The Australian National University has come under political and industry fire for its decision earlier this month to divest $16 million worth of holdings in mining companies based on their environmental record. It is the first Australian university to offload fossil fuel shares because of environmental concerns, but has come under the direct criticism of Prime Minister Tony Abbott.

Embarrassingly, ANU has also been forced to leave open the option of reconsidering its blacklist based on information it received from Corporate Analysis Enhanced Responsibility, which some of the affected companies say is incorrect.

This week ANU Chancellor Gareth Evans wrote to mining giant Santos to express the council's regret for the embarrassment caused by the decision and promised the university would review it if any flaws were revealed to have been made in the methodology.

Vice Chancellor Stephen Parker said he had been somewhat surprised by the backlash against the ANU, but he could not comment directly on its decision.

He noted the UC was not yet one of the universities in the sector which had the luxury of a significant investment portfolio – having made significant investments in campus accommodation which it was repaying.

It had around $4 million in a UC Foundation, comprising mainly donated funds "which therefore requires us to be particularly sensitive when investing the money. In practice our foundation funds are invested mainly in term deposits with banks of Approved Deposit Institutions rather than shares."

The UC's investment policy was designed to ensure that "it should be seen as a socially responsible institution, and as such it should be a socially responsible investor. The university will not knowingly invest in an organisation that operates at the expense of the environment, human rights, the public safety, or the communities in which the operation conducts itself. It will respect the dignity of its employees."

It also prohibited investment in companies that knowingly exploited labour and the environment or avoided social responsibility – including companies involved in armaments or tobacco.

"Whatever the long-term prospects for fossil fuels, it would be premature in our view to categorise the general activity of mining or drilling for oil as inappropriate for investment, per se, by a university," Professor Parker said.

" It would depend on the circumstances and environmental issues raised."

He noted the UC had experienced its own industry backlash when it became the first Australian university to ban the sale of bottled water on campus.

He said the ban was evidence-based and sought to minimise UC's impact on the environment by encouraging people to switch from still bottled water to fresh drinking water from bubblers and refill stations.

The ban had been a success, he said.

Professor Parker also noted the UC was working with the mining industry to promote environment good.

"We are currently funded to do research with the University of Papua New Guinea's Institute for Biological Research and recently received $2.5 million in funding from ExxonMobil PNG Limited to continue the 'Piku Project', to conserve the habitat of the endangered pig-nosed turtle species, known locally as Piku, for another five years."