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October 6, 2020

Cambridge Reverses Course, Divests After Years of Prior Rejections

Cambridge University announced last week that it would divest after years of resisting such a policy. The university said it will drop coal and oil and gas investments over the next decade while making “significant” investments in renewable energy by 2025. 

The decision walks back on previous divestment rejections Cambridge University had in response to divestment—not too long ago in 2016 and 2018 

The Financial Times notes the divestment policy only relates to the university’s central endowment fund of £3.5bn. The FT also notes “The fund’s exposure to the energy sector, of which fossil fuel companies are a sub-set, stood at almost £100m at the end of last year. It would not reveal details of individual investments.” Cambridge has also promised to reach net-zero greenhouse-gas emissions from the activities of all its investments by 2038. The individual colleges within Cambridge, which control about a further £3.5bn, also have their own individual investment policies.  

The university’s sudden change in their position seems out of place, too. Their most recent divestment rejection was met with slight controversyIn 2017, the university created a working group to respond to activists’ calls for divestment. Well into 2018, as the university community was awaiting the response, internal documents from the working group were leaked and it was revealed that the university had made up their minds a long time ago—ultimately choosing to reject divestment.  

Their reasoning made sense, too. Cambridge rejected divestment back in June 2018 “because it needs the yield to finance its academic program.”  

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.” 

The university also states it will from now on vet all future research funding and donations, which totaled about £700m last year, to ensure that those giving money were aligned with the university’s objectives to cut greenhouse gas emissions. Frequent targets of protests have been Cambridge’s partnerships with oil and gas companies like BP and Shell. Ironically, the BP Institute works on issues like carbon capture, geothermal power, technology for wind turbines, and energy efficiency.  

Cambridge’s divestment decision once again shows that divestment is politically motivated and will not impact climate change mitigation efforts.