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LondonStudent · 1st March 2010

Comment ·19

Should ethical investment be a priority for universities?

The Great Debate

Many universities rely on money from stocks and shares for expenditure. Pressure has been put on universities by students in recent years to reviewtheir investment portfolios - firstwith regards to the arms trade, but increasingly in oil andgasmultinationals, aswell asmanyother areas. Somedisagreethat this is agoodidea.Weheardbothsides...

CRAIG GRIFFITHS, UCLU Environment & Ethics Officer

different from many charities and organisations such as the Church of England. Since they make these investments,

why shouldn't their values that are pro- moted through research and teaching also be evident in their investments? And why shouldn't ethical investment be used to bring benefits to thewider so- ciety, of which universities are an im- portant part? The priority of universities has to be

Universities do not exist to make money or return a profit.Higher Edu- cation is not a business sector and should not be generally associated with words such as “investment”.

However, it is a fact that nearly all

universities hold investments in various companies, either directly, or through pension schemes – in this, they are no

to deliver excellent teaching that can promote social justice, advancement and intellectual freedom.Yet by investing in an array of arms traders, oil and gas companies, mining firms, and many other ethically dubious enterprises, these noble aims of universities are ef- fectively undermined and subverted; ethical investment also has to become a priority.

JOHN PHELAN, Birkbeck Postgraduate

might seem like an odd time to be cutting off funding options.

Nevertheless this is what several

The government is looking for cuts to control a national debt ris- ing at £5,000 per second. In De- cember it found them when it reduced universities annual fund- ing by over £400 million. So it

‘ethical investment’ campaigns are trying to do. Instead of simply look- ing for the best return on invest- ment, universities are now being pressured, as Queen Mary’s Ethical Investment Policy says, “to consider the social and environmental poli- cies of companies”. So, for example, arms companies are out. In Novem- ber, after a lengthy campaign, UCL sold its shares in armsmanufacturer Cobham Plc whose share price had risen from 167.2p in June to 233.4p by November. It has since risen to 250.9p. Queen Mary’s has likewise adopted an ethical investment pol-

icy. But this does leave the question

of where themoney is going to come from. More government funding is out.

Government debt has risen from 29% of GDP in 2002 to 37% in 2007 (when the credit crunch started) to 60% today. It is forecast to rise to nearly 80% in the next couple of years. By 2013, 9p in every £1 paid in tax will be spent simply on pay- ing interest on this debt. The tax- payer teat has been milked dry. So do we ask students to pay

more for the education they receive? It’s estimated to cost a university, on average, about £10,000 per year to educate an undergraduate but any

Last issuewe asked: ”Are the‘EnglishDefence League’ justmisunderstood?”

You voted:

No, they’re dangerous and have to be stopped. (77%)

Yes. Themedia have just blown their truemotiva- tions out of proportion. (23%)


Hilary Aked, London Student editor, argued that the EDL are as dangerous and racist as they ap- pear, and that the media has been right to take issue with them.

Luke Williams, a post-graduate student from UCL, wrote that the EDL have valuable points to make which are being misconstrued by the main- streammedia.

Universities exist to improve human

life and many of course conduct re- search into drugs and practices that can save lives and alleviate suffering. Can it ever make sense to associate this pur- pose with the arms trade, which relies on warfare for economic viability? Many universities have in the last

decade established courses, degrees and research institutes dealing with the en- vironment and climate change, yet many of these same universities persist to invest hundreds of thousands of pounds in oil and gas companies that are driving runaway climate change through fossil fuel extraction - and using ourmoney to do so (especially now that RBS, a huge financier of oil and gas companies, is now publicly-owned). Divestment campaigns such as those

aimed against the arms trade are how- ever only one part of ethical investment.

Our unismust be consistentwith the values they embody

Certain corporate practices should be avoided altogether, but through positive investment, universities can also ac- tively seek out companies or organisa- tions whose values and global impact matches that of their own. By investing in renewable energy

technology – they already conduct valu- able research into it - the industry could be given a crucial boost (particularly given the unwillingness of government to adequately support it) and universi- ties would be investing for the social good in the fight against climate change. Investments could also be channelled into co-operative or local organisations so that money is kept in the local area and in structures that are sustainable and fair. Moreover, ethical investment need

not have negative financial conse- quences for universities. Sectors such as

the arms trade are heavily subsidised and rely on large, infrequent and highly competitive contracts; as such they make risky investments. As more stringent environmental

regulations are introduced, those com- panieswhich are already sustainablewill have tomake very few changes, thus in- curring no financial loss; the opposite applies for massive polluters. The Church of England has for instance re- ported increased returns on its invest- ments since it adopted an ethical investment policy in 1994. By following in the footsteps of

groups such as disarmUCL(withwhich I was involved), students can campaign not only for an end to their tuition fees fundingwarfare and climate change, but for universities to use their financial re- sources to promote progressive aims and social justice.

“Ethical investment”will only harmHigher Education in the long-run

proposal to raise fees is controver- sial. The London Student website currently carries a photo of a stu- dent wearing a placard reading “No fees please” which is a bit like sit- ting down to eat in a restaurant wearing a sign saying “No bill please”. A recent proposal from the think tank Policy Exchange to raise tuition fees provoked a furious re- sponse fromthe University and Col- lege Union and the National Union of Students. Of course, universities can always

milk foreign students. Between 2000 and 2006 the number of interna- tional students in the UK increased by 48%. Fees range from £8,500 to £32,000 per year, a rise of between

1/3 and ½ over the last decade. Of course universities should not

be investing in companies engaged in criminal activity. But as the arms trade has been singled out as a target so far, it is worth noting that most people are killed not with high tech weapons but with cheap weapons like the machetes which hacked so many to death in Rwanda. But with the government’s pock-

ets empty and students unwilling to pay more, the coming gap in uni- versity funding requires that some serious thought goes into cutting off potential revenue streams. Ethical investment plans will

only jeopardise Higher Education further.


Should universities ensure their investments are morally sound?

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