In a report on Friday, the university ruled out future investments in coal and tar sands, although it currently has no direct holdings in either, and only negligible holdings in coal by investments managed externally.

But the working group on investment responsibility argued it was better to keep investments in oil and gas companies, and engage with them.

Campaigners said the steps announced today were too little and too slow, and said they would renew their push to force the university to divest.

Cambridge’s endowment is the biggest of any of the British universities where students have staged divestment campaigns, part of a global movement that has seen institutions and individuals globally commit to divesting £1.89tn in fossil fuels to stop catastrophic global warming.

Cambridge’s fund, the CUEF, is rivalled only by that of the University of Oxford, which reached a similar decision on coal and tar sands last year but ruled out divestment.

The working group’s report said that it recognises concerns of a “carbon bubble”, where international action to rapidly phase out emissions from fossil fuels – as agreed by nearly 200 countries in Paris last year – results in abrupt loss in the sector’s value. The Bank of England is investigating the risk of such stranded assets, which some have warned could cause another global financial crash.

“Regulatory change and public policy significantly affect the expected economic returns from carbon related industries. The group recognises therefore that engagement with fund managers may include such considerations and involve strategies, where feasible, to divest progressively, consistent with the expected performance of the portfolio.”

Most of the endowment is managed indirectly by such fund managers.

The working group was appointed in 2015 to look into whether environmental considerations were being factored into its investment decisions. It concluded that excluding individual investments would be neither ethical or practical, and that it would have no influence with more “enlightened operators” in the fossil fuel sector if it divested from them.

A university spokeswoman said: “In a set of recommendations, the working group recommended continued engagement between the university and firms that invest on its behalf to ensure all are fully aware of our values.”

More than 2,000 students signed a petition for divestment and the student union council voted 33 to 1 in favour of divestment. Nearly 100 Cambridge academics signed an open letter in April calling for divestment.

Angus Satow, campaigns officer at the Cambridge Zero Carbon Society, said: “Whilst we welcome these tentative first steps to divestment, this is too little, too slow. The university has failed to live up to its own mission statement, including ‘concern for sustainability and the relationship with the environment’.”

He added that they would seek a decision next year at the university’s decision-making body, Regent House: “We will win a vote among academics next year, and Cambridge will divest from fossil fuels.”

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