Amid questions surrounding fossil fuel investment, the University of Minnesota confirmed it does indirectly invest in the fossil fuel industry, including companies like ExxonMobil, Chevron and Royal Dutch Shell.
University invests in fossil fuels with index funds — investments made by an individual or institution into a pool of companies. For several decades, the University has invested in the Russell 3000, an index fund of the top 3,000 companies in the United States, according to Stuart Mason, the University’s chief investment officer.
However, as more companies worldwide are looking to become more sustainable and more people are becoming more aware of climate change, University Regent Michael Hsu said he may one day encourage the University to divest from fossil fuels.
“Maybe we’ve reached that tipping point where it doesn’t make any sense to invest in fossil fuels anymore,” Hsu said. “But as long as there’s a good return in fossil fuels, then we have to make a decision.”
Institutions invest in index funds in order to replicate the financial success of the companies in that index pool, and index funds are often a cheaper alternative to investing directly into a single company, Mason said.
The Board of Regents has the final say in what the University decides to invest in, according to University policy.
“Our goal in investing is to make money so that we can reduce the cost of tuition and use that money to fund operations of the University of Minnesota,” Hsu said.
Student groups such as the Minnesota Student Association and UMN Climate Strike have been actively advocating for the University to divest from fossil fuels by drafting resolutions, holding strikes and sending “break up with fossil fuels” Valentine’s Day cards to the Board of Regents.
“I’m always going to listen to the case being made by students,” said Regent Darrin Rosha. “[Fossil fuel divestment] is an important issue because to students at our institution, it’s an important issue … but obviously, there’s a lot of other considerations that are involved.”
Other schools within the Big Ten Academic Alliance, of which the University is a member, have had their own conversations regarding fossil fuels divestment.
The University of Michigan recently announced that it’s stopping any new investments into the fossil fuel industry. As of June 2019, Michigan invests about 9% of its total investments in natural resources, which include oil and gas.
The University of Minnesota also disclosed that it invests in a low-carbon index fund, which includes investments from more sustainable companies, Mason said.
It operates similarly to the Russell 3000 index fund but prioritizes investments in companies with low carbon emissions.
“I’m not saying that there isn’t more we could do, but I think we have done a fair amount,” Mason said.
