Cambridge colleges have dramatically decreased their investment in defence companies since protests by students in 2006. But campaigners say that much more still needs to be done.

There has been a £800,000 decrease in investment in weapons manufacturers such as BAE Systems over the last two years, according to data compiled by the Campaign Against the Arms Trade.

St John's College was responsible for 78 per cent of the reduction, diminishing its stake in GKN, General Electric and L-3 Communications by £630,000 since 2006.

As of June 2008, a total of 11 Cambridge colleges had investments in companies that CAAT consider to be arms companies, worth a total of £4m. This is down from £4.8m in 2006, which amounts to a 16 per cent decrease. The biggest arms investor is still Trinity Hall, with £1.18m in stock.

Six Cambridge colleges increased their investment in CAAT's blacklisted arms companies. Churchill, Darwin, Downing, Murray Edwards, Queens and Sidney Sussex increased their investments by a total of £425,000.

Ten Cambridge colleges reduced their investment in these companies. But only Jesus, Emmanuel, Newnham, Clare Hall, and Pembroke eliminated the companies from their stock portfolio entirely.

Wolfson, Magdalene, Girton, St John's and Trinity Hall all reduced their portfolio in the blacklisted arms companies, but did not eliminate it. St John's, for example, still has £575,000 in GKN and General Electric.

"We are delighted that so many Cambridge colleges have decreased their arms investments, but are sorry to hear about all the colleges that have increased it," said Simon Hill, a spokesperson for CAAT.

The data comes as a result of a series of Freedom of Information requests put to the colleges by CAAT. The colleges were legally bound to reveal their investment in the seven top UK-based arms exporting companies, and seven other US arms companies.

The university itself refused to disclose its holdings in these companies. It argued that it was exempt, because disclosure could harm the commercial interests of the university and its fund managers.

CAAT is concerned that any reduction in arms investment by the Colleges was done for economic reasons rather than ethical concerns. Their fear is that the figures are just as likely to go up next year as they are to go down.

"I suspect that in most cases it was a commercial rather than an ethical decision," said Simon Hill a spokesperson for CAAT.

"What's really important is to move away from the situation where colleges have decreased their investment one year and increased it the next. We need to see colleges committing to ethical investment policies, and taking student opinion and wider public opinion into account," Hill continued.

Out of the colleges that reduced their investment in arms companies, only Clare Hall has adopted a significant new "ethical investment" policy, say CAAT. Clare Hall's new policy precludes investment in companies which have a "significant" (five per cent) element of arms.

"Ethical investment policies are the only way a long-term difference can be made," said Hill.

Most colleges have some sort of "ethical investment" policy, but they differ widely. Many, such as Fitzwilliam, follow the Charity Commission's advice on ethical investment. This excludes investment in arms companies trading with terrorists or with countries banned to British traders by the British Government.

Six colleges (Selwyn, St Catharine's, Lucy Cavendish, St. Edmund's, Fitzwilliam and Clare Hall) have investment policies that prohibit arms trade investment. Some, such as Churchill and St John's, allow investment in defence but not tobacco.

One college has a particularly impressive sounding ethical investment policy, but it is disputed whether it is actually followed. Mischa Foxell, CUSU ethical affairs officer, said "Magdalene has one of the most advanced policies I've ever seen, it's a pity they don't adhere to it."

Magdalene's ethical investment policy says that it must "avoid involvement in organisations that clearly ignore responsible standards in dealing with... employees, the environment and the communities in which they operate."

"They invest in BAE though, who are pretty big bads, as well as some dodgy extraction companies like Rio Tinto," said Foxell.
The senior bursar of Magdalene, Steven Morris, responded that they have a duty to maximise profits to support the college, and all their investments were within the bounds of the law.

"On behalf of the current and future beneficiaries of the College and as a charity, it has a fundamental objective to maximise its return on its investments. After all, the returns from investments are essential in supporting the costs of the world class teaching system operating in the collegiate university and also help to subsidise the costs of accommodation and food for its students," said Morris.

Five Cambridge colleges increased their holdings in BAE Systems since 2006, which is the world's second biggest arms manufacturer selling to 130 countries worldwide.

