Universities of Newcastle and Southampton join fossil fuel divestment push

As the world’s leading oil and gas majors this week face a series of questions about their ability to respond to escalating climate risks, two of the UK’s leading universities have become the latest institutions to announce new investment strategies designed to curb their exposure to fossil fuel assets.

Newcastle University yesterday followed hot on the heels of the University of Southampton inannouncing plans to modify its investment strategy to better embed Environmental, Social and Governance (ESG) considerations.

Specifically, the university’s governing council said it would ensure it only procured assets from fund managers who are signed up to the United Nations Principles for Responsible Investment (UNPRI). It also said it would give preference to investment managers who preferentially invest in “progressive companies that are working towards low carbon solutions and who will provide the University with reports on the carbon footprint of companies within its portfolio”

The university said the new strategy meant it would aim to divest its £60m of endowment funds from thermal coal and oil/tar sand companies, as well as other “non-progressive oil and gas companies”, within five years.

“Newcastle University is committed to furthering environmental sustainability and we have a strong track-record in this regard,” said Mark I’Anson, chair of Newcastle University’s Council, in a statement. “Not only is it a main focus for our research through our internationally leading Institute for Sustainability, but as an organisation, we continue to score highly in the influential ‘People and Planet’ Green League table. So it is right that our investment decisions are consistent with these values.

“We took the concerns raised by our student body very seriously and I am grateful to the Carbon Advisory Group for its considered approach to this complex issue. It is hoped that today’s decision will allow the University to address ESG considerations across the University’s investment portfolio, and reduce the University’s exposure to investments linked to explicit environmental damage.”

The decision was welcomed by students who had led the campaign for the university to divest.

“Climate change is one of the key issues facing us globally and last year was the hottest in recorded history,” said Dominic Fearon, NUSU president and member of the Carbon Advisory group. “As students we can be incredibly proud that our university is making the most progressive divestment commitment of any UK university and contributing to a more sustainable future. Hopefully this will inspire other universities and organisations to divest from companies profiting from unethical practices.”

The move came just days after the University of Southampton reportedly joined the growing number of academic bodies announcing plans to reduce their exposure to carbon intensive assets and step up investment in green businesses.

An internal update from the University confirmed it has appointed Kames Capital as the new fund manager for its endowment investments with funds being invested in the Kames Ethical Cautious Managed Fund.

The fund is described as a “dark green” fund that screens out firms that do not adhere to strict ethical standards, including firms that are “in breach of internationally recognised conventions on biodiversity and companies in energy intensive industries which are not tackling the issue of climate change”.

Meanwhile, Lancaster University last week similarly announced it would “shift the emphasis of its investments strategy into new technologies as part of its commitment to environmental sustainability”.

It said it had been working with its Students’ Union to review its portfolio of endowment and unrestricted investments, with a particular focus on a portfolio of around £1m shares which will provide funding for new green investments. “We are now researching companies and technologies which will positively deliver on environmental sustainability and look to become part of a fund that targets companies and novel approaches that could help provide a more sustainable future,” the University added in a statement.

Separately, the Church of Scotland yesterday voted to halt investment in the most carbon intensive energy companies, approving a motion requiring its investment funds to withdraw from firms significantly involved in tar sands and coal.

The latest moves were welcomed by divestment campaigners. “To see these new commitments during AGM season shows that an increasing number of investors are losing faith in fossil fuel companies’ ability to respond properly to shareholder concerns of the risk climate change poses to their business,” said Tom Harrison of Europeans for Divest Invest. “As more and more organisations commit to divest invest, asset managers need to wake up to the business opportunities available to them in developing fossil fuel free investment strategies.”