The recommendations were made in a report to Regent House on December 16 2020Louis Ashworth

The University Council has proposed the establishment of a new Endowment Fund Supervisory Body (EFSB) as part of reforms to the University’s investment management framework.

Several members of the Council oppose the creation of what they call a “quasi-autonomous entity populated entirely by self-anointing members” which they believe will prevent the University from setting “investment principles”, including those related to divestment.

However, Student Councillor Freddie Poser describes the EFSB as “a relatively technical result of charity law” which “does not materially affect divestment”.

The news comes three months after Vice Chancellor Stephen Toope announced that the University would divest completely from fossil fuels.

Under current arrangements, the University makes investments through the Cambridge University Endowment Fund (CUEF), which is administered by Cambridge Investment Management Ltd (CIML).

The University is the parent organisation, major investor, and corporate trustee of CIML. The proposed new body would assume the role of trustee and so “ensure that the University is able to discharge the duties arising from these distinct roles properly and lawfully”, according to a report by the Council published in the Cambridge University Reporter on 16 December 2020.

The report gives the EFSB “the power to set the investment objectives, the distribution objective and the investment principles for the Cambridge University Endowment Fund” and “exercise any and all of the powers of the University as trustee” of CIML.

Professor Nick Gay, one of the Council members opposing the EFSB, told Varsity that the new body “could and would disregard the broader views of the Council, the Regent House and the student body on issues such as disinvestment in fossil fuels”.

Professor Gay explained that, although the Council will appoint three of the six members of the EFSB, the requirement that members have “relevant professional experience in finance” will create a “narrow group” with “extremely conservative, some would say backward-looking, views on ethical investing”.

“The Vice Chancellor will be powerless to fulfil any commitments that he has made on divestment, they will be no more than empty promises,” he added.

He also expressed concern that the new committee will be chaired by an external member of the Council, who will not otherwise be a member of the Collegiate University.

Meanwhile, Poser supports the decision of the Council as “a legal necessity” and says it was “taken on the basis of some pretty clear legal advice about the structuring of CUEF's governance”.

He continued: “The University, CUEF and the Investment Office have all agreed to an ambitious timeline for divestment which is already underway.


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“We should be incredibly proud of the University for taking this step as well of all the student action that brought this issue to the fore.”

Professor Gay acknowledges the need for reform, but was disappointed by the proposals, which he expected to provide “transparency and oversight”.

Instead, “the proposed EFSB would leave Council members as mere bystanders who would receive reports that were ‘for information only’”, he says.

Professor Gay feels that CUEF has had “a culture of hostility to oversight by the Council” since its foundation, which “crystallised in the resignation of the CIO [Chief Investment Officer] in 2018”. The resignation was reported to have resulted from previous CIO’s frustration over calls for divestment.

Professor Gay will now “seek to call a ballot of Regent House” and hopes that “the VC [Vice Chancellor] and Registrary do not try to frustrate our democratic process by claiming that the new arrangements have a legal imperative”.

Responding to concerns about CUEF, a spokesperson for the University said: "The Cambridge University Endowment Fund (CUEF) has created a publicly available website, issued three annual reports and hired a sustainable finance officer as mandated by Council in its response to the DWP Report in 2018.

“In October 2020, Chief Investment Officer Tilly Franklin appeared before Council to outline her team's plan to divest the Fund from all fossil fuels, aim to be net zero across all of its investments by 2038 and help provide data and training for fund managers with more than £250 billion under management to do likewise."