Federal Education Minister Christopher Pyne has labelled the Australian National University's (ANU) decision to sell off its shares in seven mining companies as "bizarre".
Earlier this month ANU announced a plan to divest itself of shares in companies like Santos and Iluka Resources after receiving independent advice on social responsibility.
Mr Pyne told the ABC's AM program he lamented the fact he had no power to intervene in the university's decision.
"Sadly, no, the universities govern themselves. But I think to suggest that companies like Santos and Iluka, which are both excellent companies, are somehow not ethical investments is a bizarre decision," he said.
The ANU also faced criticism from Liberal MP Jamie Briggs, who wrote a letter to ANU vice-chancellor Ian Young last week which described the university's decision as "extraordinary".
Mr Briggs, who is the Assistant Minister for Infrastructure and Regional Development, accused the university of making its decision with a "seeming lack of concern about the possible reputational damage to the companies concerned".
He said the ANU had failed to offer them the opportunity to respond to the allegation that they were not socially responsible.
"Further it is remarkable that you are yet to provide a detailed explanation of as to how you arrived at this decision or disclose the data you are relying on," Mr Briggs said in the letter, dated October 10.
In an interview with the ABC, Mr Briggs said there might be a backlash.
"If the ANU are going to run their decisions based on green activists, then taxpayers should think about the investment they make in this publicly-funded university," he said.
"It's bizarre behaviour for the vice-chancellor to take public aim at companies who employ thousand of Australians, who are well respected.
"For one of [our] leading research institutions to come out and publicly attack them, with no opportunity to respond, does seem not just bizarre, but is quite outrageous behaviour and of course the Government is watching this."
Mr Briggs was the third member of the Coalition to speak out on the topic after similar comments from Treasurer Joe Hockey last week.
'ANU must respond to stakeholder concerns'
Professor Young defended the move on the ABC's Radio National, saying the decision had been made in response to a "significant push" from stakeholders demanding investments that were consistent with the ethos of the university.
"A university like ANU invests its funds for the betterment of its stakeholders, our staff, our students, our alumni," he said.
"Just a like a super fund needs to respond to what its investors want, a university like ours needs to respond to those stakeholders."
Professor Young said stakeholders had asked for the university to divest from all fossil fuel companies, but a more nuanced approach was decided on.
"We actually developed a socially responsible investment policy, modelled on the policy of Stamford University, one of the leaders in this area," he said.
Environmental, social and governance issues examined: Young
An external consultant was engaged to assess each company the university had investments in, with reference to three issues.
"They looked at environmental impact ... they look at the social issues around the company, and they look at the governance," he said.
After this assessment had taken place the university chose to divest itself of shares in Iluka Resources, Independence Group, Newcrest Mining, Sandfire Resources, Oil Search, Santos and Sirius Resources.
The stocks represented around 5.1 per cent of the university's Australian equity holdings and approximately $16 million, or 1 per cent, of its total investment holdings - worth $1 billion.
As well as fossil fuels, the university chose to divest itself of shares in companies who mined copper, gold, nickel and mineral sands.
Some of these companies objected to the university's negative assessment.
This included Santos, which asked ANU to withdraw its assessment of the company as doing "social harm".
Professor Young said the phrase "social harm" was an emotive one, that needed to be viewed in context.
"Although these socially responsible investment policies tend to be couched in this terminology of 'social harm', what we've tried to do I think is look at a broad portfolio of these environmental, social and governance issues," he said.
BHP, Rio Tinto remain in portfolio
Other mining companies such as BHP Billiton and Rio Tinto remain in the university's portfolio of investments.
Professor Young described them as "diversified companies that do a whole range of different things".
"And in our assessment they actually come out quite good," he said.
In response to criticism from the Federal Government, Professor Young said if someone could show the university's plan was flawed or inappropriate, he would be happy to listen to their comments.
"But right now I think that we've gone through a very detailed process," he said.
"Our consultants have actually reassessed [the decision] because of the publicity that has surrounded it. They stand by their ratings and so right now the university is comfortable in its position."
Professor Young said the university had been overwhelmed by the positive response from the community on its new investment policy.
"It's been very eye opening for me to see the volume of support that the university as received from people right across the country," he said.
Student group Fossil Free ANU were supportive of the policy, but urged the vice-chancellor to go further by committing to full fossil fuel divestment.