The role of responsible investment in the University’s climate action

In this COP26 blog, we look at the importance of responsible investment as part of the University's Climate Action Plan. Learn more about our Socially Responsible Investment Policy and what led to the decision to divest from fossil fuels.

What are endowment funds and how does the University uses them?

Newcastle University holds endowment funds, which contain donations, bequests and legacies from different individuals. These funds are currently valued at around £104 million and are often used for a specific purpose.

Fund managers invest these endowments on behalf of the University. The aim is to make a return on the investment to fund the purpose prescribed by the donor.

As a university, we have had a longstanding Socially Responsible Investment Policy in place. The policy states any exclusions on our investments. It also describes the process that the University community can use to challenge companies that we invest in.

Why did we decide to divest from fossil fuels?

In 2015, there were calls from our students to divest from fossil fuels. We began a process of looking deeper into our investments and sought to optimise the representation of our values within our responsible investment approach.

We formed a Carbon Advisory Group to consider all aspects of the debate as well as the options available to us. This group included students, academic researchers, and members of our University Council and governing body.

There were increasing calls for transparency about where the University holds investments. We recognised the urgency of climate action. There were rapidly evolving markets for more responsible investment funds. Following careful consideration, we decided to divest all endowments from fossil fuel companies.

Achieving divestment hasn’t been easy. This involved both movement of money away from funds, as well as engagement with our fund managers to drive lasting change in the sector. Key to our progress was improving the regularity of our reporting and scrutiny by our Finance Committee, as well as transparent reporting to our students.

How has our Socially Responsible Investment Policy changed?

Our Socially Responsible Investment Policy has evolved to capture the increased depth of our approach. We added both fossil fuels and arms companies as exclusions within our portfolio. We are now working with our fund managers to improve reporting on the carbon emissions associated with our investment portfolio.

Future phases of our Climate Action Plan will have targets for reducing the carbon intensity of our investment portfolio. We are looking at ways that we can contribute to the net zero transition through our investments.

Alongside our work on climate, we are engaging with our fund managers more broadly on the Environmental, Social and Governance (ESG) performance of our investment funds. We want to encourage increased disclosure and improvements in practice.

Environmental and societal issues we need to consider

The responsible investment space is complex. On climate action alone, there isn’t a consistent approach. There are many further environmental and societal issues to consider when assessing the companies that our money is held with and making steps towards positive change.

Read about the climate change-related research that Newcastle University academics are working on in our COP26 blog series. Alternatively, sign up for our research newsletter to get the latest research stories from Newcastle University straight to your inbox,