Barclays risks centuries-old ties with Cambridge university over fossil fuel financing

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Barclays is in danger of losing its prestigious position as the bank of Cambridge university after more than 200 years, as students and staff lobby for a greener lender.

Cambridge has notified banks and asset managers that it is looking for an institution with robust climate policies to manage “several hundred million pounds” in cash and money market funds, according to a document seen by the Financial Times.

The mandate is expected to cover more than £200mn in assets and generate about £10mn in fees a year, two people familiar with the process told the FT. Another pitch process for Cambridge’s wider business banking services is likely to follow later in 2024, the people said.

People close to Barclays and Cambridge say the bank, for most of its 300-year history, has provided financing to the university either under its current brand or via lenders it later acquired, such as Mortlock’s, established in Cambridge around 1780.

Unlike many of its peers, Barclays has refused to stop financing new oil and gas projects and the bank remained the top European funder of fossil fuels between 2016 and 2022, according to a report by the Rainforest Action Network.

Barclays’ stance has caused several high-profile clashes with UK institutions such as the National Trust — whose largest donor is trying to get it to cut ties — and charity Christian Aid, which in July moved its affairs to rival Lloyds, citing Barclays’ “weak commitment”.

Barclays has also lost the business of several other universities. In September, Leeds told staff that it was switching to Lloyds specifically because it “has the lowest fossil fuel investments of any of the major UK banks”. Barclays raised £250mn of bonds for the university in 2017.

Cambridge’s selection process will be closely watched. The university notes in the letter that “fellow higher education institutions and asset owner organisations representing a yet larger sum have expressed interest in assessing the results of this request for proposals as well”.

Cambridge said it was “exploring opportunities to find financial products that do not finance fossil fuel expansion” as part of its “net zero engagement strategy with the banking sector”.

Cambridge and most of its 31 colleges bank either with Barclays or Lloyds, according to a bursar at one of the colleges.

The bursar said senior executives at both banks were given “pretty robust challenges” over their sustainability policies — “everything from who they lend money to, to how big their bonuses are” — but added: “Barclays always gets a harder time.”

The business review is in part a response to increasingly vocal student demands. Cambridge has pledged to divest its £3.5bn endowment from all direct and indirect investments in fossil fuels by 2030. “We’re dealing with people who are likely going to be leaders of tomorrow,” a second college bursar added. “And the biggest of their concerns is climate change.”

Barclays chair Nigel Higgins has made reducing the financing of carbon emissions one of his signature issues since joining in 2019. Barclays said it was ahead of its targets, committed to “financing the energy transition” and added that it was a “privilege” to bank Cambridge.

While HSBC, NatWest and Lloyds have gone further in their commitments, they still are not completely aligned with net zero guidelines from the International Energy Agency, meaning that Cambridge may find it difficult to select a major bank if it sticks rigidly to its criteria.

A person close the university said its representatives had also started meeting HSBC executives. Cambridge University Press banks with HSBC, as do a handful of colleges, the person said.