Cambridge finance chiefs under fire on fossil fuel divestment

Minutes show investment board saw draft of council decision against full divestment

June 25, 2018
Source: Getty

The University of Cambridge council’s decision against fully divesting from fossil fuels in the institution’s £6 billion endowment and against putting money into environmental funds shows the “huge influence” of the institution’s “unaccountable financial bureaucracy”, according to campaigners.

The decision – where the involvement of the university’s investment board is spotlighted in council minutes seen by Times Higher Education – comes after a three-year campaign for divestment by students in the Cambridge Zero Carbon Society and the setting-up of a divestment working group (DWG) by the university in May 2017.

Cambridge’s governing body, the Regent House, passed a motion backing full divestment in 2017. But a majority of the council, the university’s executive body, took a different stance.

The council’s response to the DWG report, published on 14 June, repeats a previous commitment by the university “that it will have no direct holdings in the most polluting industries, previously defined as thermal coal and tar sands”.

But in terms of indirectly managed funds, invested with external fund managers – which make up the “vast majority” of the university’s investment portfolio, the DWG report notes – the council says that it is “inevitable in a diversified and indirectly managed investment portfolio that some exposure may appear in some funds and therefore it is not possible to demand absolute exclusion”.

Two members of the council – the Cambridge University Students’ Union president and the Graduate Union president – said they were “unable to consent” to the decision, while a further two members of council, staff members Nick Gay and Alice Hutchings, published a “note of dissent”, rarely used in council decisions. The note says that “repeated requests to the chief investment officer…for information about the identity of the secondary fund managers used by [Cambridge University Endowment Fund] and the composition of their portfolios have been refused”, criticising a “culture of secrecy and hostility to oversight within the investment office”.

The DWG had recommended that 10 per cent of the university’s indirect investments should go “into dedicated environmental, social, and governance (ESG) funds consistent with a carbon neutral future”.

But the council’s response called this “a relatively immature field” – committing only to research into the possibility of such investments.

Minutes seen by THE show that the council considered a draft response to the DWG report at a meeting in May, where members “expressed their concern that the tone of the draft response…could be perceived as too confrontational” and said that “some of the report’s recommendations would need further discussion at the council”.

Divestment supporters believe this shows some council members showing support for the DWG’s ESG plan.

However, come the 6 June extraordinary meeting, when Stephen Toope, the Cambridge vice-chancellor, reported that a revised draft of the council’s response had been produced, there was still no support for ESG funds.

“The investment board [which advises the investment office on management of the CUEF] had considered the revised draft at its meeting on 30 May 2018,” the minutes state. “The investment board had been largely supportive of the response and had decided not to submit a separate statement for today’s meeting.”

Angus Satow, press officer for Cambridge Zero Carbon Society, said the matter showed “the huge power and influence the university’s unaccountable financial bureaucracy now wields over decision-making”.

CZCS is calling for a review of the university’s governance, so “the people who make up this university have a far greater say in running it”, he added.

Professor Gay, professor of molecular and cellular biochemistry, said the council decision is “not the end” of the divestment issue. “I think we [the university] may well find we’re on the wrong side of history on this,” he added.

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