Skip to main contentCambridge University Reporter

No 6537

Wednesday 13 February 2019

Vol cxlix No 19

pp. 394–412

Report of Discussion

Tuesday, 5 February 2019

A Discussion was held in the Senate-House. Deputy Vice-Chancellor Professor Sarah Worthington was presiding, with the Registrary’s deputy, the Deputy Senior Proctor, the Junior Pro-Proctor and twenty-eight other persons present.

Unless otherwise stated, all remarks at the Discussion were made by the contributors in a personal capacity.

The following items were discussed:

Topic of Concern to the University: The future of the Investment Office

(Reporter, 2018–19; 6532, p. 294 and 6534, p. 322).

Ms B. Bhargava (King’s College):

Deputy Vice-Chancellor, Cambridge University continues to represent an alienating, exclusionary environment for many students of minority status. Upon attending an open day at the University, I was shocked at the blatant and unashamed celebration of figures from this country’s colonial history by some Colleges. As a student of Indian heritage I was, for example, made deeply uncomfortable by Christ’s College’s inclusion of ‘Lord Mountbatten. Last Viceroy of India’ on its list of notable alumni. Yet this is far from the most egregious example of Cambridge’s unwillingness to repudiate its historic connections to British colonialism. In giving precedence to the views of fossil fuel companies over the democratic will of students and staff – shown time and again through rallies, open letters, and the previous 2017 Grace to be in favour of divestment – the University remains intimately linked to neo-colonial structures.

It is undeniable that climate change causes the deepest privation amongst the world’s most vulnerable communities. In the global south, fossil fuel companies exploit the historic power imbalances of the era of European imperialism, and are allowed to degrade the lived environments of black and brown communities with near impunity. In our own inner cities, high levels of toxic air pollution disproportionately affect working class and BME communities (in which the incidence of asthma and related illnesses is often many times the national average). In maintaining tight connections with major polluters, this University, which nominally exists to serve the next generation, proves itself happy to cooperate with those who pose great risk to it.

On that note I’d particularly like to draw your attention to the report published in yesterday’s Guardian which suggests that in a best-case scenario (in which carbon emissions are dramatically and rapidly cut and succeed in limiting global warming to 1.5°C) more than a third of the Himalayan ice cap is already doomed by our actions.1 This will affect two billion people, amongst them the deeply vulnerable, isolated and impoverished communities. Amongst them my relatives in the region.

In light of the above objections, I believe that the University Council must re-open its discussion of the merits of divestment, revoking the previous Divestment Working Group report. It must then institute a new, transparent and democratic Working Group which is not beholden to the interests of the fossil fuel industry. In doing so, Cambridge would fulfil its duty to global youth, as well as partaking in a long-overdue reassessment of its questionable colonial past.

Dr D. R. Thomas (Department of Computer Science and Technology and Pembroke College):

Deputy Vice-Chancellor, in Professor N. J. Gay’s remarks at the Discussion of the ‘Annual Report of the Council for the academic year 2017–18’1 on 22 January 2019 he said

Members of the Regent House may therefore be surprised that one Board member is an ardent Brexiteer who donated £3m to the ‘Vote Leave’ campaign. My friend the Pro-Vice-Chancellor for Research has described the impact of Brexit on the University as ‘bad, very bad or catastrophic’.

I am in fact astonished that the University would choose so poorly in selecting members of its Investment Board. Of course everyone is entitled to their own political views, but Brexit is clearly against the University’s interests and the University has been very clear about that. The personal actions of a member of our Investment Board have probably already cost the University more than the total cumulative value to the University of having an Investment Board. This is not difficult, as Professor Gay also remarked:

In fact relative to other relevant benchmarks such as global equities the fund could be viewed as underperforming in this period.

It seems there is a disconnect between the interests of those who set University policy on matters such as investments, and the actual interests of the University. Perhaps this results from motivating these staff with money in a way that we do not with other staff. All the academic and research staff in my department could earn five or more times as much working in industry,2 but they do not because they care about the University’s mission. However, they sometimes struggle to meet living costs. Our Investment Office staff are paid abundantly and have no concern over living costs, but it seems also little stake in the University’s mission. If we motivate all other staff out of solidarity with the University’s mission, why should the most senior staff be exempt from that and suddenly paid market rates when no-one else is? We get real terms pay cuts, they get massive pay rises.3 Our lives and research are messed up by Brexit and they cheer it on. Our pensions are proposed to be cut at their request to improve bond rates while they get vast payments in lieu of pensions.4 This University is a democratically constituted community of scholars. Our senior management should start acting in line with that.

It seems that our Investment Office provides no useful value to the University as both in theory and in practice investment offices have no value, as they are no better at predicting future performance of stocks or at picking people who predict future performance of stocks than anyone else. Instead it serves as a means to provide jobs for fat cats. Rather than employing a few people on very high salaries to try and beat the markets (and fail) we could spend the money on other staff and actually get a return on our investment.

However, there is one way in which the University can do better than the markets. We can show moral leadership and bet on the future we want and not invest in clearly unethical companies. Then if we are wrong and climate breakdown is not averted then we have bigger problems, and if we are right and the world follows us, our stocks will be worth much more than they would have been if we left them in carbon bubble stocks.56 Assuming stocks are priced correctly there is no financial disadvantage to switching to ethical stocks and there are big gains to be made if we keep the oil in the ground and the carbon bubble bursts.

The corruption of the Divestment Working Group by undisclosed conflicts of interest in fossil fuel funds has brought the University into disrepute. How can anyone believe reports and publications produced by University staff if they suspect that outcomes can be bought by undisclosed special interests. Such corruption at a senior level with the knowledge of the Vice-Chancellor undermines the reputation of the whole University. It makes us little more than a dark money-funded thinktank, not worthy of any trust.

I do not object to the University receiving oil money to fund public interest research (better to spend it here than on making the world burn). However any such donations or proposed donations should be clearly disclosed by people considering whether to alter investments in fossil fuels. The potential for future such donations should not influence our investment policy as if a company requires us to invest in their stocks before they will fund our research, then they do not really want independent academic research, and so are a poor partner for the University.

The University has three main assets: its staff, its reputation and its endowment. With staff and reputation we could build a new endowment but if we trash 800 years of hard-earned reputation then we will lose all three. Without our academic integrity and freedom we have nothing. If we wish this University to last another 800 years we must never desert the moral high ground or we will be covered by the rising seas.


  • 1Reporter, 6535, 2018–19, p. 373.

  • 2They could also earn substantially more in academic research at other institutions.

  • 3See my remarks at the Discussion of ‘Reports and Financial Statements for the year ended 31 July 2018’ (Reporter, 6535, 2018–19, p. 375).

  • 4E.g., £37,000 last year for our Vice-Chancellor.

  • 5See Dr P. A. Salas’ remarks at the Discussion of ‘Topic of concern to the University: the University’s investments’ on 5 December 2017 (Reporter, 6488, 2017–18, p. 186).

  • 6Or tobacco.

Mr E. J. Wilson (Selwyn College):

Deputy Vice-Chancellor, now is the time for climate justice. By investing tens of millions of pounds in the fossil fuel industry, Cambridge University and its Colleges are failing to face up to global climate breakdown. This is a crisis. Will you join us in fighting it?

The Guardian has revealed that the Divestment Working Group’s rejection in 2018 of a clear plan for divestment from fossil fuels was fatally flawed.1 In the light of this, the University must now revoke the Working Group’s 2018 decision, respect the Regent House’s democratic vote for divestment in 2017, and establish a plan to divest from fossil fuels within five years.

There is little time left. The Intergovernmental Panel on Climate Change has given the world twelve years to nearly halve current CO2 emissions if we wish to avoid complete climate breakdown.2 The University, as a leader in climate science and the pursuit of the truth, must act fast. Because divestment works.3 In 2017, Shell cited divestment as a threat to its fossil fuel-based business model.4 Now, by divesting, Cambridge can put pressure on the energy sector to abandon further investment in fossil fuels and reinvest in a renewable future.

