Edinburgh University angers fossil fuel divestment campaigners

The University of Edinburgh has angered fossil fuel divestment campaigners by ruling out a wholesale sell-off of its oil, gas and coal company investments.

But in a nod to student pressure it has threatened to shun heavily polluting coal and tar sands companies if "realistic alternative sources of energy are available" and if the businesses fail to invest in measures to address climate change.

"The university does not see choices as limited to 'no change' or 'pull out of all investments'," the institution said as it announced its decision.

Fossil fuel holdings accounted for £27m, or just under 9 per cent, of the university's £308m endowment fund investments at the end of December.

Edinburgh's move is the latest response from investors confronting an international campaign to stigmatise the use of fossil fuels.

During the past 12 months, California's Stanford University, the heirs to the Rockefeller oil fortune and most recently the Church of England have announced plans to sell or cut their holdings in coal companies, and in some cases tar sands groups as well.

Others have followed the University of Glasgow, which said in October it would fully divest from fossil fuel businesses - "subject to reassurance that the financial impact for the university is acceptable".

One University of Glasgow academic welcomed Edinburgh's decision, which he said was a more realistic response than the "simplistic" stance of his own university.

"It is refreshing to see the University of Edinburgh propose a policy that is consistent both with ethical principles and with what is technically feasible," said Paul Younger, professor of energy engineering.

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But Simon Lewis, reader in global change science at University College London, said Edinburgh's move was "a form of denial of the seriousness of the problems facing humanity from the actions of fossil fuel companies".

"To accept the need to radically reduce emissions, but not to divest from companies that produce those emissions, is a total failure of logic," he said, adding that 25 years of engagement with fossil fuel companies had not worked and it was unrealistic "to politely ask companies to end their core profitable business and expect them to agree".

The divestment campaign may be attracting public attention but there is little sign that investors are acting on it, according to FTI Consulting, a business advisory company that recently surveyed 324 investment professionals for its client, the Independent Petroleum Association of America.

"Nearly 80 per cent of respondents told us the inclusion of fossil-fuel related investments is an 'essential element' of having a 'balanced, diversified portfolio'," FTI said.

Lang Banks, Scotland director of WWF, the environmental campaign group, said the University of Edinburgh may have taken into account the fact that Scotland is the UK home of oil and gas.

"However, Glasgow University's decision to divest made it entirely possible. Edinburgh could have done the same," he said.

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