News article
Sussex collaborates with other UK universities in proposing new cash market to stop financing fossil fuel expansion
The University of Sussex is among sixty leading institutions and trusts in UK Higher Education calling on finance companies to offer more sustainable products and avoid investing in fossil fuels.
Sussex is collaborating with the Universities of Cambridge, Edinburgh, Leeds, Oxford, Southampton, St Andrews and Westminster, on a new effort to create a market for cash products that do not contribute to the financing of fossil fuel expansion.
The institutions are especially keen to avoid financing companies that are constructing new coal and gas-fired power plants in OECD countries (Organization for Economic Cooperation and Development). New fossil fuel infrastructure can lock in decades of fossil fuel demand and subsequent greenhouse gas emissions. Research has shown that fossil fuels are responsible for around 80% of greenhouse gas emissions globally.
The institutions have issued a Request for Proposals (RfP) to financial institutions for cash products such as deposits and money market funds.
Carey Mclaughlin, Assistant Director of Finance at the University of Sussex said:
“The elimination of fossil fuel exploration and production is a priority of the University’s socially responsible investment policy.
“Our collaboration with Cambridge and other leading universities aims to seek out cash investment products that do not contribute to the financing of fossil fuel expansion. This will provide us with environmentally sustainable options to better manage the University’s cash, which is hugely important to the success of our investment aims.”
University of Cambridge Chief Financial Officer Anthony Odgers said:
“What we and our partners are focussed on with this mandate is finding financial services products that do not contribute to the expansion of fossil fuels – in particular, new coal-and gas-fired plants which lock in demand for decades.”
The RfP criteria are based on the International Energy Agency’s (IEA) Net Zero Emissions by 2050 Scenario and are in line with emissions reductions laid out in the Intergovernmental Panel on Climate Change (IPCC)’s Sixth Assessment Report.
The institutions are also hoping to direct funding towards the much-needed construction of renewables to accelerate the rapid energy transition away from fossil fuels, and particularly in areas where finance is a key constraint for growth, such as in low-income countries.
University of Cambridge Head of Group Treasury Heather Davis said:
“The University treasurers in this group all share a common goal, which is to manage money in a way that doesn’t contribute to the financing of fossil fuel expansion and to find something that aligns with the IEA Net Zero Emissions Scenario, and that is lacking in the cash space at present.”
Responsible investment is a mainstream part of equities investing, but it is still not widespread in the debt markets even though a large majority of the new capital for companies constructing new fossil fuel power stations or exploring for new reserves comes from debt.
For this reason, the institutions behind the RfP have focused on banks and the bond market as the primary sources of external financing for fossil fuel expansion.
The institutions participating in the RfP are:
Bath Spa University; Brasenose College, Oxford; Cambridge University Press & Assessment; Christ’s College, Cambridge; Churchill College, Cambridge; Clare College, Cambridge; Clare Hall College, Cambridge; Corpus Christi College, Cambridge; Corpus Christi College, Oxford; Darwin College, Cambridge; Downing College, Cambridge; Emmanuel College, Cambridge; Fitzwilliam College, Cambridge; Girton College, Cambridge; Gonville and Caius College, Cambridge; Hughes Hall, Cambridge; Jesus College, Cambridge; JISC; King’s College, Cambridge; London School of Economics; Lucy Cavendish College, Cambridge; Magdalene College, Cambridge; Manchester Metropolitan University, Merton College, Oxford; Newnham College, Cambridge; Oxford Brookes University; Pembroke College, Cambridge; Peterhouse, Cambridge; Queens’ College, Cambridge; Robinson College, Cambridge; Selwyn College, Cambridge; Sidney Sussex College, Cambridge; St Antony’s College, Oxford; St Catharine’s College, Cambridge; St Edmund Hall, Oxford; St Edmund’s College, Cambridge; St John’s College, Cambridge; The Gates Cambridge Trust; The Isaac Newton Trust, Cambridge; The Queen’s College, Oxford; Trinity College, Cambridge; University College London (UCL); University of Bristol; University of Cambridge; University of Dundee; University of Edinburgh; University of Exeter; University of Gloucestershire; University of Leeds; University of Manchester; University of Oxford; University of Reading; University of Southampton; University of St Andrews; University of Sussex; University of the Arts London; University of Westminster; University of York; Wolfson College, Cambridge; Worcester College, Oxford.