Queens’ College has already led the way in divesting.5 We ask the University – and all other Colleges – to follow urgently. Many people around the world suffer daily from the effects of climate breakdown, with over 300,000 lives already lost every year as a consequence, according to Kofi Annan’s Global Humanitarian Forum.6 According to a study from the Swedish government, nearly three billion people live in largely Third-World regions at ‘high risk’ of climate-caused ‘violent conflict’.7 As the carbon economy of the West still depends on extracting resources from the Third World,8 climate breakdown is a continuing colonial oppression for which Cambridge has some share of responsibility.9

So decolonisation goes beyond the curriculum: it should encompass the approach of the University to the past, present and future victims of climate breakdown. In their name, we demand climate justice.


Ms C. M. Sosienski Smith (Cambridge University Students’ Union Women’s Officer and Selwyn College):

Deputy Vice-Chancellor, Cambridge is, for better and for worse, an influential institution. It is an institution whose reputational worth far outweighs the amount of money it receives from fossil fuel companies. I would like to draw attention to the research in the Joint Working Group Submission to the University Council in 2017 by People & Planet and the National Union of Students, that ‘the [fossil fuel] industry only contributed to 0.4% of Cambridge University Research in 2015/2016’ highlighting that

the industry gets much more out of this relationship than the University does – in fact it is these links with institutions like the University of Cambridge that reinforce their perception as socially acceptable entities, providing the industry with a ‘social license’ to continue to operate as they currently do.1

Certain members of University management cling to the notion that good stewardship of the University involves securing money from unethical investments. This is not what being a trustee of the University entails. As long as we remain invested in fossil fuels, we remain complicit in the continual erosion of any democratic ideals this institution clings to, and we remain complicit in the global climate crisis, the effects of which are felt most keenly in the Global South. The continued investment by the University of Cambridge in fossil fuels is colonialism in practice.

I reiterate the suggestions submitted to and consequently ignored by the Divestment Working Group in 2017, that continuing to invest in fossil fuel companies is not only a financial risk to the University of Cambridge, but reputational too in: continued support for companies that play a role in systematically misleading the public with regard to climate change; human rights abuses associated with fossil fuel extraction; and profiting from an immoral status quo that would lead to mass displacement, famine, conflict and ecosystem failure.

We need an Investment Office that is accountable to the entire University, including its students. We need an Investment Office with no conflicts of interests among any of its members, and we need an Investment Office that is able to pursue, through open, transparent and democratic procedures, complete divestment from the fossil fuel industry now.

Mr G. L. Breckenridge (Fitzwilliam College):

Deputy Vice-Chancellor, I serve as the elected Undergraduate Student Representative to the Council of the School of the Physical Sciences, though I make these remarks in a personal capacity.

The very need for the Investment Office to be reformed and repopulated is the most basic of knowledges on its future, yet it is also the most institutionally concerning.

The resignation of the Chief Investment Officer and core members of his team is, as reported by the Financial Times,1 fundamentally intertwined with Cambridge’s institutional crisis, rightfully characterised by the disconnect between its mission to serve society and its current practices on investment.

At the heart of the University’s mission statement is the aim of ‘concern for sustainability and the relationship with the environment’.2 Fundamentally, the previous and ongoing practices of the Investment Office, and the policy decision by the University Council to reject divestment from fossil fuels, represent one aspect of Cambridge’s comprehensive and wide-reaching failure in achieving this aim. We cannot afford for this to go on, and we must immediately switch away from an investment policy focused solely on economic objectives. We must divest from fossil fuels, and invest with the purposes of social responsibility, if we are to not be caught on the wrong side of history. Cambridge may claim to be a leader in the educational community, but in this respect, it is behind the curve: a majority of all UK universities have divested their investment portfolios from fossil fuels.3

The future of the Investment Office must, at its core, represent the agreed values of the University and respect the voices of staff and students. On the topic of the University’s investments, these have been made repeatedly clear. Democratic channels have been harnessed, mobilised and exhausted. The refusal for the leadership of the University to suitably respond, in accordance with its social values, aims, and mission statement, is disappointing at best, and scandalous at worst. Though, for being an optimist, I will now proceed to summarise these democratic mandates once more, in the hope that they will be listened to, instead of again heard and dismissed.

Democratic mandates from student support are official and overwhelming.4 In 2017, a motion was unanimously passed through CUSU Council to ‘Support Fossil Fuel Divestment’,5 with a Graduate Union statement coinciding. Student petitions have gained a combined 5,000 signatories since 2016, with academic student representatives at Faculty and School level also having gone on-record as judging their student electorates to support divestment.6 Similarly, a democratic mandate has been given by academics of the University, at the Regent House governing body. In January 2017, a Grace was passed unopposed by 140 members calling for the University to divest from fossil fuels.7 To this day, that democratic mandate stands, with UCU’s 2018 statement urging its implementation.4 It is accompanied in evidencing staff support by countless open letters signed by hundreds of Cambridge academics, most relevantly an open letter in December 2018 signed by over 200 members of the Regent House, calling for a divested, transparent and accountable future for the Investment Office.8

If Cambridge is to be a democratic institution, thus, then during the repopulation of the Investment Office, the ability for incoming investment officers to be willing to explore pragmatic methods for divestment, and to adapt to policies of responsible investment, must be probed. The aims of the Investment Office must be formally aligned with the full mission of the University to society, both now and into the future. That cannot, and does not, mean maximising economic returns. It means maximising returns to society. Being complicit in the financial health of the companies most causing of unprecedented environmental risks to society,9 from dangerous climate change, is not doing that. Profiting from it, and granting such companies a social licence, purportedly in the name of societal good, is even worse. The University should find this situation, the current situation, morally shameful.

Though, in the months ahead, this dark chapter in the University’s history can come to an end. At a time of institutional crisis, Cambridge has a better chance than ever to regain its moral authority, and once more claim its status as a social leader. To do this though, it must reform the Investment Office as a divested entity, in line with the University’s values, and in line with the ever-growing, longstanding, democratic, demands of University members.

Mr J. E. Sherer-Clarke (Churchill College):

Deputy Vice-Chancellor, no one is content to be kept in the dark about how our University’s investment decisions are made. Currently, much of the Cambridge University Endowment Fund (CUEF) is held in funds whose own investments are opaque even to members of the University Council and the Vice-Chancellor himself. More than this however, Council members’ attempts to cut through this atmosphere of secrecy have been persistently and illegitimately frustrated. Last term, a fifth of the Council wrote in a note of dissent that they were unable to sign off on the Annual Report of Council due to a lack of transparency surrounding the Investment Board’s decisions.1 Under Standing Order 11(ii) , Council members are entitled to see all papers of subsidiary committees, yet they noted

We cannot properly discharge our duty as trustees of the University if we are arbitrarily and persistently denied access to such documents.

As a case in point, Council member Professor Ross Anderson, requested access to Investment Board papers following The Guardian’s Paradise Papers revelations that the Endowment Fund had invested in Shell, contrary to what Council members had been led to believe. The papers revealed that £1.3m of the University’s Endowment Fund was invested in an offshore fund, Coller International, which had its biggest investment, amounting to $1bn, in Royal Dutch Shell. Despite the shocking scale of this revelation, Professor Anderson reported to the Regent House on 23 January 2018 that he was denied access to the Investment Board papers he requested, adding

I can conceive of no valid reason for keeping it confidential from the trustees of this University. We are responsible after all.

Such instances are merely symptomatic however of a wider culture of opacity that has been recognised by many parties. Despite the recent damning revelation of its own embroilment in scandals regarding oil investments, even the Divestment Working Group, reporting earlier last year, remarked on the opacity of the Investment Office and recommended that transparency be improved.2 Despite this, in the same note of dissent provided by Council members to the Annual Report, the signatories noted

Council members have since demanded access to Investment Board papers on more than one occasion; this has either been denied with various excuses, or access has been promised and not delivered.

Clearly then, issues of the transparency of the Investment Office have been, and continue to be, a severe and persistent thorn in the side of Council members’ and others’ attempts to provide accountability and scrutiny to our University’s investments. It is for this reason, that I impress on you today the urgency of using this opportunity to help build a more transparent and accountable Investment Office. One which discloses the companies and funds it invests in and one which holds meetings at least once every year to report on its activities and take questions from members of this University. Only in this way can the Investment Office leverage our resources and influence to build a more stable, sustainable, and just future.


Ms S. Thorpe (Newnham College):

Deputy Vice-Chancellor, learning so often happens by example and this week approximately 20,000 students learnt two things from the example set by the University of Cambridge: that democratic processes can be overridden and that private donations trump public interest.

