UPDATE (6/15/18, 11:00 am EST): In a blow to the divestment campaign, Cambridge University has officially rejected fossil fuel divestment “because it needs the yield to finance its academic program.” First reported in the Financial Times last week, this morning the University Council at Cambridge released its full announcement. From Cambridge:
“The financial sustainability of the University depends on strong returns from its investment strategies and the ability to benchmark these strategies against other investors. The CUEF has significantly outperformed its market benchmarks over the 10 years of its existence and so has significantly enhanced the University’s ability to pursue its mission. Those returns are a critical component of the financial resources that underpin research and education activities across the University, including the provision of some financial support for students and the enhancement of education and research facilities.”
“Divestment from any funds that have even small fossil fuel components, or that would require CUEF to step back from investments in alternative energy initiatives by global companies currently regarded as fossil fuel companies, would result in significant limitations on the CUEF’s ability to invest as successfully as in the past, with consequent reductions in the fundamental support provided by the endowment to the University’s core academic activities.”
As Bloomberg rightly describes, “among universities that have taken up the matter, most remain cautious about full divestment.” Let Cambridge’s rejection be an example of why: Endowments exist to provide for students, academics, scholarships, and more. They are not there for costly, political statements.
UPDATE (6/8/18, 2:00 pm EST): The Financial Times is reporting “Cambridge university has ruled out divesting from oil and gas in its £6.2bn endowment fund despite a last-ditch attempt by UK shadow chancellor John McDonnell to convince the institution to dump fossil fuels.”
The article continues, noting “It is understood the university’s council, its executive arm, decided against divesting from oil and gas stocks at a meeting on Friday. The university said a final response would be published next week.”
The decision comes at the end of a school year of continued struggles for the pro-divestment effort. Stay tuned for more details.
UPDATE (5/22/18, 8:00 am EST): Cambridge University has announced the University Council will its divestment decision, opting to continue deliberations in “an extra meeting” prior to the next monthly University Council meeting on Monday, June 18. Stay tuned!
***(Original Post, May 18, 2018, 5:25 pm EST)***
The divestment campaign at the University of Cambridge has been dealt blow after blow since it first began. With just hours left before an expected decision from campus officials on May 21, we take a look back at why Cambridge’s rejection of full fossil fuel divestment is all but certain.
A leaked report notes Cambridge will reject full divestment. In response to a 2017 call for divestment, the University Council set up a working group, which recently finished a report on its findings. But a leaked draft of the latest investment report indicates that the University’s decision has been baked for months. Back in March, the Financial Times got hold of a document from the University’s latest working group that indicated that the latest findings would be similar to the 2016 report rejection. According to the paper:
“Cambridge University is planning to reject divesting its £6.3bn endowment fund from oil companies despite huge pressure from students and staff to shun fossil fuels, according to a document seen by the Financial Times. The draft paper, written by a working group created to consider divestment, says the university should avoid the most polluting industries such as tar sands and coal in line with its current policy. But it does not explicitly recommend pulling out of all fossil fuels, in a blow to campaigners at the university.”
Multiple voices have come out along the way against divestment. The Financial Times editorial board recently said it best when it stated, “Divestment is not an investment strategy, or a way of putting direct economic pressure on energy companies. It is a political statement.”
Respected economist Andrew Lilico has also written of the negative impact fossil fuel divestment has on pension funds going on to state:
“Perhaps some university employees would be happy to have lower pensions in order to signal that they disapprove of fossil fuels. But universities need to attract talented staff, many of whom will not want to sacrifice one-eighth of their pensions on virtue-signalling. What’s more, it is not unknown for university lecturers and researchers to call for additional public money to be provided for their salaries. A cynic might suggest that some university staff would not be expecting their own salaries to drop but would, instead, hope to secure additional public funds to pay for their own choices. But will taxpayers really be willing to pay for university staff unnecessarily to cut their remuneration in order to have no practical impact on fossil fuel companies at all?”
At a recent Investment conference, Christopher Snowdon of the think tank the Institute of Economic Affairs referred to divestment schemes as ‘unethical’, citing in particular the impact of divestment by local authority pension funds has on taxpayers:
“When you are dealing with taxpayers’ money, this is a very expensive way to virtue signal. If that leads to taxpayers having to make up the difference – which it will do if you end up buying an inferior stock – that is unethical in itself.”
Jan Zeber of the Taxpayers Alliance has also called divesting from fossil fuel companies ‘pointless posturing’, going on to state that:
“It is very possible that trends exhibited in numerous studies comparing performance of divested and non-divested funds – unequivocally pointing to lower returns for those pursuing divestment – may not hold forever. When that happens, prioritisation of returns for taxpayer-backed funds will involve shunning fossil fuels. But until then, those running them need to remember that, firstly, evidence on the effectiveness of divestment is at best mixed, and secondly, that their primary obligation is to the taxpayers.”
This is the latest in a long path of divestment rejections at the university. With the working group’s results announcement fast approaching, it’s worth looking back at Cambridge’s past comments on divestment. University officials have repeatedly made it clear that full divestment is expensive and not beneficial to broader policy changes.
In 2016, the University published its working group findings on its endowments holdings, which includes energy investments:
“As is the case with many other charitable institutions, the University holds most of its investment portfolio indirectly. The overwhelming majority of investments (outside individual property assets) are managed on a discretionary basis by external investment managers selected and monitored by the University’s Investment Office, with the oversight of the Investment Board. In this context, the direct exclusion of individual investments that are otherwise legal is considered to be neither an appropriate ethical, nor indeed a practical, policy. Indeed a tokenistic approach may be counterproductive, as there is no guarantee that a desired outcome could be achieved merely by selling a particular share or other investment. Instead, the University intends where possible to pursue a constructive process of engagement and, given the Office’s intermediated investment model, reliance will be placed on working with its selected investment managers.”
Despite all of this, divestment activists still aren’t letting up. As the university prepares to announce its latest investment decision on May 21st, activists are lashing out to grab the public’s attention in any way that they can. This week, the chose to vandalize the university’s historic senate house. According to the local paper:
“Student activists daubed graffiti across Cambridge University’s Senate House in protest at the use of fossil fuels. The multi-coloured messages were scrawled on the buildings walls yesterday (May 14). Senate House is one of the city’s most iconic buildings and hosts the University Council’s meetings. Protestors used chalk spray to paint ‘Cambridge divest from fossil fuels’ and ‘Climate justice for all’ on the front of the building.”
The graffiti stunt comes after activists attempted to interfere with the historic Cambridge vs. Oxford boat race on the Thames in March. Protestors took over the Hammersmith Bridge, unfurled a large banner and set off orange flares while the race was in progress, in order to draw attention to their cause. The flares caused confusion and blocked the views of spectators, but thankfully no one was hurt and the race proceeded. Although the disturbance was attributed to Oxford and Cambridge students, People and Planet (through its social media channels), unsurprisingly touted the press coverage the disruption received as its own.
Bottom Line: Divestment is highly costly and ineffective. All the arrows point to Cambridge saying no to full divestment – stay tuned.