Peterhouse, which was the first college to directly divest from fossil fuels, earlier this yearJack Conway

The majority of colleges do not intend to divest their endowments from fossil fuels, claiming difficulties due to the structure of their investments and rules from the Charity Commission, a Varsity investigation has found. Two colleges’ investment policies also question the usefulness of divestment in bringing about positive change.

For the investigation, Varsity sent Freedom of Information requests to the University’s 31 colleges, seeking details about their investment practices. Of those, 26 responded.

The responses highlighted that almost all colleges manage significant portions of their investments indirectly. In this model, colleges do not choose companies to invest in, but rather delegate this task to external managers. These managers choose how to invest the combined money of the college and their other clients.

Indirect investment poses difficulties for divestment as the college itself does not choose which individual investments are made. Gonville & Caius and Girton both state, for instance, that they do not “routinely confront” issues of social responsibility for this reason.

Direct investments are easier for colleges to directly manage. Peterhouse is believed to have been the first Cambridge college to directly divest from fossil fuel companies, earlier this year. The decision was made on “economic grounds and because of more general concerns about the fossil fuel industry”, calling into question suggestions by some that divestment is financially unviable.

A small number of colleges have policies recognising that they can affect the ethics of their indirect investments by deciding which manager to hire. Caius, Girton and Jesus require their external managers to have “integrity”, for example. However, it is unclear what this means in practice. Caius and Jesus are both known to have large indirect holdings in fossil fuel companies, for instance.

Several colleges also cite legal issues that make divestment difficult. Varsity found six policies that mentioned the fiduciary duty, imposed by the Charity Commission, for charities to maximise the return from their investments. This duty means that colleges are unable to divest from fossil fuel investments, if they believe that doing so would decrease their income.

The Charities Commission does allow charities to accept a lower investment return, if a particular investment conflicts with the aims of the charity, or would cause the charity to lose supporters.

However, Varsity only found two policies that defined what specific investments are in conflict with the college’s aims. According to Downing’s policy, such companies “may” include those “whose activities violate human rights, the environment, and best practice in social and stakeholder matters”. Selwyn and Lucy Cavendish, meanwhile, state that tobacco and arms companies should be avoided and ban direct investments in them.

A number of other colleges have divested from specific industries. Darwin’s policy bans the college from investing, either directly or indirectly, in tobacco companies, while St Catharine’s and Magdalene have both ruled out direct holdings in thermal coal or tar sands companies.


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St Catharine’s policy claims that it is difficult to determine which specific investments are in conflict, arguing that “the College has a diverse set of stakeholders and it would be difficult for all of these to reach full agreement on the meaning of the term ‘ethical investment’”.

Some colleges express scepticism in divestment as a way of promoting ethical behaviour. Clare’s ethical investment policy argues that “divestment often results in companies being owned by private investors who allow companies to continue to do what they wish, without any pressure from public shareholders to change strategy”. St Catharine’s echoes this sentiment.

Because of these difficulties, colleges generally favour ‘shareholder engagement’ for promoting ethical behaviour. In theory, this means shareholders will use their stake in a company to persuade it to behave in a way that matches their ideals.

Seven colleges assert an intention to use shareholder engagement, either directly, or from their external managers, to have a positive ethical impact.

Churchill’s investment policy states that the College “will vote to encourage responsible behaviour” in companies it invests in directly. Where Churchill invests indirectly, it requires information from investment managers “about voting practices and how environmental, social and governance issues are addressed with companies”, saying that “new managers will be chosen, in part, on this basis”.

Several colleges do not appear to have a policy explicitly promoting divestment or shareholder engagement. At least five colleges, including Trinity and King’s, two of the colleges with the largest endowments, do not have any ethical investment policy.