First, the University have shown complete disregard for democratic processes. Students first mobilised all the way back in 2015 to pass a CUSU motion in support of divestment. Staff have, in their hundreds, signed open letters calling for Cambridge to divest, adding their voices to high-profile figures, from the Labour Party leadership to the former Archbishop of Canterbury, from Noam Chomsky to Naomi Klein. Finally, a Grace calling for divestment was passed in 2017 here by the Regent House, supposedly the University’s governing body. However, management ignored the mandate of the Grace and kicked the issue into the long grass by setting up the Divestment Working Group. Last June, following recommendations from this working group, the University rejected divestment from fossil fuels. The University fundamentally fails in its central mission to ‘contribute to society through the pursuit of education’ if management are able to override the democratic will of students and staff.

The second lesson that we learnt this week came from the shocking revelations in The Guardian, which revealed that private donations trumped public interest and influenced Cambridge’s rejection of divestment.1 The profound links between members of the Working Group and the fossil fuel industry make a mockery of the democratic process. At the same time as sitting on the Divestment Working Group, Professor Simon Redfern was overseeing donations of £20 million and £2 million from major fossil fuel companies BHP Billiton and BP, yet failed to declare this clear conflict of interest. Both Vice-Chancellor Stephen Toope and Vice-Chair of the Working Group John Shakeshaft were fully aware of Redfern’s management of these donations, yet neither disclosed that the donations were on the table or the clear conflict of interest. This completely discredits the Working Group process and ultimately calls into question the integrity of this institution.

It is almost laughable that this process has rolled on for so long. If Cambridge is to regain any credibility as an institution then the pantomime must end. The Divestment Working Group and University Council’s rejection of divestment must be revoked. The University must embrace the democratic mandate of the 2017 Grace and divest from fossil fuels.

Mr S. J. Warren Miell (King’s College):

Deputy Vice-Chancellor, we have heard about the gravity of the situation regarding climate change and also about the technical details of why divestment is the correct course of action, so I don’t want to rehearse these points. I would like instead to draw attention to an aspect of the issue which is particular to our place here in an institution like the University of Cambridge.

I went to the type of school where each day everyone assembles to sing hymns in a huge musty hall lined with boards displaying the achievements of the school’s alumni. In the front corners, next to the ones entitled ‘University Distinctions: Oxford and Cambridge’, there are a group of boards listing the names of those alumni admitted to the Indian Civil Service. For those who don’t know, for about a hundred years, young men from Britain’s most distinguished public schools would take examinations to join this service, and, if they passed, would spend two years at university – usually Oxford or Cambridge – preparing to be sent off to India to administer the Raj. Likewise, the highest levels of the administration of the British Empire in Africa were drawn from this University and the other one. Seeing these boards every day, it was not lost on me that the people who ran the Empire were in many senses my predecessors, and looked and sounded like this. In my first term here Professor Peter de Bolla told me that the function of a place like Cambridge is to train young people to go out and be citizens of the polis. Historically, the highest expression of the British citizenry was its Empire, the rule of Britannia, which defined its polis as whatever was within the reach of its lily-white tendrils; wherever the law could be made by and for the sake of the British alone. Cambridge was one of the institutions directed to this end.

I don’t think I need to remind anyone here that the function of British colonial rule was to extract, brutally, as much value as possible from resource-rich parts of the world, at the cost not only of the self-determination but also of the health, homes and livelihoods of the people who lived in these places. With this in mind is not hard to see how the activities of companies like BP and Shell represent the modern face of colonialism. In fact there is very clear continuity between the Empire and contemporary extractivist projects.

For example, in 1960 Nigeria gained independence from the UK. Almost immediately the government, looking to generate revenue, began forcing people in the Niger Delta to abandon their land to the Shell D’Arcy company, a British arm of Royal Dutch Shell, which had long been active in the Colony of Nigeria and had discovered viable petroleum in the area in 1957. By the 1990s, one of the ethnic groups which live in the Delta, the Ogoni, had started a movement to protest the utter devastation Shell had for decades wrought on their homeland, devastation with which they are still living today. Like the subjects of the Empire, when the Ogoni people rebelled, they were swiftly dispatched. The military dictatorship, to whom Shell had made payments, sent in soldiers, who killed around 2,000 people and left around 100,000 displaced. Nine leaders of the Movement for the Survival of the Ogoni People were executed. Amnesty International, who are looking to bring a criminal case against Shell on behalf of the Ogoni, write that,

The evidence shows Shell repeatedly encouraged the Nigerian military to deal with community protests, even when it knew the horrors this would lead to – unlawful killings, rape, torture and the burning of villages.

We know moreover that those in the highest echelons of the contemporary colonialism that is the fossil fuel industry are, as in the days of Empire, often Oxbridge-trained. We know this not least because they keep coming back here to tell us about it. Look no further than alumnus Andrew Brown, Shell’s Upstream International Director, who is responsible for ‘the exploration and production of oil and gas from conventional, shale and deep-water sources.’ Every year we invite him to Cambridge to tell us about his and his company’s exploits, and to schmooze with some of the University’s most senior figures.

This is the underside of our supposed internationalism. Today, the University of Cambridge is internationalist inasmuch as it enjoys making money from students who come from other countries. It is internationalist inasmuch as ‘Global Cambridge’ is an expedient brand name, especially for assessment and publishing businesses. My own College has a Provost who is very happy to accept kudos for flying the EU flag from a building, but unwilling to represent the will of our very international membership in his capacity as a Council member by advocating for divestment. In other words, Cambridge is internationalist up to the point where anything at all is actually at stake. Beyond this, we don’t really want to know anything about it, no matter what the human cost, no matter how severe the emergency.

For these reasons, I think it is important to stress that the Cambridge Zero Carbon Society, insofar as it calls for full divestment, does not see itself as a radical organisation at all. When one takes into account both the scale of what we are faced with and our institution’s particular place in the history of the exploitation of Africa and Asia, divestment is the most minimal demand, the absolute lower limit of what the University must do. It is what is nearest, reasonable, the middle term. It is already belated, and until it is completely realised, the situation will remain intolerable. So if we are militants, we are militants of this minimal demand. We are not, by contrast, extremists, because the only extremism lies in believing that things can go on as they are. Make no mistake, those who advocate for a continuation of the status quo, represented here by continued investment in fossil fuels, will be seen by posterity as utter extremists, out-and-out nihilists. To them it will not be enough to repeat the line that future generations will damn them in their graves for what they have done, because they are already being damned by us and by the people who have the most to lose, which is to say the people from whom they are never made to hear a thing. Anyone who opposes divestment, and in fact anyone who opposes measures that go far beyond divestment, is not someone who see things differently, but someone who does not see things at all, at least beyond their own nose. These people are inimical to humanity in general, and to the humanity of the Global South in particular. So divestment will not come with a victory parade, but with the solemn acknowledgement that it is only the smallest step in beginning to take responsibility for ourselves, because we may already be beyond forgiveness.

There is another definition of education which belongs to the French philosopher Alain Badiou. He writes that

‘education’ (save in its oppressive or perverted expressions) has never meant anything but this: to arrange the forms of knowledge in such a way that some truth may come to pierce a hole in them.

Even in its cardinal movements, the University-wide Decolonise movement has pierced the forms of knowledge produced in Cambridge with the overwhelming truth of Empire and its legacy. This is a legacy we are yet to meaningfully confront, and cannot in any way confront as long as we are directly invested in it. The Ogoni stood up to Shell because, in the words of their Movement’s leader, Ken Saro-Wiwa,

...while the land is ravaged
And our pure air poisoned
When streams choke with pollution
Silence would be treason

This conviction was one for which he and others gave their lives. Compared to this, what is being advocated for here is almost nothing at all. I reiterate: it is the most minimal demand. In regard to this meagre challenge, I see only two courses of action: continue to excuse ourselves, or begin to change ourselves.

Ms R. Hunter (Murray Edwards College):

Deputy Vice-Chancellor, Cambridge University has to date shown contempt for the democratic will of its members, as was evident in the undisclosed conflicts of interest held by members of the Divestment Working Group. The University’s continued endorsement of fossil fuel companies by extension has shown little consideration for the millions of people already suffering due to their actions. Whether that be due to resource exploitation, leading to the destruction of livelihoods and displacement of people; or the increasing frequency and scale of natural disasters such as wildfires, floods and droughts due to rising global temperatures.

