The University of BC’s board of governors has declared climate change an emergency and now plans to divest its endowment fund from fossil fuels.
The university’s board of governors, which rejected calls to divest from fossil fuel in 2016, has had a change of heart, after receiving a letter signed by 1,600 people calling on the university to declare a climate emergency, and after “decisive” referenda were held by faculty and students calling for fossil fuel divestment.
“UBC acknowledges the urgency of the climate crisis and we must directly face the coming challenges,” UBC president Santa Ono said in a press release.
The university has $1.7 billion invested through its endowment fund, of which fossil fuel investments make up 2% – about $43 million. The board of governors will conduct legal and financial reviews to determine how to move that $43 million out of fossil fuels.
The university is also looking into the legal and financial implications of taking $380 million currently invested in its endowment fund and targeting it towards its sustainable future pool, which would be invested in low-carbon funds.
The university has not yet identified which companies will be targeted for divestment, so it’s not clear whether it will be a wholesale divestment of all things carbon – coal, oil and natural gas – or more discriminating.
Norway’s government pension fund, for example, is divesting from companies that are primarily in oil and gas exploration and production.
It has specifically targeted four Canadian companies that are primarily invested in the Alberta oil sands: Suncor Energy, Cenovus Energy, Imperial Oil, and Husky Energy.
But Norway’s pension fund is keeping its investments in integrated majors like Exxon Mobil, Royal Dutch Shell, and Norway’s own Equinor ASA (Statoil).
As Business in Vancouver recently reported, there is some debate over the efficacy of fossil fuel divestment as a climate change action tool. Although it may raise the cost of financing for companies in the coal, oil and natural gas sectors, it doesn’t address the fact that there is expected to be a demand for fossil fuels for decades to come, particularly in China and India.
Microsoft founder Bill Gates – who has invested heavily in clean energy – recently opined that he doesn’t think fossil fuel divestment will actually result in any measurable greenhouse gas reductions.
But there may be some genuine fiduciary reasons for fossil fuel divestment on the part of the trustees. Thermal coal, for example, is fast becoming a stranded asset risk. A number of global banks have been shedding coal stocks. The same might not be said for natural gas, however, which the International Energy Agency forecasts will be in ever increasing demand over the next decade, especially in Asia.