The Memorial states: “The U.C. Academic Senate petitions the Regents to divest the University’s endowment portfolio of all investments in the 200 publicly traded fossil fuel companies with the largest carbon reserves.”
First, this isn’t about bankrupting oil companies or even undermining their bottom line in the short term. This is about turning the tide of public opinion, comparable to the anti-apartheid movement and the successful fight against Big Tobacco. The goal is to reduce the power of fossil fuel companies to control the public discourse and political process, and at the same time, protect the value of our Endowment investments. As with Big Tobacco, divestment will eventually lead to regulations and effective actions to combat climate change. In this fight, UC is in a powerful position to influence public opinion due to its historical involvement in identifying the causes of global warming and its high profile commitment to a carbon neutral future*.
* Roger Revelle and Hans Seuss were the first to demonstrate that seawater would not buffer the anthropogenic increase in atmospheric CO2, and warned that this could have serious environmental consequences. Roger Revelle enabled Charles Keeling to conduct the first usable measurements for estimating worldwide atmospheric CO2 concentrations (at Mauna Loa). Current faculty Veerabhadran Ramanathan was the first to identify the greenhouse effects of CFCs and has led efforts to reduce short-lived climate pollutants.
The value of fossil fuel stocks are heavily dependent on the value of the companies’ proven reserves of coal, oil and gas, but climate scientists maintain that ~80% of these fossil fuel reserves must stay in the ground if we are to keep the global temperature rise to under 2⁰C. A temperature increase above 2⁰C will drive vulnerable species into extinction, and cause the displacement and suffering of millions of humans. No matter how you look at it, fossil fuel stocks are a bad investment: if reserves are left in the ground, the stocks will greatly decline in value; if they are extracted and burned, disasters on a scale never before seen will ensue.
The scenario is already playing out. US coal stocks have lost ~75% of their value in the past five years, a time period when average stock prices have been gaining value. Quantitative analyses have found better performance by investment portfolios which do not contain fossil fuel stocks compared to those that do. With momentum rising for effective action against global warming, you can expect this dynamic to intensify.
Most climatologists agree that we are skating dangerously close to the “point of no return,” when poorly understood runaway climate feedback mechanisms insure that no amount of cutbacks on greenhouse gas emissions will save us from potentially catastrophic global changes (see the consensus scientific view from the IPCC and a mainstream overview of global warming from the EPA). Impacts that could be locked in include (depending on the geographic areas) massive flooding, devastating droughts, uncontrollable forest fires, extensive crop failures, refugee migrations that dwarf those currently hitting Europe, widespread starvation, species extinctions, and widespread disease outbreaks. If all this were not reason enough to act, there is common agreement that the longer we wait to act, the more expensive and less effective mitigation measures will be.
In Fall ’15, the California Legislature passed a law requiring CALPERS and CalSTRS (which includes the retirement investments for our state colleges) to divest from coal and tar sands stocks. UC then sold off these stocks voluntarily, but the UC Chief Investment Officer insisted that he will re-invest in them if it thinks they are a good deal. Note that CALPERS and CalSTRS lost $840M by delaying their divestment of coal stocks in just the past fiscal year, and over $5B in all fossil fuel stocks; UC has not revealed how much it lost or continues to lose as these stocks lose their value.
UCOP has led on renewable energy on the system’s ten campuses. But is investment in fossil fuels actually consistent with the university’s commitment to sustainable development? In the end, we are major stakeholders in this debate, this is our retirement we’re considering, and we have a right—indeed, a responsibility—to express our opinion.
True. But many UC faculty members possess a special knowledge regarding climate change unbeknownst to investment bankers. On this particular subject, where financial, moral, and scientific issues come together, our expertise can help the financial professionals.
We believe this is wishful thinking. Under the principles of corporate governance, Big Oil cannot support a policy that results in 80% of its assets becoming worthless. Moreover, the fossil fuel industry has been decreasing investments in sustainable energy while at the same time, funding climate-change denial and supporting politicians who vote against actions to prevent climate change (see articles in PNAS and Nature Climate Change. Exxon exemplifies the industry at large. Exxon understood the enormous risk posed by climate change before it became public knowledge, but rather than invest in sustainable energy sources, the company spent millions of dollars to promote misinformation. They have literally employed the same PR firms and tactics employed by the tobacco lobby before them, to manufacture doubt and dangerously delay action.
The fossil fuel divestment campaign was started by the students back in 2012. Faculty at UCSC, UCSB and UCSD voted for resolutions in support of the students. This eventually led to the memorial which was introduced by UCSF in 2019. It was sent to all campuses and by now almost all have voted in favor, leading to the systemwide vote to be held June 1st to 30th 2019.