2023 was the year of action for climate activists at universities across Britain. Groups like Student Rebellion led protests at universities that drove forward what is considered by many to be a painfully slow rate of change within institutions. These recurrent protests and shifting policies are part of a larger debate about divestment as a strategy to combat the Climate Crisis. Many universities, including Leeds, have committed to climate net neutrality by the end of this decade. Such commitment has manifested itself in the University switching its banking provider from Barclays - which had invested $5.6 billion into fossil fuels in 2021 alone - to Lloyds Banking Group. Given this, it is important to ask, is divestment working, and is it the best path forward?

108 universities in the United Kingdom have now committed to divesting from Fossil Fuels since Glasgow University kickstarted progress in 2014. Over this period, that equates to 17.7 billion pounds of direct university endowments committed to divestment. Whilst not all of these universities have agreed to divest fully, with some, such as the University of Leeds, having completed only a partial divestment thus far, it nevertheless shows the dramatic progress made by climate movements over the past decade.

Universities are not alone in seeing divestment as a crucial step in fighting the climate crisis. The Global Fossil Fuel Divestments Commitments Database (GFFDCD) aims to track the global level of financial investment in climate-damaging energy sources and, so far, reports $40.63 trillion in divestment across 1612 institutions and companies. This equates to just less than all G7 GDPs combined and makes a significant impact on the global economy.

However, when these numbers are broken down, the story becomes more complex. Of the 1612 companies and institutions committed to divestment, over 74% are either non-profit and philanthropic or organisations where the will of the people can be heard, such as Faith communities, educational institutions, and governments. Only 8% of these companies are for profit, which suggests that the message has not yet impacted the private sector, allowing huge investment firms and banks like Barclays to continue pumping money into new fossil fuel projects. So, does divestment make an impact, or does it just satisfy the 90% of students who say that the climate crisis impacts their mental well-being?

Major voices such as Bill Gates have argued that divestment is yet to reduce carbon emissions, and instead, positive investment in innovative technology is the way forward. In a study titled ‘Exit vs Voice’, Luigi Zingales, Eleonora Broccardo, and Oliver Hart argue that to divest is to lose any influence over the direction of major companies, and it opens investment opportunities for those who do not care about the need to protect the environment. Moreover, Mike Hulme, the founding director of the Tyndall Centre for Climate Change Research and professor of climate change in the School of Environmental Sciences at the University of East Anglia, suggested that the focus on divestment was merely a campaigning strategy rather than legitimate policy and fails to deal with the key factors driving climate change beyond the scope of fossil fuels.

Yet in the last few years, more and more institutions have decided to divest, even those who have previously opposed it, such as the Church of England. One such organisation is the University of Cambridge, which published a decision document to accompany its divestment decision in 2021. They conclude that the idea of investing to influence does not work in practice, rendering little major change, but through divestment, climate-destroying companies will be stigmatised, raising public consciousness and making it more difficult to publicly stand by their dirty investment decisions. Engagement with these companies through investment will not provide the fundamental and systemic change which is required to protect the climate for future generations.

Instead, ethical investment plans are required. The Boston Consulting Group has estimated that there is an investment gap of $18 trillion in the drive to achieve net zero by 2050 (which is only seen as the bare minimum for climate protection by the United Nations). The argument is more than just an economic one but a moral one, particularly for institutions that rely on public funds. There is no single clear route to combating climate change. Yet it is now unavoidable that divestment must be part of the solution. Major corporations with private investment can give a stronger argument behind a hybrid system of investment, maintaining a voice whilst positively contributing elsewhere to climate-positive countries, but institutions such as universities that rely partially or fully on public money must be held accountable to the wishes of the people.