energy.
Meanwhile, $1.17 million was invested in the Supervised Investments Global Income fund. The fund’s portfolio as of September 2018 invested 12 per cent of its capital in oil and gas company Po Valley Energy.
Amazon, gambling, the big four banks and military boats
USyd had invested $43.65 million invested VGI Global. Their June 2021 report indicated that 14 per cent of the fund’s capital is in Amazon and 4 per cent is in French betting company Francaise de Jeux.
Additionally, USyd had invested $23.2 million in Harbourvest funds. Harbourvest’s website advertises holdings in oilfield developer Crown Rock Minerals and military boat manufacturer Safeboats International.
Multiple funds also name Westpac, Commbank, NAB and ANZ in their Top 10 Holdings. These banks collectively loaned $7 billion to 33 new or expansionary fossil fuel projects from 2016 to 2019.
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Over 40 per cent of the University’s 2020 investment portfolio has released no substantive information on what companies they invest in, meaning it is impossible to know the extent of the USyd’s links to the fossil fuel industry. For example, $191.52 million or 11.5 per cent of the University’s capital is invested in the CC JCB Active Bond Fund, which has not publicly disclosed its portfolio.
USyd’s new Vice-Chancellor, Mark Scott, said he had no knowledge of links to fossil fuels when questioned.
“I understand the view that the university should be showing leadership in ethical investment and that many will have views on precisely what that means,” Mr Scott said.
“It’s not an issue that I have studied and focused on at this point. I’m only two weeks in, but I’ll take on notice your observations and I’m sure they’re matters we’ll be able to discuss in the future.”
The University released its Sustainable Investment Strategy in June this year, promising to “exclude fossil fuel companies with inadequate transition plans” to align its portfolio with the UN Sustainable Development Goals by 2030. The strategy faced criticism for failing to commit to divestment from all fossil fuel companies - a commitment made by fellow Australian universities UNSW, QUT and La Trobe.
By the end of this year, the University will have “communicated clear milestones and methodologies to assess” the sustainability performance of their investments. Time will tell if these communications increase transparency surrounding its University’s more than one-billion-dollar portfolio.