I would like to remind the room that climate change is an innately discriminatory problem. Studies by the UN show that marginalised communities are disproportionately vulnerable to the impacts of climate change. These vulnerabilities are especially prevalent when there are inequalities in socioeconomic status – based on social factors such as gender, class, ethnicity and disability. During natural disasters and resource conflicts, women face increased risk of sexual abuse and disease transmission and have increased burdens in caring for the sick and vulnerable. Increased frequency of natural disasters and resource scarcity will only further exacerbate these disparities.

We, as a University and as individuals, have benefited from the excessive exploitation of natural resources. It is morally reprehensible if we do not then take the lead in radical action against climate change. It is unacceptable, in this time of crisis, for ethical considerations to remain merely implicit in the University’s investment policy.

I hope going forward that the Investment Office can take into consideration the lasting consequences of their decisions and embrace the opportunity to join the push towards a sustainable economy and society.

Dr J. E. Scott-Warren (University Council, Faculty of English and Gonville and Caius College):

Deputy Vice-Chancellor, as a new member of the University Council, I have over the past few weeks received a fairly substantial induction, as a result of which I have begun to see the institution from a financial angle. I’ve learnt the difference between ‘Little U’, the bit of the University that we academics inhabit, and ‘Big U’, the larger entity that contains not just the academic University but also Cambridge Assessment and Cambridge University Press. I’ve learned that only 25% of our funding comes from tuition fees or directly from government, as compared with 25% from research grants and just under 40% from the two thriving businesses with which we share the ‘Big U’. I’ve seen graphs for the achievements of the ‘Dear World’ development campaign, which rise over time at something approaching a 45° angle, and I’ve come to a better understanding of our investment portfolio, which hopes to deliver a thwacking 5.25% return per year in real terms.

At the same time, I’ve learnt to view ‘Developments in the HE market’ as almost entirely negative. University tuition fees are currently being reviewed and could conceivably fall – hallelujah! – but this is bad news for the University, or it would be if the University reckoned that it made anything much from tuition fees. Pensions might seem like a nice bauble for academics, but they are becoming more expensive for employers, and given the risk that the rest of the UK’s universities might collapse they represent an existential threat to Cambridge as an institution. The Office for Students is becoming ever more oppressive as a regulator and ever less significant as a source of funding. Meanwhile Brexit renders everything uncertain, although it is possible that EU students will be transformed overnight into International Students and so will bring us more money rather than less, assuming that the numbers hold up. Only research grant income can be counted as a genuine plus point, since we get a good slice of the national pie, but even there we find worries aplenty, to do with EU funding, full economic costing, and the restructuring of research councils.

In short, I have been welcomed to the semi-privatised University, the aim of which is to strive for ever greater financial independence from a government that is ever more intrusive and ever less supportive. I’ve been introduced to an institution that proudly trumpets its successes – revenues enjoying compound growth of 6.5% since 2012, taking our income from £1.32bn in 2012 to £1.96bn in 2018 – whilst doubting that its luck can hold, and fretting about all the potential risks that lie in wait for its operation. Amazingly, my University is even apparently biting its nails about the possibility that a period of ‘pay inflation’ will follow a period of (ahem) ‘pay restraint’, even though precious little ‘pay inflation’ is currently in view for anyone below the top tier. So the overall picture is one of risk aversion and investment maximisation, on the assumption that more money can only be good for the University’s mission ‘to contribute to society through the pursuit of education, learning and research at the highest international levels of excellence’.

This is the context in which the Investment Office pursues its work, with the sole aim of making as much money for the institution as it can. This it does through the skilful deployment of brilliant fund managers whose identities are necessarily undisclosed, and who invest our money in funds that are necessarily hidden to us. This might be a just-about viable strategy were we able to insist that certain areas of investment that are incompatible with our wider aims are strictly off-limits for our fund managers. So as an institution that values the future survival of the human race, we might refuse to invest in companies that produce fossil fuels. As an institution whose members have qualms about the carnage of modern warfare, we might refuse to invest in arms companies. As an institution that values the social cohesion that comes from taxation we might refuse to put our money into tax havens or companies that are known for ruthless tax avoidance. But our fund managers are apparently busy people with lots of clients to juggle and cannot be expected to come up with bespoke plans to accommodate our ethical concerns. (How they accommodate our existing red lines over tar sands and thermal coal, I do not know and am afraid to ask.) So our current practice is to give our fund managers a general indication of our ethical predisposition and let them get on with it. No oversight is possible, from Council or even from the Investment Office itself. We can all see what the likely results of this policy will be: more leaks like those in the ‘Paradise Papers’, which showed that we had £30m of shares in Shell, and the consequent reputational damage that such leaks bring with them.

Some will say that we have no choice over our investment policy; the University is obliged to act in its own financial self-interest and our ‘fiduciary responsibility’ dictates our current amoral approach to investment. A quick glance at the government publication Charity and Investment Matters: A Guide for Trustees scotches any such view; section 3.3 asks ‘Can a charity decide to make ethical investments?’ and answers (firmly) ‘yes’, for example if ‘a particular investment conflicts with the aims of the charity’ or if ‘the charity might lose supporters or beneficiaries if it does not invest ethically’. Some will say that the 5.25% return deriving from our current policy is worth the price of zero transparency and the attendant reputational risk. My view is that the University needs at the minimum to find a way of returning full oversight of the Investment Office to the Council, with whom the buck will stop in cases of serious mismanagement or reckless behaviour. More idealistically, I hope that the Investment Office will discover its moral compass, understanding that the University’s mission to contribute to society entails broad ethical obligations. Alongside immediate and lasting reputational advantage, such a realisation might also begin to alleviate many of the perceived risks in the University’s operating environment, for the good of us all.

Dr J. Guarneri (Faculty of History and Fitzwilliam College), read by Dr Scott-Warren:

Deputy Vice-Chancellor, I fully support the call for a transparent and accountable Investment Office. This aligns with the democratic governance of this University, which we all value deeply and which I assume the members of the University Council take very seriously indeed.

We educate young people for promising futures. At present, many of our investments fuel industries that threaten those futures. We undercut our own mission as a university if our investments enable the mining of fossil fuels, making the earth a more dangerous place for our own students.

I seek an Investment Office that matches the commitment and creativity of the students and staff of the University of Cambridge. We can and should harness the University’s wealth and intellect to devise a pioneering and responsible investment policy.

Mr M. Llavero Pasquina (University Council and Girton College):

Deputy Vice-Chancellor, I am a postgraduate student and a member of the University Council but today I am speaking in my personal capacity.

Many of you will remember the last Discussion we had on the Investment Office in 2016.1 Since then many things have changed. The Regent House put forward a Grace signed by 140 members calling for the University to divest from fossil fuels.2 Council then decided to overrule the democratic mandate of Regents by invoking fears that the University will struggle financially.3 Instead, Council offered a process that was arranged from the beginning to derail the conversation to anything but divestment,4 and welcomed the interference of the fossil fuel industry, the principal responsibles for the climate crime.5 Months later, Council decided to rule out even the only progressive recommendation of the Divestment Working Group to offer just more collaboration with the fossil fuel industry through a green-washing ‘Centre for a Carbon Neutral Future’.6

Students and staff have voiced time and time again our discontent with the way the University Council has managed the divestment debate, both institutionally and morally. Pressure from students and academics triggered the resignation of the Chief Investment Officer and half of the Investment Office team last September.7 And now the University investment model is in crisis. A crisis that reflects a huge divide between the democratic will of the members of this University and the profit-driven ideology that has dominated the Investment Office for the last ten years.

But in this crisis, we have an opportunity.

In the decisions we take to define the future of the Investment Office, Council has now an opportunity to reconcile the views of the membership of the University with our investment operations. The Grace approved by the Regent House in 2017 not only asked for the University to commit to fossil fuel divestment, it also asked that the University Council commission a Report on which approaches the University could take to divest from fossil fuels. While the Council made the case that a commitment to divest interfered with its fiduciary duty, there is no such argument that can be invoked to stop Council from looking at which ways the University could envision to divest from fossil fuels. The Divestment Working Group did not address that question at all, putting in question any of its conclusions. The democratic mandate for a Report on how the University could divest from fossil fuels continues standing.

