UC sells about $200 million in direct holdings in coal, oil sands companies

Tim Hyon/Staff

Related Posts

The University of California has sold off direct holdings, worth nearly $200 million, in coal and tar-sands-focused oil companies — a decision fueled by environmental and economic pressures.

UC Chief Investment Officer Jagdeep Bachher announced the decision at the Wednesday UC Board of Regents’ Committee on Investments meeting. The decision is part of an investment strategy that considers “environmental sustainability, social responsibility and prudent governance risks,” said UC spokesperson Dianne Klein in an email.

These holdings are a “small share” of the university’s investment assets of nearly $100 billion, Klein said. The university invests approximately $10 billion in the energy industry.

Klein added that the university will also consider carbon prices in its assessment of electric utility investment opportunities.

According to an investment status report released last week, the university’s total assets are $98.2 billion — up from $90.6 billion last year — illustrating the endowment’s significant gains since 2013, according to an analysis by the Center for Investigative Reporting. The analysis found that from 2004-13, the university saw the worst investment returns of any of the wealthiest colleges in the country.

Jake Soiffer — a campus junior and representative of Fossil Free UC, an environmental advocacy group — said the decision to sell holdings was a “powerful victory” for the campaign.

Although the university’s direct endowment and pension-fund holdings in coal and tar-sands energy sources were sold, there has been no official policy change that could dictate future investment decisions. The decision, according to officials, was grounded in economic reasons such as the current decline in the coal industry.

Last year, the regents’ investments committee voted to continue investing in fossil fuels after receiving a recommendation from a sustainable-investing task force, which aims to encourage the university to factor in long-term effects when making investment decisions. As of last year, the task force did not believe that divestment from fossil fuels would have a significant effect on climate issues.

“This is not a blanket disinvestment of fossil fuels, but part of a sustainable investing framework adopted several months ago,” Klein said in the email.

Soiffer does not think the university will likely start reinvesting in coal and oil sands, given students’ campaigning efforts — such as last year’s protests by Fossil Free UC — and the current economic incentives.

A UC task force has created a blueprint for sustainable investing, which UC Student Regent Avi Oved said encompasses principles that will influence the office’s financial decisions, as direct policies don’t usually dictate how the office will invest.

“(Investment decisions are) contingent on the market and values of stocks,” Oved said. “They can’t necessarily be beholden to a specific policy.”

Soiffer added that it is important to situate the university’s decision to sell its shares within the context of the fossil fuel divestment movement, which has recently picked up momentum.

The university’s action follows divestment decisions made by other universities, including Stanford University’s removal of coal-mining companies from its endowment. Additionally, the California State Legislature passed a bill earlier this month requiring California’s state pension funds to sell their holdings in coal companies.

In 2013, the ASUC Senate approved a bill ordering the divestment of its own funds from fossil fuels.

Oved noted that traditionally, the investment wing of the university has not been a space where social issues are considered. He said that its main goal has been to generate revenue but that recently, students have pressured the office to prioritize various issues.

“By no means is this the end to the movement,” Oved said. “We’re just getting started.”

The UC Board of Regents will meet from Sept. 15-17 at UC Irvine.

Suhauna Hussain is the lead higher education reporter. Contact her at [email protected] and follow her on Twitter at @suhaunah.