The ASUC Senate took a laudable step toward environmental responsibility by passing a bill to divest any of its funds from the fossil fuel industry. Yet such divestment on a UC systemwide scale, which the bill also recommends, is not the most prudent move for the university.
As a matter of principle, financial withdrawal from fossil fuels is a praiseworthy action. Universities and others who choose to divest demonstrate that they are prioritizing environmental concerns. Given fossil fuels’ obvious role in climate change and UC Berkeley’s historic dedication to the environment, it makes sense to shift toward more responsible investments in that area. Furthermore, the existence of similar petitions at universities across the country indicates that this is an issue that many students feel very strongly about.
But wholesale divestment from all parties associated with fossil fuels does not seem practical for the whole UC system. With an estimated $70 billion endowment, the university’s financial risk is undoubtedly significantly higher than the ASUC’s. Investments in fossil fuels are probably also very profitable, and aside from the danger inherent in losing that value, the university must consider the fact that its donors will likely not be in agreement on this issue.
A more realistic path for the university might be to follow other examples of establishing special funds dedicated to socially responsible investments. The most significant of these is Harvard University’s social choice fund, the creation of which was announced in December after students there overwhelmingly voted to endorse the creation of such a fund. According to The Harvard Crimson, the fund will “take special account of social responsibility considerations” in its investments. On our own campus, UC Berkeley’s Haas Socially Responsible Investment Fund purports to be the only student-led investment fund of its kind.
Following the model of Harvard and Haas would mitigate the risk the UC system would incur through divestment while still promoting ethical and environmentally friendly actions in business. Establishing a socially responsible fund would enshrine ethical economics in the management of the university’s endowment and maintain stability in its other investments.
Social responsibility and environmental stewardship are important qualities to embody in the university’s investment practices. To that end, complete fossil fuel divestment may work for the ASUC, but as a whole, the UC system would be better off emulating Harvard’s approach.