Cambridge-Backed Forum Unveils First Fossil-Free Cash Fund for UK Colleges

In the major turning point that shows an increased commitment to climate-conscious finance for the UK higher education sector, 79 universities and colleges jointly announce the creation of a fossil-free cash investment fund. With the University of Cambridge's Banking Engagement Forum UK steering the proposed fund to mobilise close to £500 million behind sustainable investing practices, it aims to orient institutional financial processes with wider environmental outcomes. The group stressed that the fund will not accept companies engaged in fossil fuel production activities, like banks, insurance companies, or utilities that might aid in the development of coal, oil, and gas infrastructure. However, the group mentioned that companies may be re-evaluated for inclusion if they stop supporting fossil fuel activities. This is representative of a growing commitment of English universities to implement environmentally responsible measures in their financial procedures.

Through its Chief Financial Officer, the University of Cambridge, UK, which is playing a leading role in the initiative, stated that this is the first known cash fund designed to avoid providing liquidity to financial institutions that continue to back fossil fuel projects, such as coal and gas-fired power plants, seen as long-term contributors to carbon emissions. The fund is in the process of being set up by Amundi Investment Solutions, an asset manager of global dimensions, with an expected opening to investors by the end of this year. There are indications that more seed investors from the higher education sector will join before the formal opening, according to the Banking Engagement Forum. This action indicates how UK universities are moving toward sustainable funds and deploying their financial potential to foster climate-conscious decisions.

The announcement points to a time when sustainable investments by universities are yielding excellent performance. Morgan Stanley research reveals that sustainable funds beat the traditional ones in the first half of 2025, posting a median return of 12.5% as opposed to 9.2% for conventional funds. The document further explained that this positive inclination was chiefly instituted by investments made in Europe and other global regions targeted towards sustainability. Morgan Stanley cited data from Morningstar to say that, for most of the previous years, sustainable funds have consistently outperformed traditional funds. For instance, executing a £100 investment in sustainable funds in December 2018 would now be worth £154 against only £145 in traditional funds. This testimony shows the growing appeal and financial viability of fossil-free endowment funds in UK colleges.

This is part of a more substantial collection of Cambridge and Oxford institutions leading in green investments. By launching this fund, the coalition hopes to change how higher education institutions manage their finances so that their investments genuinely coincide with their values and contribute to the long-term protection of our planet. In conclusion, the £500 million fossil-free fund initiated by UK universities signals a major triumph for sustainable finance. It exemplifies how universities in England have begun to engage actively in climate solutions, and how fossil-fuel-free funds might be an excellent asset to UK higher education in supporting responsible investment decision-making and establishing new benchmarks for institutional leadership.

Editor’s Note:

This initiative indicates a major turning point whereby financial influence in support of climate action is exercised by UK universities. By launching a £500 million fossil-free cash investment fund, the higher education sector sends a clear message: sustainability is far from being a peripheral concern; it is central to institutional responsibility. Exclusion of companies associated with fossil fuel expansion, including banks, insurers, and utilities, indicates an increased recognition that financial systems have to evolve in harmony with environmental imperatives. It is particularly encouraging to see the University of Cambridge, UK, take on a leading role, not only in convening the Banking Engagement Forum but also in setting a precedent whereby universities in England can lead by example. The fund's timing and ambition are the most commendable features. It arrives at a moment when sustainable university investments are outperforming traditional investments, and when public trust in institutional leadership is becoming increasingly tied to climate-conscious action. The fund's design, which blacklists not only fossil fuel producers but also the financial institutions that support their expansion, demonstrates an understanding that systemic change requires a fresh approach. This initiative goes beyond simple divestment, aiming to redefine the market itself. The anticipated increase in seed investors before the fund's launch suggests that this is more than just a symbolic gesture; it marks the beginning of a significant movement within UK higher education. The fossil-free endowment fund in UK colleges is no longer theoretical; it is real; it can drive a strategic agenda and can deliver financial returns. The coalition's activities demonstrate that universities can now align their values with their investments, and that alignment may have valuable spin-off effects environmentally and economically.

As per Skoobuzz, the burgeoning campaigns for ecologically sound investment in Cambridge and Oxford should catalyse other institutions to adopt similar practices. This fund transcends its function as a mere financial instrument; it exemplifies how higher education can lead the way in creating a more sustainable future.

FAQs

1. What is the £500 million fossil-free fund launched by UK universities?

The fossil-free cash investment fund is a collaborative initiative led by 79 UK universities and colleges, aiming to mobilise nearly £500 million (approximately $670 million) into sustainable finance. Spearheaded by the Banking Engagement Forum at the University of Cambridge, UK, the fund is designed to exclude companies that contribute to fossil fuel expansion and redirect institutional capital toward climate-conscious investments.

2. Why are UK universities investing in sustainable funds?

UK universities are increasingly aligning their financial strategies with climate science and ethical responsibility. By investing in sustainable funds, institutions aim to reduce exposure to fossil fuel-related risks, support global decarbonisation efforts, and demonstrate leadership in climate-conscious finance. This move also reflects growing stakeholder expectations for universities to act responsibly across all operational domains.

3. Which UK universities are leading fossil-free investments?

The University of Cambridge, UK, is playing a central role through its Banking Engagement Forum, which is coordinating the fund’s development. Other universities in England, including members of the 79-institution coalition, are actively participating. This collective action highlights the leadership of Cambridge and Oxford green initiatives and signals a broader shift across the UK higher education sector.

4. What types of companies are excluded from the fund?

The fund will exclude fossil fuel producers, utilities, banks, insurers, and any companies that finance or support the expansion of coal, oil, and gas infrastructure. However, companies may be reconsidered for inclusion if they cease their involvement in fossil fuel activities, allowing for dynamic re-evaluation based on environmental performance.

5. Is the University of Cambridge part of the green investment fund?

Yes, the University of Cambridge, UK, is a founding member and strategic leader of the initiative. Its Chief Financial Officer stated that this is the first known cash fund designed to avoid providing liquidity to financial institutions that continue to back fossil fuel projects, such as coal- and gas-fired power plants.

6. How will fossil-free funds impact higher education in the UK?

The fund is expected to reshape how universities manage their endowments and reserves, embedding sustainability into financial governance. It sets a new benchmark for fossil-free endowment funds in UK colleges and encourages other institutions to adopt similar models. This shift could also enhance public trust, attract climate-conscious donors, and strengthen the sector’s role in global climate leadership.

7. Who is managing the fossil-free fund?

Amundi Investment Solutions, a global asset manager, has been appointed to create and manage the fund. The fund is expected to open to investors by the end of 2025, with additional seed investors from the higher education sector anticipated to join before launch.

8. How are sustainable funds performing compared to traditional ones?

According to Morgan Stanley research, sustainable funds outperformed traditional funds in the first half of 2025, posting a median return of 12.5% compared to 9.2%. Morningstar data also shows that over the past several years, sustainable funds have consistently delivered stronger returns. For example, a £100 investment in a sustainable fund in December 2018 would now be worth £154, compared to £145 in a traditional fund.

9. What does this fund mean for sustainable university investments?

This fund represents a major milestone in sustainable university investments. It demonstrates that institutions can align their financial operations with environmental values without compromising performance. It also contributes to the development of a new market for fossil-free financial products, encouraging innovation and accountability across the investment landscape.

10. How does this initiative support broader climate goals?

By excluding fossil fuel-linked entities and promoting responsible investment, the fund directly supports global climate targets and the UK’s net-zero ambitions. It also complements institutional sustainability strategies and reinforces the role of higher education in advancing environmental stewardship.