Since the last Regent House Discussion we have had two College commitments to divest, Queens’ and Downing, and two thirds of Russell Group Universities have now also faced up to their climate justice responsibilities and committed to divestment. The widespread commitments of Higher Education institutions across the UK, and endowments as large as New York city, with $189 billion, give compelling precedents in which we should mirror ourselves. Having these examples at hand makes an imperative for the Council to consult with these institutions about which ways could be taken to achieve divestment. In my view, this is the best moment for Council to consider in which ways the University could divest from fossil fuels. In such a task, we can do a cost-benefit analysis of the different options we have on the table.

In fact, considering how much we would gain or lose in divesting from fossil fuels is the least the Council should do. Otherwise Council still lacks any factual justification for which it chose to overrule the legitimate and democratic demands of Regents in its rejection of the 2017 Grace. Until Council doesn’t factually demonstrate how Divestment interferes with its fiduciary duty, it will have no legitimacy on the Divestment debate.

In the process of looking at which ways could the University divest from fossil fuels, we should not repeat the mistakes we did with the Divestment Working Group. This time, the Report needs to be considered in full transparency and democratic accountability. It has to be led by staff and student representatives and must be free from any fossil fuel interference.

With a world already at 1ºC above pre-industrial times, and hundreds of millions of vulnerable people already feeling the brunt of climate injustice; with the recent IPCC report telling us what a world of runaway climate change looks like beyond 1.5ºC of warming; and knowing we only have twelve years at current emission levels, we should take swift action and make a commitment to divest from fossil fuels before the end of the academic year.

Mr J. L. C. Che (Hughes Hall), read by Mr Llavero Pasquina:

Deputy Vice-Chancellor, I apologise for not being able to deliver this message in person, but in some ways this is fitting. For also amongst the unrepresented today are the people from future generations, the people living in floodplains in Bangladesh, the most vulnerable and most unheard in the discussion.

Sustainability is not just economic sustainability. Sustainability is environmental and social. Sustainability is a moral choice. For if our actions cannot be sustained in the long term, we are robbing the future of that choice. It is not so different from stealing from our children and grandchildren. While Cambridge pays lip-service to sustainability, I hope that it remembers that its mission statement ‘to contribute to society through the pursuit of education, learning and research at the highest international levels of excellence’. This pursuit cannot be achieved without a sustainable economy.

Right now, it is abundantly clear that our actions are not sustainable. It is clear that fossil fuels are not part of a sustainable future. To invest in fossil fuels is to bet against our own sustainable future. I implore Cambridge to divest immediately and show the world its leadership in climate change.

Dr E. C. Quigley (Centre for the Study of Existential Risk, Centre for Endowment Asset Management, and Clare College):

Deputy Vice-Chancellor, I wasn’t planning on speaking today but I was a member of the original Ethical Investment Working Group and I do worry about how this debate has gone. I think it is perhaps unhelpfully centred around just divestment because we need to actually go quite a bit further than that to get to rapid decarbonisation within the time period that we have.

I also worry about the extent to which we are not taking into account human cooperative instincts in solving a major problem like this. I worry that we are raising the hackles of people who might otherwise want to effect the rapid transition that we need. I think that we actually have a fairly sympathetic Vice-Chancellor right now and some of the senior administrative figures have a similar interest in rapid decarbonisation.

I am glad that we have decided to divest from tar sands. I am from that region of Canada and it has embarrassed them tremendously and that is the point. I think that that is a huge first step. That said, the money that is ever divested from tar sands companies is shifted around among the shareholders so it really is about the announcement. So transparency is important but only because if you divest and you don’t announce it, it is like a tree falling in the forest. I think that we need to actually meaningfully shift capital so I think we should be making all sorts of divestment announcements that selectively embarrass marginal industries and companies. But I also think we need to go way further than that.

I think that the University should be directly engaging with the executives of these companies that we would want to rapidly transition. So Shell and BP are headquartered here and I doubt they would turn down an invitation from the Vice-Chancellor or another figure within the University. But I also think there are major banks that are bankrolling coal still, which is absolutely insane, as well as auto industry players, utilities – the major sources for demand from fossil fuels. We can’t divest from all of that stuff – at least not with our current system in place – but I think we can be aggressively diplomatic. I think that we can use people’s genuine concern over this issue – I mean, this is an emergency – and I think that that is actually recognised by at least some. (Probably more among people under the age of 40, and I would challenge anybody who is not that concerned who is older than that to think about that very carefully; about why you might not be as concerned as those of us who will see the effects of this stuff before we live to your age.)

The point is, we can be creative here in a way that is not being discussed in the current narrow focus of the discussion. Cambridgeshire is under-forested. We have 3% tree cover relative to the UK average of 12%. We have peatlands around us that are enormous carbon-sinks. The University itself should become carbon-neutral rapidly to demonstrate how it is done, because we could bear the cost of this much more easily, in a low interest rate environment – we can issue bonds, we can do things cheaply – show how it’s done and make it easier for others to do it. We can engage directly with all these companies in all of the sectors I’ve talked about, not just the fossil fuel sector. Because the thing that would scare my family members who work in tar sands the most would be if demand were to drop ahead of schedule, which I personally believe it’s on schedule to do. And we can actually accelerate that transition; and because markets work with expectations, long before the demand actually dropped it would be scaring investors away from various stupid investments like pipelines and so on – infrastructure that otherwise would be built and fixed – and run at a loss for the future.

I think we should be much more expansive in thinking about this. I think we should have a wide range of tactics – all with the goal of both rapidly decarbonising our own house so that we don’t have the cry of hypocrisy at our doorstep, which we’ve just seen in The Guardian how damaging that can be – but also then we should be investing in a way that is actually quite easy. Most of the investment that the University has is in public equity – again, that is just shifting around among investors, we are not actually putting capital directly into those companies. That is most of the Endowment; the rest we can actually positively invest. We can decide which things we want to make it on to that secondary market in the first place, which is a big function that no one seems to be talking about. When you issue bonds or you put together an Initial Public Offering to be listed on the stock market in the first place, that is allowing companies to grow that maybe shouldn’t grow. Those are strategic interventions that the University can be making in a way that does not put at risk all these things that we keep hearing about in terms of the purpose of the Investment Office to fund the important work that goes on in this University. I don’t think there is a trade-off. I think if anything there is much greater risk in continuing as we’ve done; the reputational risks alone for a university that, frankly, rests on reputation…

Let us be as ambitious as we can possibly be about this, and do so in a way that brings people on board. I don’t want to see defensiveness halt the participation and cooperation of people who would otherwise be active parts in finding the solution that we need.

Mr A. L. Odgers (Chief Financial Officer and Pembroke College), read by the Junior Pro-Proctor:

Deputy Vice-Chancellor, I am the University’s Chief Financial Officer. I believe the broad model pursued by the Investment Office in the past has served the University well and should be continued albeit with an increase in the level of information made public, balancing the legitimate interests of our stakeholders with appropriate measures to protect the CUEF investors’ best interests.

The Investment Office largely operates a ‘fund of funds’ model where a small investment team do not try to pick the best investments themselves which would be an impossibly large job, but rather look for the best fund managers; managers who can out-perform the market (after their fees) and can allow the CUEF to hold a globally diversified portfolio of assets to limit investment risk.

This approach has worked well for us over the last decade. The June 2018 balance of £3,193m represents the combination of the actual returns, distributions and net in/outflows of the CUEF over the last ten years. However, applying those same distributions and net in/outflows instead to the returns of a passive 65/35 benchmark the fund would have ended up with a value of £2,879m. This means the CUEF has out-performed its market benchmark by 1% p.a. on average – producing a compound out-performance of some £300m. This level of out-performance is equivalent to £25–30m each year on an ongoing basis. To make this money up elsewhere in the University would require significant cuts or new revenue sources.

There is reason to believe that the outperformance is not just luck or the skill of one particular CIO (although a skilful CIO who is able to choose the right fund managers is a key component of the model). The US private universities with large endowments as well as Oxford and the Wellcome Trust all use this model for a substantial part of their investments and, to a greater or lesser extent have also out-performed the market. The likely reason for this is that as very long-term investors, we are able to invest in assets that are more illiquid (can’t quickly be sold at a fair price) which, all things being equal, generate a higher return to compensate for this illiquidity. Furthermore, we are not bound by regulatory ‘matching’ of assets and liabilities which have encouraged pension funds into the purchase of assets such as government bonds despite their very low returns. Finally, our brand and long-term investment horizon allow us to access funds that are not otherwise open to new investors.

