Responsible investment and institutional decision-making

Responsible investment

Our Climate Plan reaffirms and strengthens our commitment to investing responsibly.

The University has implemented an investment strategy whereby it invests in companies that are sustainable and that purposefully set out to solve the problems of people and the planet profitably, without benefiting from causing harm to the world.

Progress made in 2022/23

Financial strategy

We have adopted the Tomorrow’s World strategy of the University’s investment manager Sarasin & Partners. Consequently, we only have investments in companies and bonds which support sustainable social and economic development. We do not invest in companies that are materially engaged in certain sectors, including thermal coal, the extraction of fossil fuel from tar sands, oil and gas extraction, production, or refining.

Environmental, Social and Governance (ESG) factors are considered to assess both the financial risk to an investment, and the risk to the environment, and society. Using Sarasin's Sustainability Impact Matrix (SSIM), an investment that scores a 'red flag' within environmental and social categories will not be held.

Banking

Following a competitive tendering process in 2023, the University appointed Lloyds as its new bankers and we are now in the process of set up.

On ESG issues, Lloyds has the lowest fossil fuel investments of any of the major UK banks and is the first major UK bank to commit to no longer financing greenfield oil or gas developments.

Lloyds already works with several universities on green finances and has built strategic partnerships to support the decarbonisation of domestic heating, accelerate the transition to net zero and plant 10 million trees by 2030.

We are also exploring opportunities to deposit funds in cash products that reflect our climate related ambition to decarbonise the real economy.

We are joining the University of Cambridge in a ‘Request for Proposal’ from banks and fund managers that are able to offer suitable products and whose primary market financing and engagement activities align with the International Energy Agency’s (IEA’s) Net Zero Emissions (NZE) scenario.

We have recently co-signed a letter to the Prudential Regulation Authority, as the body responsible for the safety and soundness of the UK banking sector and for Financial Stability. The letter highlights that we are concerned by the potential for increasing systemic risk to the banking sector from climate change and offers some suggestions for strengthening market discipline.

Institutional decision-making

Delivering our Climate Plan objectives, and embedding of Environmental, Social and Governance (ESG) factors across all our activities, requires the consideration of climate impact in all decision making.

Maximising this impact requires drawing upon the expertise of academic and professional services colleagues across the University. This report has highlighted opportunities for enhancing stakeholder input through focus groups etc.

Governance

At a strategic governance level, the committee papers template has been adapted to specifically require authors of papers to indicate whether an Environmental Value Assessment has been undertaken and its outcome.

To date, the use of the template and completion of all sections has not been enforced. However, we intend to discuss issues where the template has not been used and/or where there is insufficient evidence of an ESG assessment having taken place.

Further specific guidance on the completion of the Economic Value Added assessment is being developed in consultation with the Sustainability Service. A paper authoring training session will be held with the Executive Officers of University Executive Group members to increase awareness and adherence. This will be followed by a series of briefings aimed at colleagues who support the drafting of committee papers.

As part of the ongoing review of the University governance committee structure, the embedding of ESG across terms of reference and business plans and operations will be reviewed and reinforced.