UK universities threaten to divest billions unless banks accelerate net-zero plans

Cambridge University has committed to divesting its £4bn endowment from all direct and indirect fossil fuel investments by 2030.

In a formal request for proposals sent out today (15 February), the universities, including Oxford, Edinburgh, Leeds, University College London and the London School of Economics, are urging financial institutions to update their fossil fuel position statements and create environmentally friendly deposit accounts and money market funds.

Cambridge University has committed to divesting its £4bn endowment from all direct and indirect fossil fuel investments by 2030, while Oxford has faced criticism for indirect exposure to fossil fuels in its £6bn fund.

Last year, the Make My Money Matter campaign revealed that more than 90 UK universities that have committed to divest from fossil fuels continue to bank with leading fossil fuel funders, despite the climate-conscious preferences of their students.

The University of Cambridge’s chief financial officer Anthony Odgers told the Financial Times: “Building new infrastructure, such as coal and gas-fired plants and pipelines, locks in demand for fossil fuel for decades.

“We care about people using our money [to do this]. We want to have a real-world impact. Universities are under pressure from students and staff to cut ties to companies exacerbating climate change.”

The plea aims to facilitate the development of financial products that ensure funds play no role in financing new oil, coal or gas projects.

The coalition’s request outlines a stringent standard on climate issues. In addition to requesting a “green” stock and bond portfolio, financial institutions are asked to align at the group level with the International Energy Agency’s 1.5C-aligned scenario, aiming for global emissions to reach net-zero by 2050, which includes halting new financing of fossil fuel supply beyond commitments made in 2021.

By the end of the month, interested banks and asset managers are required to respond to queries about the proportion of their financing directed towards the fossil fuel sector.

They are also required to provide details on how executive pay is linked to achieving climate targets, as well as information on their lobbying and stewardship policies.

Banks continue fossil fuel financing

According to an analysis conducted by Reclaim Finance, among the world’s top 100 banks, only France’s La Banque Postale currently meets the terms outlined by the coalition. Similarly, no top 100 asset manager is currently compliant with the proposed standards.

The move comes on the heels of a warning issued by Cambridge University to Barclays, indicating a potential severance of ties over the bank’s involvement in fossil fuel financing.

In response, Barclays has revised its climate policy to halt direct financing for upstream fossil fuel projects, mirroring similar commitments from competitors such as HSBC and Société Générale. However, concerns remain regarding the provision of indirect finance by these banks, and their tendency to rely on intensity-based emissions targets for high-carbon sectors rather than absolute emissions reductions.

Comments (1)

  1. Richard Phillips says:

    It should be borne in mind that the “fossil fuel industry”, which is predominantly oil, provides not only fuel, but an avalanche of petrochemicals which provide for much in modern life.
    Like so many things, it is not simple!!

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