Oxford University has finally divested from fossil fuel companies — everything you need to know

What is divestment? Why does it matter? What makes this decision by Oxford University particularly significant? What can I do to support divestment by other organisations?

Oxford University has been splashed all over the news once more in the past week. For once, though, this time it’s a positive story. The University has finally committed to divesting from fossil fuels, passing a motion which forces them to divest from any existing fossil fuel investments, and banning future investment in fossil fuel companies.

This is pretty monumental for a few reasons:

  • Until recent years, Oxford University held a significant amount of wealth in funds supporting fossil fuel companies, most recently priced at £3.3 billion — all now withdraw.
  • They’re actually going further than just divesting, having made a commitment to actively engage with companies and funds on their net-zero plans.
  • Oxford University holds prestige in the educational world and in the media as a centre of excellence and thought leadership, and their decision to divest will likely influence other universities to do the same.
  • The role of money in climate change is a topic that, unfortunately, doesn’t get much coverage. Hopefully, the press coverage will mean that more individuals start to think about how to be a climate activist with our money — where we keep our savings is important, and many of us are inadvertently supporting fossil fuel companies with them.

What even is divestment?

Fossil fuel divestment simply means removing money from supporting companies who are contributing to global warming. Generally speaking, this means the oil and gas industry giants — those 20 companies who are responsible for a huge 35% of total global carbon emissions.

For most individuals, this means ensuring that your savings are not held in a bank, ISA, investment fund, pension, stock, or bond where it is being invested on into oil and gas companies. If you’re concerned this might be you, take a look at ethical banks such as Triodos, Co-operative Bank, and Charity Bank, or investment platforms like Ethex.

For companies (and some individuals) who are investing in order to make the highest return, fossil fuel companies often have a good financial return. This means that they often invest directly in shares in fossil fuel companies, or in investment funds which, in turn, invest directly in shares in fossil fuel companies. This was the case with Oxford University, that they had money invested in funds and portfolios which were funding fossil fuel companies.

That in turn means you have to take on not just the oil companies but also the banks, asset managers and insurance companies that invest in them (and may even own them, in the wake of the current economic crash). You have to take on, that is, the heart of global capital.

Oxford University’s history of investing in fossil fuels

Before Oxford University passed their divestment motion in April 2020, they held a massive £3.3 billion in funds contributing to fossil fuel companies.

Oxford students have been campaigning since 2013 for the University to divest from these funds, through the Oxford Climate Justice Campaign, which was also backed by academics and alumni. In 2015 they had a breakthrough, with the University agreeing to a partial divestment in any companies relating to coal and tar sands. However, this left them with £5 billion still invested in fossil fuel companies, with the University gaining financially from their success.

For any university, this shouldn’t be seen as acceptable. But for Oxford University, portrayed as a research centre at the forefront of climate science, mitigation and policy, this was an abomination.

In 2018 there was a leak of financial files from global corporations, known as the Paradise Papers, which primarily highlighted the huge amounts of money in offshore accounts. It also showed the extent of Oxford and Cambridge Universities investments in fossil fuel companies, including deep sea oil exploration. This revelation led to a new wave of anger and campaigning by Oxford students, which increased pressure on the University to take action.

What did their divestment motion include?

Oxford University’s divestment motion was passed in April 2020. The motion requires the University’s endowment fund (OUem) to:

  1. Divest from all existing direct investments in fossil fuel companies
  2. Ban any future investments in funds which primarily hold stock in fossil fuel companies
  3. Actively engage with all companies across Oxford University’s entire portfolio of investment, requesting evidence of their plans to reach net-zero carbon emissions.

This will immediately remove £3.3 billion of funding from fossil fuel companies, which is a huge win.

Beyond the money, this is also an important signal for other institutions. Oxford University has been leading on climate research for years, whilst continuing to invest billions in funding the companies contributing to it. This commitment to divest sends a signal to other research institutions across the world that this is an action they should also be taking.

As Professor Cameron Hepburn, who has been deeply involved in the campaign, put it:

“Oxford has led the world on research on net-zero in science, finance and economics, and we have shown leadership and creativity in our position on net-zero with employers of Oxford graduates. It is excellent that we are also taking a logical and hard-nosed approach to the impact of our endowment. The proposed combination of divestment and engagement around net-zero is more powerful than either strategy alone.”

— Prof. Cameron Hepburn, Professor of Environmental Economics at Oxford University

Beyond divestment — requiring active engagement

Oxford University’s motion to divest also, encouragingly, goes beyond mere divestment. Another benefit of it being a centre of climate research is that they were able to work with experts to ensure they are taking the right approach.

The Oxford Martin School is a research group focused on solutions to the world’s biggest challenges, which includes world health, financial inequality, and the future of technology, as well as environmental challenges. Oxford Martin School researchers developed a new framework for climate responsible investment, known as the Oxford Martin Principles for Climate-Conscious Investment.

“The financial sector has a crucial role in either sustaining the status quo or aiding the transition to a net-zero carbon world.”

— from the Oxford Martin Principles for Climate Conscious Invrestment

The Principles advise that any investor serious about their climate responsibility should be actively engaging with all companies they may invest with to demand the following before they do so:

  1. The company commits to net-zero emissions, and their public statements and other engagements also advance this message.
  2. The company has a plan for a profitable net-zero business model, as well as a timeline for adapting to this.
  3. The company can supply quantitative (i.e. numbers) of their medium-term targets for their movement to net-zero, so that investors can actively monitor their actions against their words.

“Crucially, Oxford is proposing to engage with companies to assess their net-zero strategies: this is not a responsibility that we can outsource.”

— Myles Allen, Oxford Professor and Lead IPCC Author

What you can do to continue this momentum

As mentioned previously in this post, the hope is that this announcement from Oxford University will encourage other institutions to also divest, and we see a tidal wave of organisations and individuals pulling their money out of fossil fuel investments.

But what can you be doing to support this tidal wave? Here are some actions you could take:

  1. Look at your own savings portfolio, and consider swapping to ethical and sustainable banks if you aren’t already.
  2. Consider investing positively in organisations who are working to accelerate the transition to a zero carbon economy, such as the Low Carbon Hub in Oxford.
  3. Share this news with your own employer, and encourage them to look at their own investment portfolio. This is especially timely if you’re part of a university or research centre, but it’s important for all organisations.
  4. Support campaigns in other cities and countries through the gofossilfree campaign — which Oxford’s Climate Justice Campaign is part of.

Let’s make this the start of a huge chain reaction of funding being pulled out from the companies at the heart of our climate crisis.

Ramblings on communication and our climate crisis🌱

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