The Financieele Dagblad discovered that in 2021, the Groningen University Fund (GUF) invested part of its own capital in the weapons and tobacco industry and in fossil fuels, among other things. Treasurer Auke Plantinga explains.
How much money does the GUF invest in total, and how much of that money goes to non-sustainable investment funds?
‘The GUF portfolio comprises a total of ten million euros. In the spring of 2021, approximately 100,000 to 120,000 euros of that was invested in oil companies and an estimated 8,000 euros in the weapons industry. This money was invested in those funds for approximately six months.
I should clarify that this money didn’t belong to the university, but to the GUF itself. We are a foundation and while the president and the rector of the UG are on our board of supervisors, we operate completely independently. The money we manage comes to us via donations, inheritances, and returns on investment. We have an annual budget of 300,000 euros to pay for study trips or subsidise smaller research projects. Most of that money is from our investments, with a small portion from donors.’
The university has said sustainability is one of its ‘core values’ and wants to ‘integrate sustainable developments into all facets of the university’. How does that work at the GUF?
‘Sustainability is very important to us, because we want there to be a better world. I’ve been studying sustainable investments for a very long time. At the GUF, we use the sustainability ratings by Morningstar. That’s an independent institute that sells financial research. They check all the investment funds and rank them on a scale from one to five.’ We use their ratings because their analyses are always thorough.’
Nevertheless, it turned out that you invested in the weapons and tobacco industry and in fossil fuels in 2021. How did that happen?
‘What’s tricky about the topic of sustainability, and the topic of ethics in particular, is that it’s full of dilemmas. You want to spread out your investments as much as possible to avoid as many risks as possible. The various funds we invest in consist of thousands, maybe even tens of thousands of shares. In the second half of 2021, we were investing in two, maybe three funds whose sustainability ratings went down over the course of the year. One of the funds the Financieele Dagblad wrote about bought two or three shares in the weapons industry in 2021. Those ended up in our portfolio as well.’
Does that mean the GUF has to always be alert about how it invests?
‘For our sustainability goals, we depend on the Morningstar ratings. I saw that the rating of these funds was going down, so at the end of the year, I chased down their annual reports. Those told me that one of these funds had added investments in the weapons industry. We then decided to stop investing in this fund. We did the same for the other funds whose ratings went down and whose reports showed that they’d added shares in the tobacco industry and fossil fuels.’
Can you guarantee that the GUF will only ever invest in sustainable funds?
‘No, I can’t 100 percent guarantee that all the funds we invest in are sustainable. We have become more sustainable over the years. Approximately four years ago, when we started our investment journey, we decided to invest in three-star funds. Today, we’ve switched almost entirely to four- or five-star alternatives. The new European legislation on investment funds has also helped. It forces all funds to say whether or not they’re sustainable. If they say they are, they have to be able to prove it.
But there will always be dilemmas, ratings and legislation notwithstanding. A recent example is whether nuclear energy is sustainable or not. It surprised the more traditional sustainability people when Europe labelled nuclear energy as sustainable at the start of this year. But both viewpoints have good arguments, so that’s a dilemma when it comes to what to invest our portfolio in.’