The issue of how to invest money responsibly has become increasingly contested in recent years.
High-profile campaigns have focused attention on whether invested funds of civic institutions and charities reflect their desire to produce socially good outcomes.
The University of Edinburgh has a strong track record of action in this area, reflected in its decision to divest from tobacco in 2004 and to sign the Principles for Responsible Investment in 2013.
On 11 May, the university adopted a new strategy on fossil fuel investments, having reached the clear conclusion that taking no action on this issue was unacceptable.
The university accepted an internal working group recommendation to divest from the most polluting forms of fossil fuels – specifically coal and tar sands – and drive investments to the most carbon efficient companies. Following last week’s meeting of the university’s investment committee, the university announced it would write to three of the world’s biggest coal and oil tar sand producers with the intention of divesting within six months.
This follows the end of a ten-day student occupation of one its buildings in Chambers Street, with students arguing that the university was not going far enough in only divesting from coal and tar sands. However, it was clear from the submissions received by the university that there were widely differing views on the issue of divestment, and strong feeling backed up with evidence.
Despite setting out a position similar to – though slightly stronger than – that proposed by the Church of England and Oxford University, both of which received plaudits, the university has been met with concern and disapproval in some quarters.
These objections have variously argued that we rejected divestment from fossil fuels or that a malign fossil fuel influence has prevailed.
It has also been said that we are more concerned with research income from fossil fuels than with the wider issue of climate change and, more subtly, that the conditions under which we will divest are too loose to work effectively.
These objections are based on a misunderstanding of our decision. We have not rejected divestment – effectively we have adopted a “divest unless” approach to coal and tar sands. We have not been malignly influenced and we do not put our research income above the moral imperative of mitigating human-induced climate change.
The evidence gathered suggested that the balance of our research was overwhelmingly towards alternative energy, renewable energy, earth systems understanding and carbon capture and storage. Indeed even the funding received from fossil fuel companies was overwhelmingly towards carbon mitigation measures.
The university has specifically said it will divest from fossil fuel companies if two conditions are met. These two conditions are that realistic alternative energy sources are available and that the companies involved are not actively investing in technologies that address carbon emissions.
The first condition reflected our concern about energy access. We live in a world where nearly one in five of the global population are without access to electricity. Whilst we all wish to deliver their energy needs with clean energy supplies, the university sees energy access for the world’s poorest to be an equally high priority – in terms of their wellbeing – as the carbon content of that energy.
The university believes there are reasonable energy alternatives to coal and oil from tar sands in most countries. However, it does not see fully developed energy alternatives at present to conventional oil and gas, and so we are not targeting these industries.
The second condition reflects the truism that it is not extraction of fossil fuels that causes human-induced climate change, but the emissions of greenhouse gases. Companies that are actively – and practically – developing technologies to reduce or stop carbon emissions would be exempt from any divestment.
As a result, the university’s first condition for divestment is met for companies engaged in extracting coal and oil from tar sands. The university will shortly begin investigating the second condition – whether specific company activities to reduce emissions are taking place. This will be a timescale measured in months not years.
At the same time, we will develop new ways of benchmarking the carbon performance of all our investments, with the intention of only investing in the highest performing companies.
The issue of divestment raises passionate arguments. The desire for a thriving, low carbon society is not in dispute. However, the means by which we achieve that – through the financial impact and signal value of invested university funds – remains contentious. We do not believe that a blanket divestment policy from fossil fuel extraction companies is the way forward. Instead, we propose to divest where alternative energy sources exist, and engage and improve performance where they do not.
• Andy Kerr, executive director, Edinburgh Centre for Carbon Innovation and a member of the Fossil Fuel Working Group, University of Edinburgh edinburghcentre.org