EDINBURGH University’s ruling body has announced the establishment is to complete its transition out of fossil fuel investments within three years – a move that has been welcomed by environmentalists, although they said it had been a long time coming.

The decision by the University Court follows its commitment in 2016 to become carbon neutral by 2040.

Edinburgh said it was at the forefront of international research on climate change and the technologies and policies which can mitigate its effects. Over the past eight years, the university has invested more than £150 million in low carbon technology, climate-related research and businesses that directly benefit the environment.

It has the biggest endowment fund of any university in Scotland and, with this move, is set to become the largest fund of its type in the UK to be free of fossil fuel investment.

Five years ago, Edinburgh became the first university in Europe to become a signatory to the Principles for Responsible Investment, a UN-backed initiative that aims to make the global financial system more sustainable. The institution’s investment in fossil fuels currently represents less than one per cent of its total funds under management, which is around £1 billion.

In May 2015, the university signalled its intention to use its investments and procurement power to support the transition to a low carbon economy and to divest from the most polluting fossil fuel companies.

Within weeks, £2.5m of investment was removed from firms involved in coal and tar sands.

Alongside these investment policy changes, Edinburgh will continue to engage with fossil fuel companies in its research and teaching.

Senior vice-principal, Professor Charlie Jeffery, said: “I’m very proud of the university’s decision. Climate change is one of the world’s biggest challenges.

“Over the past few years, we have thought hard about how to respond to that challenge.

“This change in our investment strategy is a vital step on that journey.”

Ollie Glick, Edinburgh University Students’ Association’s vice-president community said: “We are delighted with today’s announcement.

“Students and the Students’ Association have been passionate about removing fossil fuel investment from the university’s portfolio for many years.”

Environmentalists welcomed the decision, which they said had been taken after years of campaigning by students, staff and alumni, led by People and Planet Edinburgh.

They said the decision followed its 2016 commitment on carbon neutrality and last year’s announcement that it had invested £60m in sustainable water, food, and renewable energy technologies.

Ric Lander, Friends of the Earth Scotland’s (FoES) divestment campaigner, said: “Congratulations to the campaigners who have secured this fantastic victory through their hard work, creativity and commitment.

“Their victory will give inspiration to those campaigning for climate justice in Scotland and around the world. Climate change is already affecting millions of people as rising seas and more extreme weather destroys lives and livelihoods.

“Fossil fuels are driving the climate crisis and the University of Edinburgh’s decision to free their endowment fund from this industry is a truly significant step.”

People and Planet Edinburgh spokesperson Paula Lacey praised the move. She said: “People and Planet Edinburgh has been fighting for divestment for years, with a huge amount of hard work and support from students and local activists.

“This announcement has been a long time coming and we are overjoyed that the university has finally come round.

“Now it’s time for us to hold them to their promise to divest within the time frame established, and to ensure that the endowment fund is never invested in the fossil fuel industry again.”

Data from November last year showed that Scottish Council Pension Funds invested £1.8 billion in fossil fuels, said green groups, adding that the City of Edinburgh managed the Lothian Pension Fund, which still has more than £100m invested in fossil fuels.

FoES and others have been calling for local councillors, who help manage the funds, to stop backing fossil fuel companies.

Lander added: “Seven Scottish institutions have now committed to completely divest from fossil fuels.

“The University of Edinburgh’s actions make clear that investors can take bold and clear action to tackle climate change, that it’s consistent with Scotland’s wider efforts to phase out fossil fuel cars and ban fracking, and that now is the right time to back a fossil free future.”