The University of Sydney will cut its fossil fuel investments by reducing the carbon footprint of its AUD$413m (£212m) listed share portfolio by 20% over three years.

The decision announced on Monday makes the university the first in Australia to commit to a strategy of phasing out carbon emissions from all the companies in its portfolio rather than exclusively targeting those in fossil fuels. The university’s total investment portfolio is worth $1.36bn.

The Australian National University pulled all of its investments out of fossil fuels last October, a move that prime minister Tony Abbott called “a stupid decision”. Such divestment is an approach advocated by campaign movements at 350.org and Greenpeace, and has been adopted by Glasgow University in the UK and partially embraced by Stanford University in the US.

However, the University of Sydney has distanced itself from straight divestment, saying that the policy does not account for the carbon footprint of non-fossil fuel companies and risks cutting out fossil fuel companies which are also working on renewable energy.



Sara Watts, vice principal (operations), said: “If you divest from a particular company or a sub-sector, it’s a really blunt instrument. The new strategy balances the university’s obligation to manage funds wisely on behalf of our students, staff, donors and alumni with its desire to address climate change and protect Australia’s heritage. It signals to the entire market that investors are concerned about the impact of climate change and expect contributing sectors to respond with plans to reduce their emissions.”



The university will join the Portfolio Decarbonisation Coalition, an initiative launched by the United Nations Environment Programme in September 2014. It is designed to bring together a “critical mass” of investors committed to reducing the carbon footprint of their investment assets by USD$100bn USD. It also includes two of the largest asset managers and pension funds in Europe.

The coalition does not stipulate how investors should decarbonise their portfolios, although they must publish their carbon footprint and commitments annually.



The university will not divest from any sector entirely, meaning that in theory it could retain its investments in Whitehaven Coal. The company is developing Australia’s biggest new coal project in New South Wales, in southern Australia. In 2014, Greenpeace activists built a mock mine-site on the University of Sydney campus to highlight the investments.



The Sydney decision follows a student campaign and referendum last year in which 80% of students voted in favour of the university divesting from fossil fuels. The university thereafter committed to a comprehensive review of its investments.



Greenpeace Climate and Energy Campaigner Nikola Casule said: “The University of Sydney has taken an important step in the fight against dangerous climate change. However, the university must declare which companies will be affected if its policy is to be credible.”

