University of Otago has followed the local council in committing to a policy of no longer investing in companies engaged in the exploration and extraction of fossil fuels.
In May 2014, Dunedin City Council became the first local authority in New Zealand to divest from fossil fuels to highlight their impact on climate change.
The university council has now followed suit after an extended campaign by senior staff and students.
"Staff and students can be proud that the university is investing its funds in ways that avoid products we know are extremely harmful to our current and future well-being," environmental health senior lecturer Alex Macmillan said.
Dr Macmillan said the decision made Dunedin the first city in which both the city council and the university had taken the step.
She said Otago was also considering how it can reduce its own reliance on fossil fuels.
Victoria became the first university in New Zealand to divest from fossil fuels, making the decision in late 2014.