Amundi Partners with UK Universities to Deliver Fossil-Free Liquidity Fund

University of Cambridge Leads Fossil-Free Finance Shift Across Higher Education Sector

A turning point has come to sustainable finance in higher education; a Cambridge-led coalition of UK universities has launched a new fossil-free cash fund of £500 million (£635 million). The initiative, developed through Cambridge University's Banking Engagement Forum, encompasses 79 institutions aiming to sever undivided financial ties with companies engaged in fossil-fuel expansion. The fund acts as a "quasi-money market"-like vehicle that permits universities and public-sector investors to receive short-term capital without compromising their climate objectives. Excluded from the fund would be not only fossil finance entities but also banks, insurance, and utilities supporting fossil-fuel development. This is a landmark towards sustainable investment strategy in UK universities, taking their net-zero commitments far beyond equity portfolios and into daily treasury operations.

This move represents an increasing challenge: that of a large cash reserve managed in an economically sustainable and strategically beneficial way. While many institutions have already divested from fossil fuels in their long-term holdings, cash investment has lagged due to a lack of alternative low-carbon options. By pooling together, the coalition hopes to raise the market standard and assist in the establishment of new green finance and responsible investment strategies. The initial £500 million investment commitment is expected to expand further as pension schemes, charities, and insurers express interest in the fund, which is to be launched in late 2025. Other institutions may be reconsidered that were previously excluded under the fund's strict screening process if they show a clear commitment to divesting from fossil fuel activities.

The fund is being managed by Amundi, one of the largest Asset Managers in Europe. As Jean-Jacques Barbéris, Head of Institutional and Corporate Clients Division & ESG at Amundi, observes, the partnership with UK universities is emblematic of a wider change in investor expectations. The combination of strong stewardship with responsible financing is essential to building a low-carbon economy that creates long-term value, he added. This collaboration between the University of Cambridge and Amundi indicates how the partnerships between universities and financing institutions are getting increasingly relevant in shaping sustainable investment practices. Further, Amundi's strategy is well aligned with its broader aim to embed ESG principles across classes of assets, including liquidity management, a conservative field in institutional finance.

From a governance angle, the initiative also shows how higher education institutions could affect broader financial systems. As universities, Cambridge and Oxford have, so far, spearheaded the fossil fuel divestment movement. The extension of this discipline to cash holdings signals a more developed form of ESG governance that links long-term climate goals with everyday financial decisions. The fund will act as a laboratory for testing the balance between exclusionary screening and resolution, liquidity, credit quality, and yield. Should it prove successful, the fund may set a new standard for the responsible investment mandates across the public and private sectors.

The economic impact of sustainability in higher education is gaining distinction as institutions wield financial pull to support the global climate agenda. With the wave of climate-aligned financial products across Europe, this project would find itself right in the middle of new uncertainties, with institutions expected to prove that their investments meet both ethical and regulatory requirements against a backdrop of new oversight provided by regulations such as the UK Transition Plan Taskforce and Sustainability Disclosure Requirements. By building a scalable model for fossil-free liquidity that promotes sustainability in financing, the Cambridge-led coalition is pushing other sectors to follow suit. Its governance-centred regime for the fund could pave the way for similar governance models to be adopted by pension funds, municipalities, and charities, further anchoring green finance as a driver to affect the future global business and education landscape.

The closer the fund gets to launching, the more attention will be devoted to whether it can deliver competitive returns with such stringent exclusions. If it does, it could reshape how UK universities and public sector underwriters manage their balance sheets in the net-zero finance context.

Editor’s Note:

The initiative led by Cambridge is a watershed moment in the sustainable investment landscape in UK higher education. For far too long, cash investments with a short-term horizon were excluded from any climate considerations. This coalition has shown that economic sustainability and strategic investment can and indeed must go together with its £500 million commitment to a fossil-free cash fund. Using the term 'fossil fuel expansion' is about more than symbolism; it is a clear signal that finance requires responsible thinking from treasury decisions to the long-dated portfolio context. This move is quite mature for sustainable finance in higher education, reflective of only increasing pressures on asset managers to deliver on credible and ethical options. Amundi's partnership with UK universities is also key. It shows how market standards and tools can be developed in collaboration between institutions and finance providers to meet both environmental and financial goals. The fund's successful implementation would affect how other sectors, pensions, charities, and local authorities, would align their investment portfolios with net-zero commitments.

As per Skoobuzz, this financial product signifies more than just an offering; it serves as a powerful declaration of intent. It underscores the vital role universities play not merely as centres of learning, but as influential catalysts for change in the global shift towards responsible investment.

FAQs

1. What is the £500 million sustainable investment mandate by UK universities?

A coalition of 79 UK universities, led by the University of Cambridge, has committed £500 million ($635 million) to create a fossil-free cash fund. This fund is designed to manage short-term capital in a way that supports environmental goals and aligns with institutional net-zero commitments.

2. Why are UK universities promoting sustainability through finance?

Many universities have already divested their long-term portfolios from fossil fuels. However, short-term cash holdings have remained exposed due to limited fossil-free options. This initiative aims to close that gap, ensuring that all financial activity, including liquidity management, supports sustainability and responsible investment strategies.

3. What is the role of the University of Cambridge and Amundi in this partnership?

The University of Cambridge initiated the coalition through its Banking Engagement Forum. Amundi, one of Europe’s largest asset managers, will oversee the fund. This partnership reflects a shared commitment to sustainable finance in higher education and demonstrates how universities and finance institutions can work together to drive change.

4. How does the fund work?

The fund is described as a “quasi-money market” vehicle. It allows universities and public-sector investors to earn stable returns on liquid assets while excluding companies involved in fossil fuel expansion. This includes not only energy producers but also banks, insurers, and utilities that support fossil fuel growth.

5. Which universities in England are leading in sustainability and finance?

The University of Cambridge is at the forefront of this initiative, with support from 78 other institutions across the UK. Many universities, including Oxford and others, have already divested their endowments from fossil fuels and are now extending that discipline to cash investments.

6. What are the economic sustainability and strategic investment goals of the fund?

The fund aims to balance financial prudence with environmental responsibility. It provides a model for how exclusionary screening can coexist with liquidity, credit quality, and yield targets. This approach supports economic sustainability while encouraging strategic investments in line with climate goals.

7. How does sustainable investment impact global business and education?

By redirecting capital away from fossil fuel expansion, the fund contributes to the global transition toward low-carbon economies. It also sets a precedent for other sectors—such as pension schemes, charities, and local authorities—to adopt similar green finance models, reinforcing the economic impact of sustainability in higher education.

8. What ESG standards does the fund follow?

The fund applies strict fossil fuel exclusion criteria and supports stewardship principles. Institutions excluded under the screening rules may be reconsidered if they show clear withdrawal from fossil fuel activities. This ensures that ESG governance is both rigorous and adaptable.

9. What are the broader implications for sustainable finance in higher education?

This initiative demonstrates that universities are not only centres of learning but also influential players in shaping responsible finance. By pooling resources and setting high standards, they can push market norms forward and create scalable models for ethical investment.

10. When will the fund launch?

The fossil-free cash fund is expected to launch in late 2025. Additional investors, including pension schemes and insurers, may join before the launch, potentially increasing the fund’s size and influence.