What Lies Beneath

When students begin ploughing £36,000 into the Edinburgh University coffers next September they will no doubt expect that this money is used in a responsible way. The University’s Socially Responsible Investment policy and its Climate Action Plan certainly suggest that it will. However, students’ money is being used to finance some of the most environmentally destructive projects on earth, as well as runaway climate change, arms manufacturing and human rights abuses.

Edinburgh University has had a Socially Responsible Investment policy since 2003 and a Climate Action Plan since 2010, and yet their most recently-published investment portfolio (which is freely available on the Finance Department website) reads like a catalogue of the UK’s oil, gas and arms industries. Of the fifty-five UK-based companies in which the university holds shares, ten are primarily engaged in the extraction of fossil fuels, while four of them rank among the world’s top 80 arms exporters.

To fully detail the destructive and unethical practices that the university is helping to finance would fill the pages of The Student many times over, however there are a few names in the investment portfolio that really stick out. Cobham plc is the 42nd largest arms manufacturer in the world and counts the Israeli, Bahraini and Saudi governments among its many clients. It is currently developing Unmanned Aerial Vehicle Systems, otherwise known as drones, specialising particularly in “advancement of weapons carriage and release systems” and “light weight weapon ejection systems”. The company also boasts that it has been influential in lobbying for the deregulation of airspace to allow more drone attacks to occur. According to the Human Rights Commission of Pakistan 957 Pakistani civilians were killed by US drone attacks in 2010 alone.

Shell has long been renowned for its environmental devastation and human rights abuses in the Niger Delta, and it is now one of the key companies involved in the Athabasca Oil Sands project in Alberta, which has been described by The Independent as “the biggest environmental crime in history”. Shell’s exploitation of this new unconventional source of oil has contributed to the deforestation of an area the size of England and Wales, and simply extracting oil from the mixture of bitumen, sand and clay found beneath the ground generates around three times the carbon emissions of conventional oil extraction. A recent mock trial conducted by top-class lawyers and judges at the supreme court in London found the CEOs of companies engaged in oil sands extraction guilty of the crime of “ecocide”, which could soon be placed alongside genocide and war crimes in the UN’s list of crimes against peace.

How is it possible that a university whose mission statement includes the commitment to “make a significant, sustainable and socially responsible contribution to Scotland, the UK and the world,” is at the same time lending its support to companies such as Shell and Cobham? To begin with, the university’s Socially Responsible Investment policy is not nearly as impressive as it sounds. Unlike green investment funds, which screen out unethical companies or actively invest in companies that are making a positive contribution to the environment, Edinburgh’s investment policy merely allows for representative bodies such as EUSA to table objections to individual companies. Through this mechanism the university effectively absolves itself of responsibility for scrutinising the investments made on its behalf by Baillie Gifford, leaving it up to students to hold the fund managers accountable.

The other reason why Edinburgh has such a large proportion of its £140 million equities fund invested in the fossil fuels industry is simply that oil and gas are perceived to be highly secure investments. Aside from BP’s 53% drop in share prices in the two months following the Deepwater Horizon oil spill, this is largely true, however there is no reason why ethical investments cannot also be extremely profitable. According to the Financial Times The Church of England’s ethically-managed fund performed second best from a selection of over 1,000 from 1995 to 2005, and in the year up to June 2011 ethical funds had an average return of 14.91% as compared with 13.65% for non-ethical funds. The overall picture suggests that ethical funds generally do slightly better during economic upturns and slightly worse in recessions, however the differences are often negligible. Profits and principles are evidently not mutually exclusive.

The sheer number of unethical companies slipping through the net suggests that there is something seriously wrong with the University’s Socially Responsible Investment policy. The University should work with the fund managers to eradicate arms traders and persistent polluters from the investment portfolio, and any new investments should then be approved by EUSA. Through its investments the University has a genuine choice between helping to perpetuate a world of war and climate change and looking towards one of peace and sustainability.

Published in The Student