Note from the CUSU president and the GU president as student members of the Council to the report from the Divestment Working Group

As Trustees of this University, we feel unable to consent to the approach set out in this response. We believe that Cambridge is taking a reputational, financial and ethical risk by not fully divesting. If Cambridge is to be a leader in terms of its environmental impact, we must take the brave choice to divest. It is part of the duty of charity trustees to take into account the impacts of our investments, and we as trustees do not believe it is consistent with Cambridge's mission for us to profit from industries that contribute to climate breakdown. Further, given the uncertain future of the fossil fuel industry, this would be a financially prudent decision. Far from disengaging the fossil fuel industry, we feel that sending a clear message through divestment would spark new conversations and engagement with the most polluting industries about their impact. We urged the Council to take this opportunity and we hope they will return to the issue in future. Meanwhile, we welcome the fact that Council has agreed to hire an ESG officer and set up a Centre for a Carbon Neutral Future. We also hope that the Council will continue to be ambitious in its plans for reducing our carbon footprint. These initiatives are incredibly important and we stand behind action on this.

Note of dissent

Whilst we welcome the broad objectives of the DWG report and Council’s responses we dissent from the proposals concerning disinvestment of CUEF from fossil fuel companies. It is noteworthy that a submission from the Sainsbury Family Charity Trusts was received by the DWG but disregarded. Their response to the DWG report includes this comment: ‘..the report is mistaken in not recommending full divestment, nor examining the underlying financial and legal reasons for it. It fails to articulate the financial risks to investors of fossil fuel companies, it gives an impression that the practicalities of full divestment are more complicated than they actually need to be and it falsely assumes that full divestment undermines the ability of the university to influence companies and wider society’.

Repeated requests to the Chief Investment Officer by Council members for information about the identity of the secondary fund managers used by CUEF and the composition of their portfolios have been refused. These secondary investments probably contain almost all CUEF’s exposure to fossil fuel companies so the proposed measures relating to direct investments are a distraction that will fool nobody. As members of Council we share fiduciary responsibility for the University and yet we are denied the information required to make an informed decision about disinvestment.

It is stated that holdings in fossil fuel companies within the secondary investments of CUEF are about 3.5%. Of note 45% of CUEF is said to be in illiquid assets, such as private equity, distressed debt and property that are unlikely to have much exposure to fossil fuels. The rest will presumably be a mix of equities selected by the anonymous fund managers, the composition of which could easily be detailed by the Investment Office.

The proposal of the DWG for ‘enhanced reporting’ by CUEF is unlikely to be effective because of the prevailing culture of secrecy and hostility to oversight within the Investment Office. Equally the idea that the CUEF has ‘significantly out performed its benchmark over 10 years’ is overstating the issue: the figures available show it as 1% above the benchmark which although creditable could not be regarded as spectacular.

In conclusion in our opinion it should be possible to disinvest from fossil fuels over a period of 5 years without affecting returns. If 96.5% of CUEF is not in fossil fuels at the moment it will have little impact on returns if we move to 100% disinvestment.

Nick Gay
Alice Hutchings
11th June, 2018

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