The CUEF holds not just University money but money from the Gates and other Trusts and from sixteen Colleges. The University as Trustee of the fund and sole owner of Cambridge Investment Management Limited (CIML), the regulated fund manager, has a responsibility to these investors also.

CIML’s policy is not to disclose details of the CUEF’s fund managers publicly or to its investors (which given the large governing bodies of its various investors is effectively public). This approach is designed to protect its intellectual property (an ability to identify the best managers is a valuable skill) and its ability to access these fund managers. The policy of not disclosing fund managers is common to the Wellcome Trust, Oxford University and the large US private university endowments and has been strongly recommended by our Investment Board.

That does not mean that there is a lack of transparency to our Investment Office or the Investment Board who monitor the selection of managers and their performance. As part of a response to the Divestment Working Group report, sector data on the holdings is being made available to investors and will shortly be made available publicly for the first time together with more information on the operation of the Investment Office. A key part of the approach to selecting managers is to assess their own approach to investing. Managers whose approach is inconsistent with the University’s set of Investment Principles are not selected. However, under the fund of funds model, it is not possible to divest from the underlying holdings directly as these will be selected by the fund manager and CUEF will represent generally only a small proportion of the fund.

Nevertheless, there may be other ways for our investment strategy to support a transition to a low carbon economy. The Council, in its response to the Divestment Working Group, focused on the opportunities that may exist with environmental impact investing. Such investments may be made through the Investment Office but equally they might be made through some other specialist body or bodies in the way we have done with Cambridge Enterprise and Cambridge Innovation Capital.

There has been significant work in the Investment Office on increasing transparency of sector holdings and on the development of a website to make information easier to access. In addition, I have had a wide range of discussions with potential fund managers in relation to environmental impact investing, and we are developing a strategy for impact investment to complement our research and teaching, and in particular the work of the new Centre for a Carbon Neutral Future.

Dr R. Foster (External member of the Finance Committee and of the Investment Board, and Christ’s College), read by the Junior Pro-Proctor:

Deputy Vice-Chancellor, I am an external member of the Investment Board and of the Council’s Finance Committee, but I speak today in a personal capacity.

This topic of concern raises a number of issues which have been considered by the Investment Board, and which coalesce around the answers to the three main questions raised by the signatories to this topic of concern – firstly, weighing up considerations of transparency versus income generation; secondly, whether ethical considerations should remain implicit rather than explicit and legally binding; and thirdly, how the Investment Office should respond to specific campaigns.

On the first question of transparency versus income generation:

1.At our size, we have no choice but to run a fund of funds investment model, if we are to tap into world class investment expertise across a broad range of asset classes.

2.In order to find the best risk-adjusted returns, we focus primarily on smaller, performance-oriented managers, as opposed to the larger asset gatherers in the investment world. Our ability to identify the best of those managers is our competitive advantage. Publishing the list of managers would give away that competitive advantage.

3.The funds we focus on typically run as co-mingled funds. In other words, we do not have segregated accounts where we can dictate investment choices

4.Those smaller funds are very sensitive about transparency. They are in the business of generating alpha, or out-performance. They will not publish their holdings, because that would be giving away their advantage. Were we to publish their holdings, a number would return our money and refuse to deal with us and we would risk developing a reputation within the investment community that would discourage others from dealing with us.

5.In not identifying funds or fund holdings, we are exactly in line with other comparable University Endowments (see, for example, Oxford and the Ivy League in the US) and permanent pools of capital such as the Wellcome Trust, and for the same reasons.

6.However, the Divestment Working Group’s report raised the legitimate question of whether the Investment Office could be more transparent. In response, the Investment Office has agreed to publish sector holdings, which will be made available shortly

On the second question concerning ethical considerations:

1.With our fund of funds investment model, the only choice we have is to invest or not invest in a fund. We cannot tell the fund what assets to hold. A legally binding restriction not to invest in any fossil fuel company, for example, would reduce very significantly the number of funds we could invest with (i.e. all those funds which have not explicitly ruled out investment in fossil fuel companies, whether or not they hold such stocks at the time of our decision to invest). We believe this would have significant implications for expected returns.

2.However, our due diligence process does look at how funds take environmental and social issues into account and how those factors are built in to their company valuation models. We expect social and environmental risks will play an increasing role in corporate valuation models in the future, as managers realise that such risks are shorter term than they have previously thought and will therefore impact value. We also expect that these considerations will have a growing importance in our due diligence process.

The fundamental issue that the signatories to this topic of concern raises is how the University can best live up to its mission statement and make a real difference to environmental and social concerns. We thought hard about this in response to the Divestment Working Group’s report and concluded:

1.the evidence to date (and Shell is a good recent example) is that engaging with companies to change policy is more effective than divestment;

2.identifying categories of companies that the University should divest from is fraught. For example, the major oil companies are also investing in hydrogen fuel cell technologies, carbon sequestration and other renewable sources that are critical to managing global temperature rises over the next decades. Should we divest or encourage? The cement industry is one of the most polluting. Producing a tonne of cement produces 0.75 tonnes of carbon dioxide. Should we divest from construction materials companies? How would the Regent House define the envelope of which industries and companies are acceptable?

3.the University has the best opportunity to be a force for good in society not by negative screening, but by pulling together all the research across the University addressing aspects of climate change and putting money behind the ideas likely to have the largest impact. We are investigating setting up impact investing funds, including within Cambridge Enterprise (which has the skills to patent IP, develop commercialisation opportunities, etc.) to prioritise climate change related investments to maximise the University’s direct impact. Impact investing is a very different style of money management and requires a very different skill set from the Investment Office. We think we can maximise the University’s contribution to halting global temperature rises by looking at all the ways open to us to invest, and not by focusing narrowly on the Investment Office. That approach also helps manage the complications inherent in Cambridge Investment Management Limited1 and the Investment Office managing third party money as well as the University’s endowment fund, which limits their degrees of freedom to make unilateral changes.

Finally, on the third question on how the Investment Office should respond to specific campaigns:

The Investment Office does not set its own investment objectives but rather implements the objectives agreed on behalf of both the University and third-party investors such as colleges and trusts. This important question should be addressed to the University and not the Investment Office.


  • 1CIML, the wholly-owned University subsidiary that operates the Cambridge University Endowment Fund.

Professor R. J. Anderson (Department of Computer Science and Technology and Churchill College), read by the Deputy Senior Proctor:

Deputy Vice-Chancellor, I was on Council ten years ago when the Investment Office was established and for a further term up until December 2018, during which we saw the divestment movement and the departure of the Office’s senior management team. I have already told this House about the Vice-Chancellor’s failure to make the Investment Board’s papers available to Council.1 Let me now try to fill in the back story.

For many years the University managed its endowment perfectly well without investment staff; investment management was simply one of the duties of the Treasurer. After she left, the Director of Finance took over, under the supervision of the Finance Committee, of which I was a member in the early 2000s. The equity part of our portfolio was substantially invested in the income growth fund of Foreign and Colonial, whose underlying assets were boring blue-chip stocks. Capital gains were muted; the fund appreciated less than the FTSE in good times, such as the dotcom boom, but fell less in the bad times that always follow. The income was a steady 4–5% and that was exactly what we needed to pay salaries and scholarships.

Vice-Chancellor Alison Richard was unhappy with this. While Provost of Yale she’d benefitted from an aggressive investment manager who’d doubled the value of its portfolio, enabling her to hire more professors. Some of us knew enough economics to resist this. Many years ago, John Kenneth Galbraith noted that markets are now so large and so liquid that anyone who could predict outcomes better than random would rapidly end up owning all the fungible wealth on the planet. Since then we have seen the perfect markets hypothesis (now graced with a Nobel prize) and substantial econometric research which shows that stock-picking doesn’t work; some fund managers get lucky, and others don’t. None are consistently lucky. Yale’s fund eventually fell again, but not in time to deflate the grand plan to hire a similar manager here.

We were assured that the new Chief Investment Officer would not pick stocks, but instead pick fund managers. But surely the same arguments, and evidence, apply. We were told that the Investment Board would decide asset allocation, and the CIO would merely implement that. In that case, why did we need to hire someone expensive, as there wouldn’t be very much for him to do? This got us down to the Vice-Chancellor’s real argument: she wanted a story to tell prospective donors who wanted reassurance that the millions we were asking them to donate would continue to fund studentships that would preserve their names for many years to come.

