Newcastle University has continued to invest in oil and gas companies, despite committing to change its investment policy in May 2016, although they have aimed to make the change within 5 years.
To understand how this has happened, one must first understand how the University uses its money: Newcastle’s immense £75 million investment portfolio is turned over to investment managers, organisations which invest in businesses on behalf of the university.
In May 2016, Newcastle’s governing council promised only to turn over the portfolio to managers signed up to the United-Nations-backed Principles for Responsible Investment (PRI). The PRI was established in 2003 to make it easier for investors to consider environmental, social and governance (ESG) issues, and currently boasts 1750 signatories: the hope was that by only hiring investment managers from this elite, greener pool, the University would stop investing in (or would ‘divest from’) “non-progressive oil and gas companies” within the next half decade.
The announcement came after calls for the University to become more sustainable, led by the Carbon Advisory Group, a Newcastle student organisation which certainly seems good at getting a message across: representatives for the University came out the other side of the Carbon Advisory Group’s campaign using all the right buzzwords.
The University promised it would show preference for investment managers that invested in “progressive companies” that had a penchant for “low carbon solutions”. Perhaps to try and woo the green lobby, Newcastle’s press release spoke of “sustainability objectives” and “innovative urban technologies”.
Words are wind, though. Seventeen months on from their promise to divest from oil and gas, Newcastle’s investments have barely changed. It’s true that all three of Newcastle’s investment managers – Majedie Asset Management, Baillie Gifford and Blackrock (who work for Newcastle as of 2017, the last year where data is available) – are signatories of the PRI, and that the plan to divest from oil and gas was expected to last five years (making it unreasonable to expect complete divestment from oil and gas by 2018), investment in oil and gas appears to have actually grown since two years earlier.
Documents detailing Newcastle University Endowment Asset Investment (a name as long as it is boring) suggest that the University had at least £6 199 642 invested in oil and gas in 2016, compared to £6 537 463 a year later, figures which only draw from two of Newcastle’s three investment managers (information from Blackwood was not disclosed), making it likely that the actual numbers are even higher. As it stands, this represents an increase in oil and gas investment of 5%: given that Newcastle’s investment portfolio also increased over the same time period, this means that its oil and gas investments have gone from representing 10% of its investment fund (worth around £63 million in 2016) to 9% (worth around £75 million in 2017). Such a measly decrease means that, if continued at the same rate, it would take around nine years to entirely phase out gas and oil investments, a far cry from the five originally promised in 2016. To divest from oil and gas, the University would also need to – get this – divest from oil and gas, not increase their investments as they did from 2016-17.
This seems at odds with research done at Newcastle universities Institute of Sustainabilty where “Many energy researchers are also working with policymakers, industry and communities to implement sustainable energy solutions.
It’s possible that information about this financial year’s investment activities (still not available) put Newcastle in a better light, though now as we drift further and further away from 2016 and the University’s commitment to going green (along with all the other joys of 2016, like voting to leave the EU, the killer clown craze and all your childhood heroes dying), it’s not likely.