Hansard

I am delighted to have the opportunity to raise the issue of ethical investment in the chamber today. The fact that I am able to do so is testimony to the hard work and perseverance of the People & Planet group at the University of Edinburgh. I put on record my thanks to it for the work that it has done in campaigning in and around the university on ethical investment.

The University of Edinburgh faces a number of important challenges. We should congratulate Professor Tim O'Shea on the work that he has done recently and on his recent announcement on opening up the university to ensure that those who have the capacity to take advantage of educational opportunities will not fail to find them because anything is found wanting on the part of the university.

The University of Edinburgh faces a further challenge in regard to its funding position compared with its main UK counterparts now that we have had the decision at Westminster on student fees, which will bring additional funding to its competitor universities.

The university's investment policy is the third leg to the challenges that it faces. It is an important issue not only for the students but for the academic staff and people of Edinburgh, for whom that academic institution is so much a part of Edinburgh life.

In February 2002, the student association's annual general meeting took place. It had unprecedented attendance, as around 550 people took part. They passed a motion from the People & Planet group to lobby for ethical investment on the part of the university. The level of participation in that meeting was unique in the university's many-year history.

By the time we reached November 2002, the university announced that it would make its investment portfolio public, for which we should commend it. The university agreed to publish a list of the companies in which it invested, and its board of finance agreed to that.

It is right that, as the university said, it decided to pursue issues around socially responsible investment through engagement with companies in which the university's funds were invested by the fund managers. That was certainly a step forward, but more work has to be done.

By February 2003, the ethical investment policy document had been produced by the People & Planet group. It takes political and social aspirations a step further and starts to document how an institution with a substantial investment portfolio can genuinely adopt ethical investment practices and can genuinely reflect the wishes of the people working in and around that institution.

The main points of the strategy document are quite clear. It calls for a properly established and written ethical investment policy. It states that the university should seek to use its social and economic status to influence positively public policy and corporate social behaviour. It goes on to say that the university's behaviour must be consistent with those values. It is difficult for anyone to disagree with that.

The document goes on to say that the university should actively lobby companies in the investment field. For example, the pension fund for university staff throughout the UK is already an ethical investor. There are certainly opportunities for the university's £160 million of investment funds to be used alongside the funds of other organisations in discussing and agreeing corporately what the investment strategy should be, to secure not just ethical investment with the university's funds but a degree of leverage on the major companies that other pension and investment funds use as investment vehicles. A number of companies have been singled out, such as tobacco and oil companies or those operating in the tobacco or oil sector, as companies that the People & Planet group wants to encourage to operate in a more socially responsible manner.

The next demand is that the university should establish a committee that would include student participants as well as those who could give expert advice, to help guide the ethical investment policy and to examine closely the investments and exclusions about which decisions will have to be taken as part of the policy.

The University of Edinburgh's image and reputation are at stake. It faces tough competition from its main UK competitors and from abroad and there is no doubt that that competition is about not just admissions policy and investment but the reputation and image of the university.

Although the university is trying to ensure that that it is not seen as an elitist institution and attempting genuinely to build on the success of the Lothians equal access programme for schools to broaden its access base, ethical investment and being seen to invest ethically are an important part of developing and upholding that reputation. There is no doubt that ethical investment can be as profitable as regular investment. The Ethical Investment Co-operative has produced five indices of ethical investments that exclude companies involved in a range of activities—for example, tobacco, gambling and alcohol.

Those indices have shown that it is possible for ethical investments to match the performance of the FTSE all-share index over a period of time. Since 1996, the FTSE4Good index—an index of companies that are defined as socially responsible on environmental development and human rights issues—has risen in value and has matched the performance of the all-share index. Even in the current investment climate, ethical investments have fared no worse than have general investments.

In the context of a university that is seeking a return on its investments to fund investment in infrastructure and research and to attract staff, it would be difficult to argue the case for ethical investment if it were not demonstrably possible to secure very good returns on such investment as compared with traditional investment vehicles. However, it is possible to show that such returns can be secured.

The University Superannuation Scheme, which is the investment fund for all UK university pensions, has already committed itself publicly to an ethical investment policy. It examines major oil, gas and pharmaceutical companies and has discussed issues with those companies, as well as with non-governmental organisations, the International Labour Organisation and the United Nations. All have endorsed the scheme's approach and have agreed that it is ethically sound and is producing good yields on investment.

I realise that I have overstepped slightly the time allocated to me. In conclusion, I emphasise that both the motion that we are debating and the policy that People & Planet is pursuing at the University of Edinburgh have widespread support from across the political spectrum. I hope that the university's approach of continuing dialogue with People & Planet and those who are concerned to secure an ethical investment strategy will continue. I hope that it will yield a written policy that makes clear the university's commitment not just to ethical investment of its funds but to being socially responsible in an interventionist way in the marketplace alongside other ethically motivated investment funds.