NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, May 18, 2015

One of the world’s oldest—and richest—universities has decided to adopt a more “ethical” approach to investing its multibillion-dollar endowment fund.

A spokesman for the University of Cambridge said the institution’s council Monday established a working group, including three students, to devise rules meant to ensure that investments made by the endowment—the biggest of any university in Europe—are socially responsible.

The school’s total endowment, including the investments of Cambridge’s independent colleges, is valued at £5 billion ($7.86 billion). The new guidelines will apply to a portion equal to half that amount.

The working group’s recommendations, which it will produce in the next year, won’t be binding but the university has typically stuck to similar guidelines in the past.

The move by the 800-year-old university gives students an unusually large role in developing policy for the fund and comes against the backdrop of a broader debate about the ethical-investment strategies of university endowment funds. Students at the U.K.’s University of Glasgow and the London-based School of Oriental and Asian Studies have recently had some success persuading those establishments to divest their holdings in oil-and-gas companies.

Also on Monday, Oxford University joined other British universities in announcing that it will ban its £2 billion endowment from investing in any company whose main income is from coal or oil-sand extraction. The university said it had already effectively had such a policy in place but agreed to make it more formal in response to student demands. It also said it would demand more transparency on carbon emissions from companies it invests in.