To Divest or to Engage? A Case Study of Investor Responses to Climate Activism

Peer-reviewed paper by David Chambers, Elroy Dimson, Ellen Quigley
Published on 05 February 2020


An increasing number of investors face the dilemma of whether to divest from environmentally damaging businesses or enter into a dialogue with them. This debate has now taken root in Cambridge, England, where the ancient University of Cambridge confronts great pressure from students and staff members to respond to the threat of climate breakdown. Having already received two reports on its approach to responsible investment, the university appointed a new chief investment officer (CIO) who, alongside the Cambridge University Endowment Fund (CUEF) Trustee and the wider university community, needs to consider the question of whether to divest from, or to engage with, fossil fuel firms. What would be the financial effects of each choice, and what would be the outcome in terms of environmental impact? This case study describes the background and the research behind the debate. The new CIO and her colleague, the chief financial officer, reflect on both sides of this debate as they consider the position the university should adopt. In contrast with other journal articles, this one does not propose solutions. Instead, it asks the reader to consider the arguments and to take a position.

Key Findings

  • Climate activism has accelerated and is supported not only by students but also by respected scholars in many disciplines. This article represents a case study of the debate over divestment and engagement at one of the world’s leading universities where sizable endowment funds are also under management.
  • The article reveals how pressures on institutional investors to respond to climate activism can accelerate. Investment professionals need to understand the forces for change. A head-in-the-sand response is counterproductive.
  • Changes in investment policy should be based on evidence. The article summarizes relevant research and challenges the reader to form a view on the choice between divestment and engagement.

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