The global motion to sell off fossil fuel assets has picked up major speed this year.
With over 80 percent of the world’s population experiencing extreme weather linked to climate change, university endowments have become a focal point for students, faculty, and community members eager to snuff out their schools’ support for the fossil fuel companies most responsible for fueling the climate crisis.
Major universities, including Boston University, the University of Minnesota, and Harvard University — which boasts the largest endowment of any school in the world — are among the latest to commit to pull billions from fossil fuel funds. In their wake, others are following suit. In July, Maine became the first U.S. state to legally require divestment of public funds from fossil fuel assets.
Since the movement took root on university campuses a decade ago, over 1,000 institutions, including faith, health, and philanthropic groups, have rerouted investments to support a transition to clean energy. Beginning at Hampshire College in Massachusetts in 2011, colleges have been a driving force in the divestment movement for good reason: the top 100 schools have over $100 billion tucked away in their endowments.
Ando, a new sustainable banking app, recently launched Divest101.com, the first centralized listing of the top 100 universities and their current status on divesting their endowment. The site not only provides real-time updates on which universities have divested but also provides resources and links for campus activists to leverage locally. “At Ando, we empower individuals everywhere to ‘divest’ their personal money from the fossil fuel banking system,” says JP McNeill, the company’s CEO. “It makes complete sense that we support student and community activists in pursuing the same goal in higher education.”
Emily Williams is a graduate student at the University of California Santa Barbara who helped lead a successful campaign pushing the University of California system to divest its $13.4 billion endowment and $70 billion pension from fossil fuel funds, which it committed to in 2020.
“Divestment is a powerful strategy because it’s a lever you can turn that can actually interrupt some of the systemic factors that cause climate change,” Williams told Grist Creative, noting that administrators’ first response to student activists tends to be a big, whopping “no.”
“Keep that conversation open, and then build support on campus, because honestly, most students, faculty, and staff want this to happen,” she said. “Once the administration sees that, it gets a lot harder to ignore.”
Williams attributed the win to six years of activist pressure and UC-wide faculty support, but also to administrators waking up to the shifting economics. Fossil fuel assets are volatile and have limited growth opportunities, according to the Institute for Energy Economics and Financial Analysis. Leading financial firms have even admitted that fossil fuel stocks are underperforming.
In a report obtained in 2021 through the Freedom of Information Act, Blackrock, the world’s largest investment house, noted that “no investors found significant negative performance from [fossil fuel] divestment, but rather, have reported neutral to positive results.” In other words, divesting is also good business.
And yet as the divestment “parade” nears a critical mass, uncertainty looms. The question of where exactly these billions of dollars will be directed instead, and when the money will transfer, has been less clear-cut.
Following Boston University’s divestment commitment earlier this fall, university trustee Richard Reidy noted that in spite of the urgency of the climate crisis, which he called “not something our great-grandchildren are going to deal with” but “something we’re worrying about now” — rerouting the university’s endowment wouldn’t happen overnight.
“There has to be a transition process,” Reidy said.
According to BU’s new investment policy on fossil fuels, which its Board of Trustees approved in September 2021, the university says it will not make any new direct investments in “fossil-fuel-focused products” of any asset class. But, it noted, its current private fossil fuel investments “may take more than a decade to liquidate.” Plenty of other universities, such as Rutgers, have echoed similar ten-year timeframes. Some commitments are more rigorous. An Ivy League-wide resolution calls for full divestment by 2025.
In these in-between years, ongoing collective action will be crucial to determine where investments land.
Activists are urging administrators to get creative. People and Planet, a network of student-led social and environmental justice campaigns in the UK, suggests breaking down the goal of full fossil fuel divestment into achievable steps. One such intermediary move might include the creation of a mini-portfolio within the university’s overall holdings that contains specific instructions, indicating the kinds of companies and projects the divested funds can be earmarked for.
Even so, quantifying progress can be tricky. “Demand that student representatives are involved in the development of this policy to ensure that the principles for reinvestment are not watered down,” the group’s Reinvestment Action Guide recommends.
New “just transition” investment options are emerging all the time. The Climate Justice Alliance is launching a democratically-governed cooperative of revolving loan funds, for instance, called Reinvest in Our Power, which will channel capital to non-extractive projects led by frontline communities, such as solar fields built atop city structures.
More traditional investments are also an option, according to the Responsible Endowments Coalition, like mutual funds that exclude coal, oil and gas; on-campus capital improvement funds for efforts like upgrading dorms to be more energy-efficient; or installing geothermal pumps that siphon air from the earth to heat or cool a library, instead of burning oil to do the same.
While large institutions deliberate on where their billions will go, smaller entities and individuals don’t need to wait to divest. Since the 2015 Paris climate agreement, the world’s top 60 banks have invested 3.8 trillion in fossil fuel companies, directly fueling the climate crisis.
But a rising number of ethical and sustainable banks have emerged in recent years, such as Ando Money, Amalgamated Bank, and Triodos. Ando, for instance, invests 100 percent of customer deposits in decarbonization efforts. Its app allows users to “follow their money” using a visualization feature that charts the percentage of a customer’s deposited dollars supporting clean energy, transportation or green building projects. Ando also provides a mapping feature updated in real time, enabling individual divestors to track their growing network of friends and family who follow suit, moving their money out of big banks.
Students are the first to acknowledge that divestment — both personal and institutional — is only one element of the many strategies needed to stave off the worst impacts of the climate crisis. But it’s a model that’s immediately actionable, and one that’s poised to proliferate.
Ilana Cohen is a junior at Harvard University and an organizer with Divest Harvard. When asked what students at other universities can do to push administrators to divest, Cohen suggested that organizers try to pinpoint what makes their specific school tick, whether it’s the institution’s relationship with alumni, or donors, or its public reputation more broadly.
“Leverage what’s really important to it,” she said. “Creating collective moments like what we saw at the Harvard-Yale game protest, where hundreds of people poured down from the stands to join us in calling for divestment on the field, shows community unity against an entrenched power, and awakens societal consciousness.”
Like other schools, while Harvard has committed to change its investment strategy, it has yet to announce its future fossil-free portfolio, which Divest Harvard organizers have said they will continue to push administrators on.
“Persistence is powerful,” Cohen said. “Sustained collective organizing makes institutions move.”
Ando is Sustainable Banking. Ando invests 100% of customer deposits in green initiatives exclusively, like renewable energy and regenerative farming, allowing users to have the single greatest individual impact on reducing carbon emissions and healing the planet. Ando also embraces transparency, always sharing where investments are being made, providing customers a window to the transformative power of their money. These are just two reasons why banking with Ando is the easiest way to fight climate change. Plus, Ando offers a full suite of industry-leading banking features like an easy to navigate app, early paydays, easy transfers, paid referrals, 24/7 security, and overdraft protection. With Ando, changing the world can be as easy as changing where you bank. Ando banking services provided by Community Federal Savings Bank, Member FDIC.
This story was originally published by Grist with the headline Divestment campaigns — and reinvestment efforts — gain strength as climate change intensifies on Jan 25, 2022.