The University of California is going green.
On Tuesday, the university system announced it had divested completely from fossil fuels, becoming the largest in the country do so. It represents a trend gaining steam nationwide to invest in renewable energy.
The system sold more than $1 billion in fossil fuel assets from its pension, endowment and working capital pools and invested $1 billion in clean energy projects, it said.
The news is significant, given the University of California has $126 billion in investments and is one of the largest university systems in the country, with 285,000 students.
The moves are part of the system’s environmental, social and governance investment strategy. First announced in 2015, the five-year strategy aims to invest at least $1 billion into climate change solutions.
“Today’s announcements on our investment strategy underscore our hopeful view of the future,” Richard Sherman, chair of the UC Board of Regents’ investments committee, said in a statement. “As long-term investors, we believe the university and its stakeholders are much better served by investing in promising opportunities in the alternative energy field rather than gambling on oil and gas.”
Others universities have or are considering divestiture from fossil fuels, amid pressure from faculty and students.
In February, Georgetown University officials approved a policy to divest from the public securities of fossil fuel companies within the next five years and from existing private investments over the next 10.
Back in 2011, Hampshire College became the first university in the US to make plans to divest, it says.
Earlier this year, the Harvard University’s Faculty of Arts and Sciences, as well as the Harvard Medical School’s Faculty Council, both called on the university to divest – but so far, the school hasn’t made official plans to do so.
Though the movement has been slow-going in the US, that isn’t the case everywhere. In the UK, by comparison, more than 50% of universities have committed to divestment, according to the advocacy group Students Organising for Sustainability.
Why divest from fossil fuels?
The call to universities to divest from fossil fuels is driven by environmental consciousness. Universities invest billions to help generate revenue for the schools, and advocates say divesting from fossil fuel helps stigmatize those companies for carbon emissions and push them toward more development of clean energy.
So why don’t all universities divest?
It comes down to money. Swarthmore College, for example, has been wrapped in its own divestment debate. Despite calls from students and faculty groups, the administration has not yielded, due to the profitability of investing in such companies.
“Any policy change that shifts the focus from attaining the best long term financial results would then require fundamental changes in both the asset allocation and the investment managers who serve the College, and would place that performance at risk,” wrote Salem D. Shuchman, chair of the Board of Managers of the college, in 2018 – referencing the school’s growing endowment, on which he said the school relies for the majority of its funding.