What is fossil fuel divestment?

The fossil fuel divestment movement calls on University administrations to immediately freeze any new investments in the top 200 fossil fuel companies and to divest their endowment from these companies within five years. According to Fossil Free:

“Institutions of higher education are charged with preparing their students for lifetimes of work and service. But if those institutions are invested in fossil fuel companies, then students’ educations are being subsidized by investments that guarantee they won’t have much of a planet on which to make use of their degrees. 

Colleges and universities rush to launch greening initiatives, sustainability offices, and environmental curricula, but it makes no sense to green the campus and not the portfolio. Fossil fuel divestment is a reasonable next step — and it’s the right thing to do.”

Why should the U divest? 

Fundamentally, the U’s investments reflect its values, speak volumes about its moral character, and model the world it wishes to see and have a hand in building. How can we deem ourselves a champion of sustainability when we are contributing millions of dollars to the industry most responsible for the climate crisis? It is wrong to profit from the wreckage of the planet and the destruction of the communities most disproportionately impacted. We have a moral responsibility to divest.

We’re also currently experiencing a “carbon bubble,” or an over-valuation of fossil fuel industry stocks in the world’s stock markets. The CEO of BlackRock, Larry Fink, himself has said in his letter to CEOs that climate risk is investment risk and that climate change will change modern finance. We might be profiting today from fossil fuels, but that won’t be the case in 10 or 15 years. We need to get out and reinvest while we can. 

Who has divested? 

According to Fossil Free, nearly 1,200 institutions and governmental bodies have taken a leadership role on this issue and protected their investments against the carbon bubble by divesting their portfolios, partially or fully, from fossil fuels. The total value of all divested portfolios exceeds $14 trillion. According to Fossil Free’s list of commitments, the University of Maryland, the University of California, Georgetown University, Oregon State University, and Syracuse University have all committed to full divestment. 

What has happened to the performance of schools who have divested? 

According to a study by CJ Ryan (Roger Williams University School of Law) and Christopher Marsicano (Vanderbilt University), divesting from fossil fuel stocks had no major impact on the values of university and college endowments that got rid of them. According to the authors, “divestment does not clearly harm a university’s endowment assets.” Divestment from fossil fuels is wholly possible without harm to financial returns and is only going to become simpler as more and more institutions join the growing list of divested funds and the effects of climate change become more pronounced. 

Written by UMN Climate Strike.

This letter to the editor has been lightly edited for style and clarity.