She had a majority in Council, and the Investment Office grew as bureaucracies everywhere do. The CIO needed a deputy, and then another one, and pretty soon we had half a dozen high-paid analysts with offices in both Cambridge and London and a budget of three million a year, all doing the job that the Treasurer used to do in a couple of hours a week.

Two related issues have troubled us since then; the Office’s performance, and its secretiveness. I suspect the two are related. If your profession is picking stocks (or fund managers), and you sell the dream of above-average returns when actual outcomes are going to be random, then you’d better have a good story.

The Office has always been secretive. When we hired the CIO, he was presented to us at the end of a Council meeting; his CV and references were handed round and collected again afterwards, so we had no record to keep. We were allowed one question each, with no follow-ups. When the CIO was later invited to a meeting of the Board of Scrutiny, he was accompanied by the Director of Finance to field the hard questions. The Investment Office’s refusal last year to let Council see the Investment Board papers simply continued an established pattern, or should I say patter?

Did we get decent returns from the Investment Office? Initially, yes, as our endowment was largely in cash during the crash of 2008. That was not something for which the Office can take credit, but rather Lord Wilson of Dinton who persuaded the Vice-Chancellor that we should sell the Foreign and Colonial units in order to give the new Office a clean field to work in. So the Office got lucky. More recently, I observe in their latest report the admission that had we simply put the endowment into global equities, we’d have made more money than they did, from all those complex and opaque investments that we cannot possibly be told about.

Personally I voted against the establishment of the Investment Office and I see no reason to believe that I made the wrong call.

If we are now going to do ethical investment we will need a complete change of strategy, as there aren’t enough ethical fund managers to justify spending three million a year on hiring people to choose between them. Work of a different kind will be needed. It will not be enough to think about Shell. Given the war in the Yemen we’d better think about BAe as well, and then there’s Big Tobacco, and maybe even Facebook. The moral work has to be done first, and the spreadsheet work second.

In summary, I do not accept that the Investment Office possesses some critical magic before which we must bow down, or that Council members as trustees of the University have a duty to do whatever the Chief Investment Officer tells them. The duty of trustees is to not be taken in by smoke and mirrors. That means studying the accounts, reading the relevant research, making a serious effort to understand what’s going on, understanding the difference between luck and beta, and exercising judgment.

Mr O. F. G. Hailes (Trinity College), read by the Deputy Senior Proctor:

Deputy Vice-Chancellor, there are two myths about the law that have been used to deflect the democratic demand for fossil fuel divestment. The first relates to charities law and the second to corporate governance. These myths tend to be wielded as conversation-stoppers to shut down debate and to induce an unwarranted degree of deference to the preferences of the Investment Office. In discussing the future of the Investment Office, therefore, it is important not to buy in to these myths and to understand properly the coordinates for decision-making by the Council of the University of Cambridge and by fossil fuel companies.

Myth 1: The law prevents the University from divesting because it must maximise the return on its investments

The first myth is that to divest would be in breach of fiduciary duty. Indeed, the University Council members – as trustees of the University, which is treated legally as a charitable trust – each owe a duty to invest prudently for financial return and in accordance with the University’s charitable purposes. Commonly it is supposed that this means the University must maximise its returns come hell or high water. But that position is a policy choice – not a legal requirement – which has been adopted by those who were previously in charge of the Investment Office and with the complicity of the Council.

Fund managers are beginning to realise that their duty to invest prudently must also include an obligation to take into account the financial and climatic risk of fossil fuels. The Financial Times reported recently that investors are losing faith in the returns on offer from fossil fuel companies due to short- and long-term challenges, and because ‘there are so many other opportunities available’ for investors. Moreover, Cambridge researchers and the Governor of the Bank of England have independently identified a ‘carbon bubble’ that could wipe out trillions of investments through stranded fossil fuel assets. These purely financial considerations must also be situated in the context of the University’s ‘core value’ – according to its website – to hold ‘concern for sustainability and the relationship with the environment’.

It is highly unlikely that these factors are taken into account when the Council makes investment decisions on behalf of the University. Indeed, the current investment model outsources decisions to third parties, effectively securing the conditions for wilful ignorance in the University at the highest level. The trustees must no longer be allowed to fall back on plausible deniability. It is pleasing to see that five members of Council recently dissented from the University’s Annual Report in protest at the opaque operations of the Investment Office. In their view, the present arrangements mean they ‘cannot properly discharge [their] duty as trustees of the University if [they] are arbitrarily and persistently denied … access to … documents’, notably those of the Investment Board.

When we stack these factors, therefore, the Council’s fiduciary duties do not pose a legal impediment to fossil fuel divestment. Divestment is certainly within the scope of the trustees’ collective discretion, and it may well be the best course of action to preserve the long-term value of the endowment in the light of growing financial risk. That is why over 1,000 notable institutions – including the City of New York, the Norwegian Sovereign Wealth Fund, and half of the universities in the United Kingdom – have decided it is prudent to divest from fossil fuel companies. In short, the call for divestment – alongside transparency and accountability – is grounded in an honest application of the University’s existing legal duties and charitable purposes.

Myth 2: It is more effective to retain shares in fossil-fuel companies and encourage them to alter their business model

The second myth is that it would be more effective to engage with fossil fuel companies through shareholder activism. This tactic has been pursued for nearly thirty years and has consistently failed to deliver meaningful commitments. To take a recent example, when an activist shareholder group last year launched a campaign to force Royal Dutch Shell to set hard targets for cutting carbon emissions, just 6 per cent of those eligible to vote backed the plan. The urgency of the climate crisis means we cannot afford to waste time on an ineffective tactic. Fossil fuel companies will always seek to maintain the profitable extraction of fossil fuels as their primary business practice.

Indeed, the law of corporate governance requires directors to promote the success of their company. The scope for change is always constrained by a company’s size and business model. For the best part of a century, the major fossil fuel companies have wrapped the planet in infrastructure to extract and distribute carbon-intensive energy sources. Such companies, in other words, are hard-wired to preserve the value of their assets. They will transition only on their own terms and at a snail’s pace unless induced by external intervention. No amount of shareholder engagement can alter that structural reality. It is naïve or dishonest to suggest otherwise.


The Investment Office has pretended that its hands are tied on the question of divestment, and that there is a reasonable chance of fossil fuel companies leading the way to a low-carbon future. We can see, however, that the legal reality is precisely the opposite of what they tend to present.

The duty to invest prudently permits the trustees of the University to divest from fossil fuels within broad discretionary coordinates, and there is mounting evidence that the financial risks per se of carbon-intensive assets would warrant that course of action – let alone the University’s purported commitment to sustainability and the environment.

Moreover, the capacity for fossil fuel companies to change their business model, either in response to shareholder activism or on their own volition, is wholly undermined by the duties placed on directors which compel them effectively to reproduce the existing extractive model rather than prematurely retire their global business infrastructure.

Mr K. J. S. Rogaly (King’s College), read by the Deputy Senior Proctor:

Deputy Vice-Chancellor, one of the most common and fallacious arguments raised against divestment is that it is a ‘hypocritical’ tactic. That since in this economy almost all production and distribution relies on the use of fossil fuels, to target the companies that merely extract such fuels ignores their use across all sectors.

This is a fundamental misunderstanding of what divestment is for and that divestment is just one tactic among many that will be necessary in mitigating the worst effects of the ongoing climate crisis.

Divestment is a means of targeting the companies that are most responsible for the breakdown of our climate. Divestment seeks to discredit the continuing extraction of fossil fuels in a world in which burning anything over a third of existing fossil fuel reserves would lead to catastrophic warming of over two degrees.1 We have known this since 2015. We have also known for two years that the top 100 fossil fuel producing companies produce 71% of carbon emissions.2

These companies now claim to be ‘green pioneers’, seeking research partnerships with universities like Cambridge. Putting a sliver – for BP 1.3% of capital expenditure, a proportion that has decreased since 2005 – into renewables while planning for an apocalyptic future of 5 degrees of global warming.3

This University could make a commitment, using the opportunity granted by a new Investment team, to divest from these companies over the course of five years.

