WASHINGTON — The nearly decade-old campaign to force major universities, investment firms, and insurance companies to divest from fossil fuels just notched one of its biggest victories yet.
In a new op-ed for the Los Angeles Times, the chief investment officer for the University of California system and the chairman of the UC Board of Regents’ investments committee announced that the UC system’s endowment and its pension-fund were going “fossil free.”
The two officers, Jagdeep Singh Bachher and Richard Sherman, write that they have already eliminated all fossil-fuel investments from UC’s $13.7-billion endowment fund. They go on to say that the university’s $70-billion pension, which currently serves 320,000 employees, will no longer have fossil fuel investments by the end of September. “We believe hanging on to fossil fuel assets is a financial risk,” Bacher and Sherman write.
The international divestment campaign, launched seven years ago by the climate group 350.org and fueled by student activists around the world, has aimed to hobble oil, gas, and coal industries by cutting off the flow of capital. In 2016, the coal giant Peabody Energy declared bankruptcy and said divestment had been one of the negative forces that hurt its operations. As writer and activist Bill McKibben writes in the New Yorker, divestment “has become the largest such campaign in history: funds worth more than eleven trillion dollars have divested some or all of their fossil-fuel holdings.”
In their op-ed, Bacher and Sherman write that it wasn’t moral or political pressures that convinced them to phase UC’s hundreds of millions of dollars in fossil-fuel investments. Instead, they say, it was the growing realization that fossil fuel investments no longer made financial sense and weren’t a worthwhile investment. They write:
All of this is by way of saying that we don’t make investment decisions simply based on the preferences of one group or another of our stakeholders, which is not to say we don’t listen to them. We should and we do, such as when the UC Academic Senate presented a “memorial” to the UC Board of Regents in July calling on us to divest our endowment of fossil fuels. We were already going there, or as Richard said in a statement at the time, we were “on a glide path to zero.” The same applies to the pension as well.
While our rationale may not be the moral imperative that many activists embrace, our investment decision-making process leads us to the same result. We’re in the business of helping to ensure the financial viability of a great university whose stakeholders frequently come at an issue — even one as terrifyingly consequential as climate change — from different perspectives.
The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for UC’s diversified portfolios.
The UC’s decision is arguably the most consequential university divestment yet. Alone, it won’t bring the fossil fuel industry to its knees, but it could pave the way for other major universities and investment funds to follow their lead. Or as Bill McKibben put it: