A Case for Fossil Fuel Divestment at the University of Cambridge

By: People & Planet and NUS

If we are serious about preventing catastrophic warming, we cannot dig any new coal mines, drill any new fields, or build any more pipelines. The new reality for power production, according to a recent study from academics at the University of Oxford, is that no new fossil fuel infrastructure can be constructed after 2017 unless other installations are closed before the end of their lifetime, dismantled, or modernised. Yet fossil fuel companies have shown they will stop at nothing to dig up and sell every last bit of coal, gas and oil.

There is widespread acknowledgement that most of the current reserves that fossil fuel companies hold on their balance sheets are unburnable, if we are to limit global warming to 2-degrees (‘2C’). The Governor of the Bank of England, Mark Carney, noted in a speech at Lloyd’s of London that the global carbon budget for the IPCC’s 2C scenario “amounts to between a fifth and a third of the world’s proven reserves of oil, gas and coal”, going on to state that if that estimate is even approximately correct “it would render the vast majority of reserves ‘stranded’ – oil, gas and coal that will be literally unburnable”. In 2015 Citigroup warned investors that $100 trillion of stranded assets were at stake and research by Carbon Tracker into stranded assets with the Grantham Institute at LSE cautioned that many of the current reserves of listed fossil fuel companies would become 'unburnable' under a 2C scenario. Rather than protecting value for investors by either contracting and returning capital to shareholders or developing alternative business models, the fossil fuel industry continues to invest in projects that are incompatible with a 2C pathway.

Continuing to invest in fossil fuel companies is not only a financial risk to the University of Cambridge, but reputational too in: continued support for companies that play a role in systematically misleading the public with regard to climate change; human rights abuses associated with fossil fuel extraction; and profiting from an immoral status quo that would lead to mass displacement, famine, conflict and ecosystem failure.

University of Cambridge’s Current Investment Policy

The University of Cambridge has the largest university endowment in Europe at £6.3 billion. Currently, most of the investment activity is managed through the Cambridge University Endowment Fund (‘CUEF’) controlled by the Investment Board, ultimately reporting to the University Council. The investment strategy and movements of CUEF remain opaque to the general public, which makes it virtually impossible to know how and where the University invests.

Last year the Council accepted the recommendations of a dedicated working group on ethical investment and amended the University Statement of Investment Responsibility. In the new statement, it is noted that the University’s “core values [...] include the concern for sustainability and the relationship with the environment” and that the University may balance maximizing its financial return against ethical criteria. We argue that continuing to invest in fossil fuel companies is not in line with the University Statement of Investment Responsibility as:

  1. Unless the university is assuming the failure of the Paris Climate Agreement, fossil fuel companies will not maximise financial returns. Carbon capture and storage is costly, while renewable energy and battery storage is rapidly dropping in price and will easily outperform fossil fuels over the coming decades.
  2. The fossil fuel companies’ business plans are not sustainable. If current reserves held on the balance sheets of the fossil fuel industry are exploited the associated emissions will blow through the roof of the 2C ceiling. This will lead to unprecedented global social and ecological destruction, as runaway climate change becomes a reality.

Risks to Research Funding

Research which is funded by and on behalf of the fossil fuel industry contradicts the University’s mission statement: “The mission of the University of Cambridge is to contribute to society through the pursuit of education, learning, and research at the highest international levels of excellence”.

Yet the very societal problems that “education, learning and research” seek to address are created and exacerbated by these companies. However, whilst fossil fuel investments and fossil fuel research funding are related, they are not necessarily intertwined. Over a third of universities have now committed to divest in some form, and of these institutions none have reported impacts on their research funding.

The University of Cambridge receives research funding from BP, Shell and ExxonMobil. Concerns about risks to research funding need not factor into divestment decisions as the global divestment campaign targets the ‘social license’ of the fossil fuel industry through giving the industry a negative image. Therefore, it would be incredibly foolish if, on top of a divestment decision from a world-leading university, oil majors decided to discontinue their research funding at that very same institution. This would be tantamount to a very serious public relations nightmare. Given that the industry only contributed to 0.4% of Cambridge University Research in 2015/2016 it is also worth highlighting that the industry gets much more out of this relationship than the University does – in fact it is these links with institutions like the University of Cambridge that reinforce their perception as socially acceptable entities, providing the industry with a ‘social license’ to continue to operate as they currently do.

Most UK university research funding comes from the Research Councils, who are predominantly funded by the taxpayer. The University of Cambridge should therefore be researching in areas that impact most positively on the general population – such as the just transition to a low-carbon world and alternatives to fossil fuel usage. To do this it is important that the University maintains its strategic independence. Having to balance decisions, like divestment, on the funding of third parties is in clear conflict with academic independence, especially when the University values contributing “to society through the pursuit, dissemination, and application of knowledge” and highlights a “concern for sustainability and the
relationship with the environment”. To what extent can this contribution and concern be properly fulfilled and addressed if third party funding interests are placed above public and societal good?

