Oxford University has announced measures to strengthen its fossil fuel investment policy but stopped short of full divestment.

The measures follow a review in response to students’ calls to divest from the fossil fuel industry.

Council, the university’s governing body, said it consulted on the issue and concluded that robust mechanisms were already in place to ensure environmental factors were considered when investment decisions were made.

It said there were thorough screening and due diligence processes designed to select investments that produced long-term high returns but also avoided high social and environmental risks.

But it has now called for the level of engagement and public reporting on these issues to be strengthened, given the importance of carbon emissions and climate change.

The university’s £2bn (€2.7bn) in endowment funds are run by Oxford University Endowment Management (OUEM) on behalf of the university itself and collegiate investors.

OUEM is a member of the Institutional Investors Group on Climate Change.

Council has asked OUEM to continue to:

  • Avoid direct investments in coal and oil sands companies, of which it currently has none, and also avoid investment in sectors with high social and environmental risks
  • Include a range of other energy investments with the Oxford Funds, where financially prudent. The council’s investment committee, which sets policy for OUEM, will report annually on OUEM’s voting decisions and engagement with fund managers across all sectors
  • Improve reporting and communicating on its investment strategy, including in its annual report and on its website. This will include publishing a full breakdown of sector exposures, including the energy sector

The university’s policy on socially responsible investment states that it is committed to ensuring its investment decisions, including those taken on its behalf, take into account social, environmental and political issues to maintain its ethical standards.

However, there is little detail on specific investment criteria.

But the university has revealed that the Oxford Funds hold no direct investments in coal and sand, nor do they have any direct investments in the energy sector.

As at 31 December 2014, the Oxford Endowment Fund – the permanent endowment segment of the Oxford Funds – stood at £1.7bn, with around 3% in the wider energy sector, more than half of this in exploration and extraction.

Professor Andrew Hamilton, vice-chancellor at Oxford University, said: “Our investment managers take a long-term view and take into account global risks, including climate change, when considering what investments to make.

“The university believes that approach to be the right one, and today’s decision reinforces it by encouraging greater engagement and reporting on this crucial issue to the environment and all of society.”

While campaigners against fossil fuel investing welcomed the move, some pointed out that the decision only applies to directly owned shares and does not commit the university to divesting from all fossil fuels. 

Meanwhile, as part of the regular review of its policy on investment responsibility, Cambridge University has established a working group to explore the university’s position in the light of developments in the understanding of the integration of environmental, social and governance aspects in investment decisions.