Cambridge takes big step towards stopping fossil fuel funding
The University of Cambridge in collaboration with other Higher Educational Institutions (HEI) is taking a significant step to move away from contributing to fossil fuel financing.
As your President (PG), I have been working hard with the university committee tasked with tackling fossil fuel funding through banking. This committee is called the Banking Engagement Forum (BEF), a committee of the Collegiate University. This is all being done as part of the bigger picture of multiple Higher Education Institutions (HEIs) taking proactive steps towards stopping fossil fuel funding.
Below is a detailed FAQ of what is happening. But if you want the headlines, here’s a quick round-up:
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Cambridge University is working hard to be at the forefront of change
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They are working alongside 71 other HEIs in collaboration
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They have put a request for proposals (RfP) from banks and financial institutions that do not contribute to the financing of fossil fuel expansion
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23 proposals have been received so far
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The pace of progress is dictated by how quickly financial institutions can make changes to their policies
What can I do?
Check if your college has signed up for the RfP. A full list of colleges/institutions who signed up for RfP is available here: https://www.governance.cam.ac.uk/committees/bef/Pages/request-proposals.aspx
Check with your college about the progress they are making in moving their cash deposits and investments away from banks and financial products which fund fossil fuel. Campaign in your college to make this transition faster. If your college has not signed up for the RfP, campaign for them to join this initiative for decarbonisation!
Why does it matter?
Fossil fuels are responsible for around 80% of global greenhouse gas emissions, which are accelerating the climate emergency. Despite the recommendations of the Intergovernmental Panel on Climate Change (IPCC), electrical utilities continue to build hundreds of fossil fuel power plants (mainly burning methane gas) in wealthy countries alone, and fossil fuel companies continue to seek new reserves and build infrastructures to extract and transport fossil fuels. These activities can lock in decades of fossil fuel demand, resulting in emissions that will further accelerate the climate crisis.
The majority of such fossil fuel expansion is financed or facilitated by banks, including those used by HEIs across the UK. As innovative, influential organisations with commitments to civic responsibility, HEIs are well-placed to identify solutions to shift finance away from fossil fuel expansion.
How is the university doing this?
The university is at the forefront of an initiative to find financial service providers who are aligned to the objective of not funding fossil fuel expansion. In 2024, a group of UK Higher Education Institutions (HEIs) spearheaded by Cambridge announced a new collaboration on a request for proposals (RfP) to seek out financial institutions/banks and products (financial assets or instruments that people/institution can put money into in the expectation of earning an income) that do not contribute to the financing of fossil fuel expansion while meeting the business and operational needs of UK HEIs. This work is led by Banking Engagement Forum (BEF), a committee of the Collegiate University, where as your President (PG), I sit and actively campaign for an ethical university by moving away from fossil fuel funding.
Why will the banks/financial institutions care?
This represents an opportunity for banks to change their policies and for asset managers (professionals/organisations who manage others’ money in the form of investments) to develop new products, thereby attracting new HEI customers, while minimising their exposure to risks associated with fossil fuel investments.
How does this impact companies that produce or are responsible for emissions?
The RfP also seeks to address an important gap for products that assess a company’s emissions trajectory, not their current emissions profile. This would enable investors not only to provide new capital to high-emissions companies that are rapidly decarbonising, but also refuse to provide new capital to companies that are building new fossil fuel infrastructure or exploring for new fossil fuel reserves.
What has been achieved?
In a snapshot:
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More than 70 HEI are co-signatories in this initiative led by BEF
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23 proposals received from financial institutions (FI) and extensive discussions were held with the FIs
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The co-signatories will then move money to successful providers. The pace of progress is dictated by how quickly financial institutions are able to make changes to their policies
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In this year so far,
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Several banking providers responded to the RfP, proposing to provide cash deposit accounts. For these providers, the project team assessed whether the institution provides any fossil fuel expansion financing. To date, six institutions have been deemed to meet the objectives of the RfP. They are (in alphabetical order):
- The co-signatories are now able to begin the process of opening accounts or increasing the amounts that they have on deposit at these institutions in the assurance that they meet the RfP’s objectives
- Four full-service banks are currently still in the engagement phase. Regular meetings are held to discuss what changes are necessary for them to meet the RfP objectives
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Money Market Fund Equivalents: Money Market Funds (MMFs) are an investment product offered by asset managers to help institutions manage their cash. Traditional MMFs largely invest in financial institutions such as banks. The RfP seeks to create alternative MMF-equivalent products that do not invest in banks that finance fossil fuel expansion nor in companies engaging in fossil fuel expansion themselves. It is relatively simple for institutions to move their money to a new MMF, making this a good tool for engagement
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The asset managers are being assessed on their general practices at the institutional level, including i) their provision of new money to fossil fuel expansion and ii) their use of votes against directors of fossil fuel expansionist companies at annual general meetings. This institution-wide work could affect trillions of pounds of investments.
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BEF along with other HEIs are now working closely with a small number of asset managers to create up to two new products. New funds are expected to be launched in the first half of 2025.
In Summary,
To remain within the carbon budget and decrease emissions on a science-aligned trajectory, fossil fuel expansion – and the financing of companies engaging in fossil fuel expansion – must come to an immediate end. This approach provides clear, achievable expectations for corporate behaviour.
If you’ve got this far, here is a reminder of what you can do:
Check if your college has signed up for the RfP. A full list of colleges/institutions who signed up for RfP is available here: https://www.governance.cam.ac.uk/committees/bef/Pages/request-proposals.aspx
Check with your college about the progress they are making in moving their cash deposits and investments away from banks and financial products which fund fossil fuel. Campaign in your college to make this transition faster. If your college has not signed up for the RfP, campaign for them to join this initiative for decarbonisation!