Oxford University announced last week its intentions to divest from coal and oil sands companies, however, almost 70 Oxford alumni have criticized the lackluster decision, “symbolically” handing in their degrees in protest.
Oxford University considers itself “a world leader in the battle against climate change,” however it has taken a long time for the university to make any strong decision with regards to its investment decisions. In March, at the Oxford University Council meeting, it was decided that no decision would be made on fossil fuel investments until their next meeting in May. This brought with it a host of criticisms from the campaigning Oxford University Student Union, and a number of alumni who conducted a sit-in of the university administration building “to demonstrate their anger over today’s announcement” regarding differing the investment decision to May.
Fast forward to last week, and the Oxford University Council met again, and announced a raft of decisions, while noting that Oxford University Endowment Management (OUem) “already has robust mechanisms to ensure environmental and social factors are fully and properly considered in its investment decisions.” The peer pressure, however, has given the OUem reason to “strengthen” their “engagement with and reporting of the issue.” Subsequently, the Council agreed to a number of new decisions, including:
- The Council has encouraged the OUem “to maintain its rigorous assessment of potential investments across a number of risk criteria, particularly social and environmental impacts, alongside other investment criteria”
- The Council has asked OUem to maintain that there are no direct holdings in coal and oil sands companies, and to “avoid any future direct investments in coal and oil sands”
- The Council has asked OUem to “continue to improve reporting on and communication of its investment strategy, including on its website and in its annual report”
- The Council “has also asked its Environment Sustainability team to report annually on the carbon usage of sample groups of university members and on the progress towards institutional carbon emissions targets”
However, many believe that the University has not gone far enough.
The Oxford University Council wrote in its recommendations that they “support the continued inclusion of a broad range of energy investments with the Oxford Funds, where financially prudent.” The Council is upfront with its investments — which should be applauded, and allows us to see exactly what the Endowment is investing in:
As at 31 December, the Oxford Endowment Fund stood at £1.7 billion, with an estimated 3 per cent exposure to the wider energy sector. This comprised 1.7 per cent in exploration and extraction, 0.2 per cent in refining and marketing, 0.4 per cent in storage and transportation and 0.7 per cent in equipment and services.
The Council also note that a full breakdown “will now be included in the OUem’s annual report in June and every year following.”
“Not Good Enough”
None of this is enough, apparently, for Oxford students and alumni, leading to much criticism, and the aforementioned symbolic handing in of degrees.
“With the decision today the university has taken a step forward, but not a big enough one. I, with others, have decided to hand back my degree, in protest,” said Oxford alum, Sunniva Taylor. “This is not just a question of integrity for me. I want to use the privilege having it gives me to try and shake things up; to use my power to draw attention to others.”
In all, nearly 70 alumni handed in their degrees this past Saturday, citing the University’s failure to completely divest from fossil fuel companies as their primary reasoning.
Fossil Free UK Tweeted in response to the news:
— Fossil Free UK (@FossilFree_UK) May 23, 2015
Is Criticism Uncalled For?
However, despite the massive criticism being lobbed at Oxford University, it seems that many are forgetting the advice of top-flight investment analysts, who have never been huge proponents of complete fossil fuel divestment. Even putting aside the assumption that these analysts may be in the pocket of the fossil fuel industry (which is not an assumption I make, nor one with much evidence), the reality is that fossil fuel divestment is not necessarily all its cracked up to be.
In April, Britain’s HSBC released a report which delved into the idea of divesting from fossil fuels, and what to do with the likelihood of fossil fuels becoming stranded assets in the near future. The conclusions are two-fold:
Divesting fossil fuel stocks removes assets but dividend yields may suffer and portfolios become more concentrated. Holding onto stocks allows investors to engage with companies and encourage best practice, although there are reputational as well as economic risks to staying invested. Companies can cut capex but risks remain in maintaining exposure.
Such advice was almost immediately put into practice by the University of Edinburgh, in Scotland, which announced that it did not see its choices as being limited to “no change” to its investment practices, or “pull out of all” fossil fuel-related investments. Instead, the University announced that it intends to “use responsible investment to work with companies to reduce their emissions.”
As HSBC noted, “holding onto stocks allows investors to engage with companies and encourage best practice,” a decision that the University of Edinburgh seems to have taken to heart, and one that is probably at the center of Oxford University’s own decisions.
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