Climate & Financial Risks: Tar Sands Exposure, Stranded Assets & Total Reserves

Tar/oil sands are an unconventional fossil fuel and are the most energy-intensive type of oil to refine. Not only are they costly in financial terms when it comes to their extraction and production, but also in their human health ramifications and scarring of indigenous lands.

The Tar Sands 20TM rank the top public fossil fuel companies based on the potential CO2 emissions embedded in their reported proven reserves. Exxon Mobil, Royal Dutch Shell and BP account for 14% of the potential emissions of the entire 20. In The Tar Sands 20TM Royal Dutch Shell is ranked 4th, Exxon Mobil 7th and BP 19th. Of their potential emissions as apercentage of their total reserves emissions, Royal Dutch Shell’s tar sands account for 7%, ExxonMobil’s 3% and BP’s 0.6%.

Carbon Tracker places tar/oil sands exploiters as waiting in the “danger zone” when it comes to asset stranding and given the presence of all three of these companies in the Tar Sands 20TM, this is something that seriously needs to be considered by prudent investors wanting to properly fulfil their fiduciary duties to beneficiaries.

With regard to stranded assets Carbon Tracker state that 60-80% of the reserves of coal, oil and gas companies are ‘unburnable’, forecasting that 33% of the business-as-usual capital expenditure (‘capex’) of oil companies is inconsistent with a 2C scenario. They then allocate this excess capex – based on what oil companies can reasonably expect to exploit as based on the 2C global carbon budget – at the individual company level. In this projection, ExxonMobil are in the 40-50% band, Royal Dutch Shell the 30-40% band and BP the 20-30% band. This indicates a high likelihood of stranded assets given that these companies are investing in projects unlikely to progress towards the upstream phase. It is also worth noting that companies with over a third of their capex outside of the 2C scenario have a higher than average exposure to asset stranding – both ExxonMobil and Shell are in this category.

Fossil fuel publicly-traded company reserves are equivalent to 474 gigatons of potential C02 emissions – 5 times what is safe to burn to have an 80% of chance of remaining within the 2C limit. Of those oil and gas companies listed in the top 10 ExxonMobil, BP and Royal Dutch Shell are all present. ExxonMobil is ranked 4th with 7.960 Gt, BP 6th with 6.388 Gt and Royal Dutch Shell 7th with 4.995 Gt of potential CO2 emissions.
Any institution wanting to fully commit to a 2C future has a moral and financial responsibility to divest from these fossil fuel companies given their tar sands and stranded assets exposure, as well as their total reserves - which they seem intent on exploiting despite the fact that they are inconsistent with internationally agreed limits.

Reputational Risk: Moral Case for Divestment

Last year was the hottest on record, a deadly title previously held by 2015, which surpassed the record-setting temperatures of 2014. Our planet is now in ‘truly uncharted territory,’ with sea levels rising precipitously and the likelihood of ‘multiple climatic hazards’ increasing globally. Just as human culpability is incontrovertible, the human cost is also becoming tragically apparent. Between 2008 and 2015, over 203 million people around the world were displaced by natural disasters. Devastating drought has led to unprecedented levels of hunger. Hurricanes, fires and floods have swept across the world this summer, affecting millions of people from India to Sierra Leone, Haiti to Houston. The need for concerted action has never been so stark, nor the consequences of inaction so profound.

Every country classified at ‘extreme risk’ by the Climate Vulnerability Index is in the postcolonial Global South. Yet it is clear that responsibility for fueling the climate crisis tells a different story: the UK, 138th on the same index, has potential reserves that account for almost a fifth of the global carbon budget listed on the London Stock Exchange; Shell or BP’s reserves alone would consume the UK’s entire carbon budget until 2050. Just 100 corporations are responsible for over 70% of global emissions in the last three decades, with ExxonMobil, Shell and BP among the worst polluters.

We are not equally responsible for the climate crisis, just as we are not equally affected by it. When extraction and depredation promise momentary profits for an elite few but increasing degrees of insecurity and crisis for everyone else, a fatally flawed and morally bankrupt paradigm is exposed. It is this fundamental injustice that demands unambiguity in our solidarity and urgency in our action. This leaves every institution invested in fossil fuels with a decision of historic importance and global ramification: divest or remain complicit in the climate crisis and its consequences.

Reputational Risk: Profiting from Misleading the Public on Climate Change

Opponents of policies to limit anthropogenic climate change have offered a changing set of arguments - denying or questioning its existence, magnitude, and rate of progress, the risks it presents, the integrity of the scientists, and the value of mitigation efforts. Anthropogenic climate change has become an increasingly polarized issue with scepticism being driven by ideological and economic interests tied to the continued use of fossil fuels, rather than science.

