Amundi secures UK universities’ fossil-free fund

### Cambridge Coalition Backs Fossil-Free Cash Investments

A Cambridge-led coalition of UK universities has awarded a £500 million mandate to create a fossil-free cash fund, marking a significant shift in institutional investment strategies. This initiative, formed through the University of Cambridge’s Banking Engagement Forum, unites 79 higher education institutions aiming to eliminate exposure to companies involved in fossil fuel production or financing. The move reflects increasing pressure on asset managers to offer credible investment products aligned with net-zero commitments.

The fund, described as a “quasi-money market fund,” will enable universities and other public-sector investors to earn stable returns on liquid assets while adhering to strict fossil fuel exclusion criteria. It will screen out energy producers, utilities, banks, and insurers involved in fossil fuel expansion activities.

### A New Approach to Institutional Liquidity

The fund addresses the challenge faced by universities and local authorities in managing large short-term cash balances without compromising sustainability pledges. While equity portfolios have increasingly adopted ESG compliance, cash holdings have lagged due to limited fossil-free liquidity products. By pooling resources, the coalition aims to drive the development of sustainable cash vehicles and elevate market standards. Institutions excluded under the screening rules may be readmitted if they demonstrate a clear withdrawal from fossil fuel expansion.

The initial investment commitment of approximately £500 million could grow as additional investors, including pension schemes and insurers, join before the expected launch in late 2025.

### Stewardship Meets Financial Prudence

Amundi, one of Europe’s largest asset managers, will oversee the fund. Jean-Jacques Barbéris, Head of Institutional and Corporate Clients Division & ESG at Amundi, stated that the initiative reflects a broader evolution in investor expectations.

> “Delivering strong stewardship alongside responsible investment solutions is essential to achieving a low-carbon economy while providing long-term value for clients,” Barbéris said. “This product, developed for the UK’s leading universities, shows the growing recognition among institutional investors of the role responsible finance plays in advancing social, environmental, and economic benefits.”

The strategy aligns with Amundi’s ongoing push to integrate ESG criteria into all asset classes, particularly within liquidity management—a traditionally conservative segment of institutional portfolios.

### Governance, Finance, and Climate Implications

For policymakers, the move underscores the higher education sector’s influence in shaping sustainable finance practices. Many UK universities, including Cambridge and Oxford, have already divested their endowments from fossil fuels. Extending this discipline to cash investments demonstrates a maturation of ESG governance, bridging long-term climate commitments with daily treasury operations.

Financially, the fund will serve as a test case for how exclusionary screening can coexist with liquidity, credit quality, and yield targets. Success could set a new benchmark for public and private institutions managing significant cash reserves within responsible investment mandates.

From an ESG perspective, the fund aims to show that capital allocation, even over short time horizons, can contribute meaningfully to the global transition away from carbon-intensive sectors.

### A Broader Institutional Shift

This initiative emerges amid a wave of climate-aligned financial products across Europe. With the UK’s Transition Plan Taskforce and upcoming Sustainability Disclosure Requirements intensifying scrutiny of ESG claims, institutions are increasingly seeking investment vehicles that meet both ethical and regulatory standards.

By creating a scalable model for fossil-free liquidity, the Cambridge-led coalition’s fund could inspire similar efforts by pension schemes, charities, and municipalities across Europe. Its governance-driven approach highlights the sector’s potential to act as a collective market lever—redirecting capital from fossil expansion to sustainable outcomes.

As the fund approaches its 2025 launch, its success will likely depend on its ability to deliver competitive performance while adhering to rigorous exclusions. If successful, it may redefine how the UK’s largest universities and public institutions manage their balance sheets in the era of net-zero finance.

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