UC to shed “risky” fossil fuels from $83 billion of funds



ImpactAlpha, Sept. 17 – University of California students have waged a long-running campaign to divest the school’s $13.4 billion endowment from fossil fuels. In July, its faculty voted to support such a move. On Tuesday, they got a two-fer. In an op-ed in the LA Times, UC chief investment officer and treasurer Jagdeep Singh Bachher and UC Board of Regents’ Investments Committee chair Richard Sherman said the endowment would be fossil-free by month’s end and that university’s $70 billion pension fund would follow. Their clear-eyed analysis: “We believe hanging on to fossil fuel assets is a financial risk.”

  • Fossil-free club. UC joins a growing number of institutions divesting from fossil fuels. Since 2014, assets committed to divestment have increased 22,000%, from $52 billion to more than $11 trillion today, according to 350.org, which helped catalyze the divestment movement.
  • Fiduciary duty. The fund managers wanted to make clear they were acting in the financial interests of UC. “The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for UC’s diversified portfolios.” 
  • Beyond divestment. “We have been looking years, decades and centuries ahead as we place our bets that clean energy will fuel the world’s future. That means we believe there is money to be made,” wrote Bachher and Sherman. “We have chosen to invest for a better planet, and reap the financial rewards for UC, rather than simply divest for a headline.”
  • Policy by op-ed? Pressure from UC faculty members appears to have spurred the announcement. The $1 billion in clean and renewable investments is significant, but recent equity divestment activity has mostly been limited to the smaller endowment fund. The carbon footprint of UC’s equity portfolio actually increased in 2018 over 2017, the university says.

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