In what was shaping up to be a banner week for climate policy watchers, the University of California on Sept. 17 announced it will divest its $83 billion in endowment and pension funds from the fossil fuel industry, a move that could send ripple effects throughout higher education nationally.
The decision — which coincided with a worldwide strike on Sept. 20 and the Trump administration threatening California’s auto emissions standards — caps a multi-year campaign by students and faculty who argued the university had a responsibility to address climate change.
UC officials, however, said they made it for financial reasons.
“We believe hanging onto fossil fuel assets is a financial risk,” chief investment officer Jagdeep Singh Bachher and Richard Sherman, chair of the university regents’ investment committee, wrote in an opinion piece published in the Los Angeles Times.
They added that there were “more attractive investment opportunities” in new energy sources — presumably renewables, where UC has pledged to direct $1 billion in funding by 2020.
Climate activists celebrated UC’s announcement, though a few cautioned that some details of the plan remain unclear.
“This is the biggest single commitment by any educational institution in the world and it represents a true watershed,” said Bill McKibben, author and founder of the environmental group 350.org, adding that he expected other universities to follow suit.
The university’s faculty senate sent a memorandum to regents in July urging divestment. UC says it will make the change in phases, starting with the university’s endowment by the end of the month and moving on to the larger pension funds at an unspecified time.
One unanswered question: exactly how the university will define a fossil fuel asset. UC is shedding about $150 million in investments in the top 200 publicly-traded fossil fuel companies from its endowment, Baccher said at a recent board of regents meeting. Divestment will not be limited to those companies, however, UC spokesman Stett Holbrook said. “We have developed a more comprehensive, custom list,” he said in an email to CalMatters.
At the meeting, Baccher also credited student activism for raising his awareness about the issue. “The students were the first early warning system for us,” he said.
UC had previously divested from coal and tar sands, and committed to becoming carbon-neutral by 2025. “The UC has taken cautious steps,” said Emily Williams, a Ph.D. student in geography at UC Santa Barbara active in the campaign. “Each time they’ve added a little bit more.”
Students at the university have a history of successful divestment campaigns, agitating for the pulling of funds from apartheid-era South Africa and, more recently, private prisons.
The announcement also came at a time of heightened climate activism, with young people around the world — led by crusading Swedish teenager Greta Thunberg — walking out of school in a coordinated climate strike Sept. 20, ahead of the United Nations Climate Action Summit.
Divestment as a strategy, however, is not without its critics. Some climate experts argue that while fossil fuel companies derail many efforts to reduce emissions, some of them nevertheless must play a role in any transition to a low-carbon future.
“Divesting from all fossil fuel companies turns the climate problem into something that seems like a simple problem, and in fact it’s the opposite,” said David Victor, a professor at UC San Diego’s School of Global Policy and Strategy who studies climate regulations. He cited efforts by European oil and gas companies to develop carbon capture technology and hydrogen pipelines.
“We should be shareholders in those companies, and we should be active shareholders, to make sure that they’re actually doing it,” he said.
But Leah Stokes, a UC Santa Barbara political science professor who supported the divestment drive, said its symbolism was important in a country still struggling to come to terms with the climate crisis.
“I think the broader issue is about eroding fossil fuel companies’ social license to operate,” she said. “The real power from the divestment movement comes from standing up and saying the fossil fuel era needs to come to an end.”
* This article was updated Sept. 18, 2019, to more accurately reflect the status of UC’s fossil fuel divestments
CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.