Social Responsibility and Sustainability

Questions and answers

Clarifying what the new changes to the University of Edinburgh's Responsible Investment policy mean.

In February 2018, the University announced a change to its investment approach which will result in its entire investment portfolio being moved away from fossil fuels.

What is happening to the University’s investments?

The University has made a commitment that over the next three years, we will cease to invest in fossil fuel extraction and production, across our direct and pooled investments. This includes coal, tar sands, oil and gas. We will update our responsible investment policy in due course to reflect this commitment.

The University of Edinburgh has the largest endowment fund of any university in Scotland. It will now become the largest university endowment in the UK to be free of fossil fuel investment.

How big was the University’s investment in fossil fuels?

The University's holdings - direct and indirect - change frequently as our investment managers respond to a changing market.

As of early 2018, investment in fossil fuels represented less than 1 per cent of the total University of Edinburgh funds under management and included direct investments in two firms of less than £5m.

We update information about our investments twice a year, and it is available on the Finance Website.
 
How much money does the University invest?
 
As of 30th September 2017, the University’s total funds under management was around £1 billion. This includes the University’s Endowment, which is part of the Endowment and Investment Fund of £527 million which is invested with a number of fund managers and in different asset types, to diversify risk.
 
In addition, the University’s Treasury Management policy grants the Director of Finance delegated authority to deposit or invest funds with approved organisations to approved limits.
 
These investments include:
 
Endowment and Investment Fund £527m
Short-term deposits £195m
Cash and cash equivalents £250m
Total £972m
Note: some smaller investments have been left out of this table for simplicity. Please see the Annual Report and Accounts for more information.
 

Why has the University made this decision?

We think that our investment portfolio should reflect our commitment to a low carbon future, focusing on lower carbon investment products and transitioning from investment in fossil fuel companies.

We undertook a major review of our investments in fossil fuels companies, published in May 2015. That review committed us to substantial actions: to end coal and tar sands investment, to prioritise low carbon investments across other industries, and to revisit the decision in 2018.

Our earlier commitments have helped to reduce the emissions of our portfolio (measured in carbon per £ invested) to less than 10% of its 2008 levels.

The energy and carbon landscape has continued to move rapidly since our last review in 2015.

In particular, the agreement of our Zero by 2040 goal, which applies across all of our activities, means that we now need to update our investment approach to ensure it is fully consistent with the 2040 goal.

At present, suitable cost-effective and scalable technologies to entirely replace fossil fuels do not yet exist across the full range of uses; power, heating, land and sea based transport, aviation and petrochemicals.

However, we believe that the shift to low carbon and fossil-free technologies is now inevitable and will move forward at an increasingly rapid pace. Whilst we expect fossil fuels to remain in use for decades to come, the time is now right to further develop our investment approach.

How long will it take to transition the University’s investments?

The policy change will be implemented over the next three years.

What else does the University not invest in?

Aside from the previous decision on coal and tar sands, earlier decisions were made not to invest in controversial weapons and tobacco stocks. The Investment Committee will continue to respond to the decisions of the University relating to specific exclusions. 

Working closely with Finance Department, Investment Committee, Investment Advisors and academic colleagues, the Department for Social Responsibility and Sustainability develops and maintains the exclusion lists compiled to ensure compliance with and reporting to PRI as well as agreed University investment decisions. 

What does the University invest in?

In 2013 Edinburgh became the first University in Europe to become a member of the Principles for Responsible Investment, a UN-backed initiative which aims to make the global financial system more sustainable.

The University has already invested more than £150 million in low carbon technology, climate-related research and businesses that directly benefit the environment since 2010.

In September 2017, the University invested £1 million in Big Issue Invest, the social investment arm of the Big Issue Group, which seeks to dismantle poverty and create opportunity for people and communities across the UK.

In October, the University moved £60 million of its investments into businesses that directly benefit the environment.

How will this latest decision affect research funding and collaboration with fossil fuel companies?

This decision affects our investment policy only. We will continue to engage with fossil fuel companies, and research and teach on hydrocarbons extraction, in line with our normal processes and activities and the principle of academic freedom.

What else is the University doing in response to climate change?

The University is committed to making a significant, sustainable and socially responsible contribution to society. In 2016, the University committed to a goal to be a zero carbon University by 2040- our ‘Zero by 2040’ goal.

The University will continue to conduct research into climate mitigation and adaptation worldwide, support the development new low-carbon technologies and embed an awareness of sustainability and sustainable development into learning and teaching.

The University has also established a new £4 million Sustainable Campus Fund to support staff and student projects that will cut emissions, and has committed to:

  • improve our sustainable infrastructure, building on £30 million already invested in low carbon technology since 2006,
  • develop our metering to ensure that we have a better understanding of our emissions,
  • roll out sustainable travel advice to improve awareness of alternative travel options and drive down business travel contributions to our emissions,
  • continue to move our vehicle fleet from fossil fuel to electric power.

Read about our Zero by 2040 climate strategy