The University of Cambridge, in collaboration with leading investment firms, is set to launch an initiative to explore and promote sustainable investment. The aim is to investigate ways in which institutions can continue to maximise financial returns on investments, while still considering their social and environmental implications.

The Cambridge Judge Business School will be working with the Investment Leaders Group (ILG) on the three-year programme. The ILG is comprised of twelve high profile investment firms, including Aviva Investors and Zurich Insurance Group.

The announcement of this initiative comes ahead of National Ethical Investment Week and follows the revelations of a Varsity investigation into the investments of the Cambridge colleges. Varsity found that most do not operate any kind of ethical investment policy and often make morally dubious investments as a result. For example, the investment fund owned and used by Trinity College is run on the Morgan Stanley International Capital index, which makes investment decisions purely on market performance, regardless of ethical concerns.

Several studies have suggested that businesses which take into account social and environmental concerns when making investment decisions see their investments perform better over time. However the investment funds used by these firms still form only a minority of the global investment market.

Carlos Joly of the Cambridge Programme for Sustainability Leadership (CPSL) said: “Pursuing environmental and social goods does not have to preclude robust returns on investments. On the contrary, we can create a virtuous circle, whereby considering environmental and social factors in investment decisions can drive both economic prosperity and societal wellbeing.

“That is the only secure basis on which business and long-term investment can flourish.”

However, the University, in line with most of the colleges, is yet to institute an explicit ethical investment policy, something that other universities such as UCL, St. Andrews and Oxford have all had in place for many years. The University of Edinburgh also recently divested itself of investments in Ultra Electronics, a company that manufactures navigation parts for drones, after pressure from a student campaign that the University invest ethically.

Philippe Sands QC, Professor of Law at UCL said: “It’s a matter of legitimate and reasonable concern that the University, and some of the colleges, appear to have no formal ethical investment policy, or a body charged with overseeing its application. UCL has had an ethical investment policy for several years, and although reasonable people might differ as to the standard to be applied, the fact it exists and operates transparently is important.

“In this day and age any sensible university ought to be addressing such issues openly and transparently, in accordance with guidelines that are properly debated, adopted and applied”.

Lucy Cavendish and St Catharine’s are two of the few exceptions to this rule – both colleges are regarded as having particularly stringent ethical investment policies. St Edmund’s College and Selwyn College have also been commended by the CUSU ethical investment campaign for banning arms companies from their investment portfolios.