By Vanessa Huang
LSE, as part of a coalition of UK universities, has threatened to withdraw funding from banks and asset managers unless they cease financing of fossil fuels and expedite net-zero initiatives. The 21 universities, managing over £5 billion collectively and led by the University of Cambridge, are asking banks to provide environmentally friendly deposit accounts and money market funds.
The universities in the coalition are looking for products and services that follow targets set out by the International Energy Agency’s 2050 net-zero scenario, which would keep the global temperature rise within 1.5°C. Interested financial institutions were required to disclose the details of their fossil fuel funding by the end of February.
This move comes as universities face mounting pressure to end their associations with the fossil fuel industry through divestment. The University of Edinburgh, also in the coalition, completed its full divestment from fossil fuels in 2021. LSE has significantly slashed its exposure to high-risk industries, including thermal coal, tar sands, tobacco manufacture, and controversial weapons, reducing its exposure to 0.5% in 2022/23. However, LSE has stopped short of full divestment, citing its reliance on mutual funds, which means that “direct action by LSE to exclude investment in specific companies is not possible.”
In response to rising concerns over sustainability, Barclays, Europe’s top financier of fossil fuels from 2016 to 2022, risked the termination of its more than 200-year-old relationship with Cambridge unless it ended fossil fuel financing. Barclays has since pledged to end fossil fuel financing alongside industry peers HSBC and Société Générale, although banks continue to maintain ties to the fossil fuel industry through other means such as corporate loans and bond markets.
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