New network to teach universities how to invest ethically

Initiative aims to expand the debate about endowments beyond divestment to wider social responsibilities

December 12, 2019

A charity has created a network that aims to help universities invest their huge endowments responsibly.

So far, the universities of Cambridge and Edinburgh, as well as St Anne’s College, Oxford – together representing about £5.5 billion in investments – have come together to form the Responsible Investment Network Universities.

The network will help universities learn how to invest positively “so they are not furthering global threats like climate change, ecosystem breakdowns and inequality”, according to Lily Tomson, head of networks at ShareAction, the charity running the new initiative.

Campaigns challenging universities to invest responsibly have continued to grow in the UK, with dozens of universities announcing over recent years that they would divest from the fossil fuel industry. However, Ms Tomson said, focusing only on divestment “oversimplified and polarised the discussion”.

“It’s an important debate, and over half of UK universities have divested; but it’s not the only strategy at their disposal,” she said.

Universities are under increasing pressure from students, staff and alumni to use their finances ethically but are uncertain about how to do so aside from divestment, Ms Tomson said.

“For example, many of them hold a lot of land; what does responsible investment in land look like?” she said.

The network, which institutions join on an annual membership basis, will allow universities to share their experiences, as well as providing bespoke research on ethical investment. Those involved will be able to choose from a “menu of opportunities” depending on their needs and interests, Ms Tomson said.

Alongside more obvious actions, such as investing in renewable energy, the network can help institutions to ensure that they invest in companies that pay the living wage and support local communities.

Another important element will be advising universities how to hold the asset managers they use to account, Ms Tomson said.

Many institutions invest through passive investment managers, who simply track the market and make high returns. However, this makes it difficult for universities to engage with the companies they are investing in. Universities will learn how to challenge their investment managers and other advisers effectively, she said.

Another role for the charity will be showing universities how to spot genuinely ethical companies, given that some green credentials do not quite stack up. “That’s why it’s a huge challenge for universities. It’s hard to work out what is genuine,” Ms Tomson said.

The network will also work with universities to improve how they communicate with their students about how and where their endowment is invested.

The initiative will be supported by the social impact investor Big Society Capital and by the National Union of Students’ sustainability charity, SOS-UK.

Other universities are expected to sign up soon, but Ms Tomson said the new network did not want to expand too quickly. “We are interested in universities that have the motivation to really develop as responsible investors and don’t see it as a one-off, tick-box exercise…in a way, I’d be disappointed if every UK university joined at this stage,” she said.

“For us, what is really exciting as an investment charity [is] this group of universities really stepping up and finding their voice,” she said.

John Ford, treasurer of St Anne’s College, said the college joined because it was “keen to work collaboratively with like-minded investors and to learn more about the difference that shareholder engagement can make”.

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