Student concerns could coax $18M fossil fuel divestment
By Lee van der Voo
Equilibrium Capital's Bill Campbell said divestment campaigns work because they frequently pay off in the long run for investors.
The Oregon University System is exploring whether it should divest its endowment fund from 200 publicly traded companies that hold the majority of the world’s proven coal, oil and gas reserves.
The inquiry follows a push from students at several of the universities in tandem with a student movement across the globe. The students are among activists at more than 300 colleges and universities who want their schools to withdraw endowment funds from fossil fuel companies. They want schools to divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds.
So far, organizers say a handful of universities have agreed to divest funds. Ten U.S. cities, including Eugene, have also committed to divest.
At stake in Oregon is about 2.5 percent of the Oregon University System’s $730 million worth of investments, or around $18 million, said Karen Levear, the Oregon University System’s director of treasury operations.
The push is part of a nationwide campaign orchestrated by 350.org and its leading environmental advocate, Bill McKibben. The campaign argues that fossil fuel reserves held by the 200 companies are already sufficient to raise the earth’s temperature an average of 2 degrees Celsius five times over.
The 2 degree metric, about 3.6 degrees Fahrenheit, is one that most governments worldwide have agreed would be unsafe, according to the campaign.
McKibben argues that fossil fuel companies are valued on their reserves. Investing in them encourages those companies to continue to increase reserves, which in turn promotes global warming. The top 500 college and university endowments, he says, hold nearly $400 billion in economic investments.
The movement could potentially affect other state funds. The efforts have caught on with groups that are pushing counties and municipalities to divest their investments of fossil fuel holdings.
It’s also attracting activist students at several private colleges in Oregon, including Willamette University, Reed College and Lewis & Clark College.
Bill Campbell, principal at Equilibrium Capital Group LLC in Portland, suggests that aligning an institution’s investment with its values doesn’t have to violate fiduciary responsibility.
“These campaigns work precisely because they reveal the dissonance between the mandate for purely fiduciary responsibility and the reputation for the university, or whatever institution it is, that will absorb the benefit that might otherwise come from this investment,” he said.
Within the Oregon University System, Southern Oregon University student Winston Friedman has spearheaded the movement. He has support from students at Oregon State University, the University of Oregon and Portland State who have also circulated divestment petitions and hosted rallies.
At Southern Oregon, Friedman brought the 350.org campaign to the Southern Oregon University Sustainability Council, where it made the greatest inroads.
“I personally think that the values of Oregon universities — SOU and the Oregon University system — are not being represented,” Friedman said. “We’re supporting things that we don’t want to be supporting.”
Levear has since been directed by finance leaders at Oregon’s universities to examine the school’s investments.
Levear said the issue, after another round of discussion, may or may not head to the full Oregon Board of Higher Education before the $18 million is divested.
“The committee is very empathetic to the students concerns and think they raise a really valid point,” she said.
Critics of the campaign have said divesting of fossil fuels can be a slippery slope. It’s asking fiduciaries to forgo their highest obligation, which is to optimize returns for institutions focused on carrying out other missions, in favor of politics.
That could bring financial consequences for the institutions they serve. And it can also open the door to divestments of other types of funds tied to hot-button issues like guns.
Such campaigns force institutions and fiduciaries to consider that, even though they might make more money investing in things that are out of step with their institutional values, doing so also harms their brand, which can make it tough to get gifts from alumni or attract the best and brightest students, or cause other fallout that interferes with their mission.
“These campaigns turn it back into a financial metric that essentially can be dealt with in a fiduciary sense,” said Equilibrium’s Campbell.
Campaign organizers are betting fiduciaries for public funds may find financial reasons to divest, and that civic leaders won’t be able to resist a strong push from their constituencies.
On the municipal front, campaigns have popped up in Forest Grove and Benton County.
Kevin Fitzgerald, a graphic designer at Portland’s Bullseye Glass Co., is leading a signature-gathering effort in the city of Portland and plans to petition the City Council. He said the campaign has united a number of climate-action groups under the 350PDX umbrella and that momentum is building so fast the group overflowed a house at it’s last meeting and is now location hunting for a next meeting June 8.
“I can’t just sit by and kind of watch as all these warning signs come up, whether it be melting ice caps or sea level rising,” said Fitzgerald.
He pointed to last week’s news that atmospheric carbon dioxide hit 400 parts per million last week, a number scientists have deemed a dangerous level.
“The signs are there and it’s going to affect me, it’s going to affect Portland,” Fitzgerald said. “I hate to get all doom and gloomy about what I feel we’re up against, and so with this campaign, it was an opportunity for me to dive into working with the community.”
He said the group is not just protesting.
“We want to be able to demonstrate that investing in fossil fuel companies is, long term, not necessarily going to continue to be a good investment and that there are investment options now that are just as strong,” he said.
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