According to critics, past wrongs include BAE's sale of the Hawk light-combat helicopter to Indonesia during its repression of East Timor and its supply of sub-systems for Israel's F-16 fighter aircraft. CAAT say that these amount to "human rights abuses."

A corruption investigation by the Serious Fraud Office into BAE's arms deal with Saudi Arabia was stopped by the government in the interest of "national security."

Four Cambridge colleges reduced their investment in BAE Systems. The total reduction amounted to £320,000 more than the total increase.

The information gained from FOI requests is only a snapshot of the colleges' investments at that time, and therefore does not necessarily reflect broader trends.

Criticism is often levelled at CAAT and CCAT for their blanket divestment policies. "This policy is unhelpful, because it depends on what these companies are doing. Selling arms to the UN, whose sole mission is to promote peace, is one thing. Selling to countries where you know the arms are eventually getting into the wrong hands is another," said Foxell.

"John's could use their stake in GKN and General Electric to promote transparency and regulation, rather than just divesting in it. If this does not work then they could divest in protest," said Foxell.

Many bursars agreed that the issue was not as simple as CAAT make out. "I don't disagree with everything CAAT says, but as a former serviceman, it seems reasonable to me that countries should maintain and provide for their own armed forces... Blanket divestment seems to me to be a simplistic policy, there are shades of grey," said Peter Brindle, the Darwin College bursar.

The other criticism made of CAAT is that the ‘arms companies' on their blacklist are not necessarily as villainous as they suggest. Companies currently on the CAAT's list "provide a wide range of goods and services falling outside the simple bracket of the arms trade," said Brindle. For example, Rolls Royce make commercial jet engines as well as military ones.

CUSU are launching a campaign this term called the Socially Responsible Investment Campaign, to try and get the university to adopt an ethical investment policy. They hope that if the university has a good ‘ethical investment' policy, the colleges will eventually follow.

"Hopefully there will be protests on Senate House lawn. Student protest is going to be a huge part of the campaign," said Foxell, who is leading the campaign.

The model for a university's ethical investment policy is St Andrews. "The St Andrews investment policy is amazing and has done incredible, incredible things. It was achieved as a result of student protest," she continued.

"It is the responsibility of the Alumni to stand up and say that I am not comfortable in giving my money to a college that does not invest ethically. It is the responsibility of the student body to make it known that their relationship with their college is worsened because of the way it is spending student money," said Foxell.

Although only eleven out of the 31 Cambridge colleges have direct investment in the companies involved in the arms trade, nearly all of the rest will have indirect investment. For example a FTSE100 tracker fund, which many colleges invest in, will contain shares in BAE as it is part of the FTSE100.

Most colleges' capital, such as that of Christ's or King's College, is in managed funds and FTSE trackers. Many bursars said that they had no control, and no knowledge, about individual stocks held by the fund.

"It's fair to assume that tracker funds imply indirect exposure to all the companies that make up each index," said the Emmanuel bursar, Michael Gross, when asked about their exposure to arms companies through their tracker funds.

A bursar's only option is to switch to an ethical fund/tracker, but there is a debate about how economical this is. This is important because it is the primary job of the Bursar to protect and build on the investments of the college so it can be the most effective place of education and learning. If a bursar does not do that, another might be found who can.

Gonville and Caius bursar, Julia Collins, said their research found the performance of ethical funds "was not as good as standard tracker funds." This, she said, was the reason they had not switched.

Selwyn bursar Nick Downer disagreed with Mrs Collins, saying that their current investment policy, which does not include tobacco or arms companies, "has not been a difficult policy to uphold."

He argued that an "ethical" policy is not necessarily any less economical than a traditional one. "I do not see any conflict between the restrictions of the policy and the wider charitable objectives," he said.

The reason for this, he said, was relatively insignificant weighting of ‘unethical stocks' in the FTSE 100. "I could begin to see conflicts arising if we were, for example, prevented from investing in sectors that have a significant weighting in the FTSE 100 or other market indices (banks, oils, extractive industries) but this has not yet arisen."

The Clare Hall bursar, Joanna Womack, came to similar conclusions. "Over five-year and ten-year periods there was virtually no difference in performance [between ethical and non ethical funds]."

Michael Stothard