It is common knowledge to most in this debate, as shown by two Cambridge researchers last year that these assets will soon become stranded, drastically decreasing in value.4 The only reason the financial managers at this University can give to not make a commitment to sell these assets, held indirectly in funds and funds of funds, is that they would prefer to invest freely until the market dictates that such assets are no longer profitable. This is evidently needless. Why wait for a crisis in the value of fossil fuel assets to avoid a potentially groundbreaking commitment? Why continue maintaining the close ties we have to companies like BP and doing their prized PR work for them?

Vice-Chancellor, I implore you to stand for all of us. You told students last year that ‘climate change is an existential threat to the world’ and that the University has an ‘obligation to do everything in its power’ to address the issue.5 If you truly believe this and are willing to listen to your staff, students and the immense body of research on the causes of climate change then you will commit to full divestment within five years. You will recognise that as the richest university in Europe we have the power to take a collective stand against some of those who have caused climate change far greater than simply managing our existing estates.

The Guardian yesterday reported that even if warming is limited to 1.5 degrees, a third of the glaciers in the Himalaya will melt, endangering two billion people.6 That this is our current best case scenario should speak powerfully of the magnitude of long-term challenge we are facing. This is a crisis that will shape the future of the world, and of course this University.

Divestment at Cambridge represents only a tiny part of the action necessary to avoid the most devastating of climate consequences. But this is the action that is within our reach. It is the most impact that we can have as members of this incredibly wealthy institution and it could not be more desperately needed.

Dr S. J. Cowley (University Council, Faculty of Mathematics and Emmanuel College):

Deputy Vice-Chancellor, I am a member of the Council, and as such a charity trustee of the University, and also a member of the Finance Committee, but I speak in a personal capacity.

According to the Charity Commission:1

Trustees of any charity can decide to invest ethically, even if the investment might provide a lower rate of return than an alternative investment. Ethical investment means investing in a way that reflects a charity’s values and ethos and does not run counter to its aims. However, a charity’s trustees must be able to justify why it is in the charity’s best interests to invest in this way. The law permits the following reasons:

a particular investment conflicts with the aims of the charity

the charity might lose supporters or beneficiaries if it does not invest ethically

there is no significant financial detriment

Trustees must ensure that any decision that they take about adopting an ethical investment approach can be justified within the criteria above. They must be clear about the reasons why certain companies or sectors are excluded or included. Trustees should also evaluate the effect of any proposed policy on potential investment returns and balance any risk of lower returns against the risk of alienating support or damage to reputation.

The additional information about this Topic of Concern stated:

What sort of balance between transparency and income generation should be struck by the Office, given the nature of the University’s mission? Is it acceptable that ethical considerations remain implicit rather than explicit and legally binding in the University’s investment policies? Finally, how should the Office respond to the campaigns to end investment in arms and fossil fuels?

As I understand it, the balance between transparency and income generation, and the response to the campaigns to end investment in arms and fossil fuels, is struck not by the Investment Office but by the Council, the members of which are the charity trustees of the University.

I believe that good practice requires that the Investment Policy as set by the Council should be clear and unambiguous, and I would argue that it should also be transparent. This does not always appear to have been the case. For instance, on 17 June 2016 the Financial Times reported that ‘Cambridge blacklists coal and tar sands companies’2, yet in papers for the Finance Committee Business Sub-Committee of 4 April 2018 it was reported in the Cambridge University Endowment Fund (CUEF) – Information policy, that the University had no policy on ‘Coal and/or tar sands direct disinvestment’. In order that the Regent House can have trust in the Council, such confusion should not arise again.

As one of the charity trustees, if I am to agree that the University is to invest ethically (possibly with the investment providing a lower rate of return), then it needs to be clear which one, or more, of the three reasons listed by the Charity Commission justifies that decision.

Does the statement in the University’s core values of ‘concern for sustainability and the relationship with the environment’ constitute an aim of the University which is in conflict with investment in arms and/or fossil fuels?

Is it clear that the University might lose supporters or beneficiaries if it invests in arms and/or fossil fuels?

Would there be no significant financial detriment if the University disinvested in arms and/or fossil fuels?

In the recent past it can be argued (e.g. over North West Cambridge3 and the current cash-flow deficit), that there may have been too much wishful thinking in the running of University, and too little rigorous argument. When Council debates the future of the Investment Office, answers need to be available to the above questions.

On the issue of arms, if the University were to disinvest in arms manufacturers, would it not be inconsistent if the University did not then also decline research contracts and donations from such manufacturers? Would that include, say, Rolls Royce, Boeing and Airbus in addition to BAE Systems, and what about contractors to those firms? Widening the net further, what about research contracts from the Atomic Weapons Establishment, the Defence Science and Technology Laboratory (DSTL), and other Ministry of Defence (MoD) establishments? Where would one draw the line? Or is this a decision for individuals rather than the institution? From my own standpoint, while I was happy to receive NASA support, I did not pursue funding from the MoD or the US Department of Defense,4 but not all colleagues share my views.

On the issue of financial detriment, I have found it difficult to find hard data. A Council briefing paper noted that the ‘Norwegian Sovereign Wealth Fund estimates that negative screening has cost it 0.1% of equity returns per annum’, but this may be an under-estimate. If the University were to disinvest in arms and/or fossil fuels then the Council has been told that the current strategy of indirect investment by specialist managers would need to change. As we have heard, over the last decade this investment strategy (after costs) has produced better returns than the benchmark (which includes arms and fossil fuels) by tens of millions of pounds.

For ethical reasons the University might be willing to take a lower rate of return than that achieved by the current investment strategy. If so, the University should be clear in advance what the potential downsides are (whether it be £5m, £15m, or possibly £30m per annum), and what expenditure might be at risk. In the 1980s the then government argued that taxes could be lower with no decrease in services. While there was ‘family silver’ and North Sea oil to sell, the worst effects of this deception were hidden, but they are no longer. I do not believe that it would be ethical for the University to accept a lower rate of return without spelling out the potential consequences, whether it is, say, lower capital expenditure or slower increases in remuneration. Promising £350m a week for the NHS on the side of a bus was what some people wanted to hear, but it was anything but the whole story. The University should tell the whole story.

In making a decision, the University should also be clear whether disinvestment is the most effective action it can take. Last year I was encouraged by supporters of ‘Zero Carbon’ to read the Oxford publication Stranded assets and the fossil fuel divestment campaign: what does divestment mean for the valuation of fossil fuel assets?5 The report includes the statement that ‘we find that the direct impacts of fossil fuel divestment on equity or debt are likely to be limited’, and ‘with respect to the divestment campaign, understand that the direct impacts are likely to be minimal’. Does that conclusion justify taking the risk of a lower rate of return?

What the world needs is direct impact, and in that context I find a disconnect between some, repeat some, of those arguing for disinvestment and personal behaviour. If one believes in disinvestment, then how does one square that with the carbon emissions from a weekend skiing trip to Europe? What about taking a taxi back from a protest, rather than walking or cycling? A few years ago I withdrew from a depressing conversation between academic colleagues that basically consisted of bragging about where they had flown in the last year, and how many frequent-flyer miles and upgrades they had collected. Global warming is real, we have to change our behaviour, and that will be at some personal cost. However, whatever changes we make, in the immediate future fossil fuels are needed for heating, transport, the production of plastics, etc. Hence, is disinvestment the most effective way to ensure that fossil fuel companies behave responsibly? Are there better ways to affect the fossil fuel companies’ bottom line?

At the Council meeting last year when the Divestment Working Group report was discussed, I argued that divestment was not the priority. What was needed was aggressive action by the University that produced a direct impact. I sat on the Resource Management Committee for eight years, during which time the efforts to reduce carbon did not, to my mind, carry sufficient urgency. Matters have improved over the last year, but more could be done. For instance, what about preferred green suppliers (with companies that deny climate change being blacklisted), all flights paid for by the University being economy, the University no longer selling/providing beef and bottled water, car-parking charges being introduced, University and student publications not accepting adverts for flights and overseas travel, etc. Or would that, and similar, result in too great a personal cost?

There is still much more that I could do personally, e.g. from better insulating our house, to flying and driving even less. At what point will I take greater effective action? Or would it be easier to vote for divestment, the effect of which is likely to be minimal, and which, to leading order, has zero personal cost.


Report of the Council, dated 21 January 2019, on refurbishment of the Bunker as a collections storage facility for the Museum of Archaeology and Anthropology

(Reporter, 6534, 2018–19, p. 351).

No remarks were made on this Report.