ExxonMobil - A recent study by Harvard researchers Supran & Oreskes concluded that between 1977 and 2014 ExxonMobil systematically misled the public on climate change. They found that over this period, while ExxonMobil contributed to advancing climate science by way of its scientists’ academic publications, it promoted misinformation that directly contradicted its own scientists and cast doubt on anthropogenic climate change. Since the Kyoto Protocol Exxon has given more than $20 million to organizations supporting climate change denial. The Heartland Institute alone, described in The Economist as “the world's most prominent think-tank promoting scepticism about man-made climate change,” has received at least $676,500 from ExxonMobil since 1998. The Heartland Institute climate conferences were described in a Nature editorial as “curious affairs designed to gather and share contrarian views, in which science is secondary to wild accusations and political propaganda.” ExxonMobil spent $27M on obstructive climate lobbying in 2015 alone, and has pressed for the repeal of the U.S Environmental Protection Agency’s renewable fuel standards. It has opposed GHG emission standards, working with other parties to take legal action against the EPA over the Clean Air Act.

Royal Dutch Shell and BP are members and funders of the American Petroleum Institute. The American Petroleum Institute’s messaging around climate change continues to suggest there is uncertainty in the science and it has been implicated in funding climate change denial research. The American Petroleum Institute convened the members of the Global Climate Science Communications Team who created the infamous Global Climate Science Communications Plan (1998). Reported on by the New York Times, the plan stated that “victory will be achieved when the average citizens “understand” uncertainties in climate science; recognition of uncertainties becomes part of the “conventional wisdom.

Those promoting the Kyoto treaty on the basis of extant science appear to be out of touch with reality.” Shell spent $22 million on obstructive climate lobbying in 2015 alone, and has opposed legislation that supported renewable energy in the run up to UN climate talks. It has also been part of an influential lobbying effort in Europe to remove binding renewable energy and energy efficiency targets from the EU’s climate change agenda.

Reputational Risk: Human Rights Abuses by Fossil Fuel Companies

The fossil fuel industry has been associated with a wide range of human rights abuses, some of which we highlight here:

BP is complicit in ongoing human rights abuses in Azerbaijan, where it is the largest foreign investor. The campaigning organisation Platform have decried a “marriage of mutual convenience” between BP and Azerbaijan’s Aliyev dictatorship. The company recently extended its ‘Contract of the Century’, while 84% of government expenditure comes from oil and gas revenues. The human rights situation in the country is dire, with NGOs working in this area forced to suspend their work. There are around one hundred political prisoners in Azerbaijan today, while the regime recently withdrew from the Board of the Extractive Industries Transparency Initiative (EITI) after being suspended due to ‘deep concern’ over the political situation in the country. The silence from BP speaks volumes. Indeed, it ignored calls from Azeri civil society groups for the company to drop its sponsorship of the 2015 European Games in Baku.

In 2009 Royal Dutch Shell paid out $15.5 million in an out-of-court settlement to the relatives of nine leaders of the Ogoni tribe, in southern Nigeria, following allegations it had been complicit in their executions. The company had also been accused of other human rights violations, leading to the killing and torture of Ogoni protesters by the Nigerian military. In 2015 Shell’s Nigerian subsidiary paid out £55 million pounds to the Ogoni and Bodo communities, following disastrous oil spills. The spills wrought huge damage on the Niger delta, destroying both the local ecology and the livelihoods of the communities dependent on it. The UN Environment Programme criticised the Shell Petroleum Development Company, saying its “own procedures have not been applied, creating public health and safety issues”. Shell has also recently been indicted over a vast bribery scheme in Nigeria, which robbed the Nigerian people of over $1billion.

ExxonMobil and its predecessor companies have been accused of a series of human rights violations in the Aceh province of Indonesia. In 2001, eleven Indonesian villagers filed suit against ExxonMobil on the grounds that it was complicit in atrocities committed by Indonesian security forces. The plaintiffs allege that soldiers hired by ExxonMobil to protect its operations shot, sexually assaulted and tortured them. While ExxonMobil has denied any knowledge of these acts, internal emails have shown they were aware of the Indonesian military’s poor human rights reputation. Despite several attempts from ExxonMobil to have the case dismissed, in 2015 it was decreed by a federal court that the claimants may continue. Indeed, in a 2008 ruling, a US federal district judge ruled that “a reasonable finder of fact could conclude that the paid security forces committed the alleged torts and that EMOI [Exxon’s Indonesian subsidiary] and ExxonMobil are liable.”


We recommend that the University of Cambridge takes the following steps and informs any organisations who invest on its behalf to also:

  • Immediately freeze any new direct investments in the fossil fuel industry.
  • Divest its direct and indirect investments from the fossil fuel industry within 5 years.

SIGN on to join the mass submission of this evidence


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