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Students press schools to drop fossil fuel stocks

San Francisco State moved this summer to divest. But the UC system and others express concern about the financial impact.

August 25, 2013|By Larry Gordon
  • Raven Rutledge, a San Francisco State environmental studies major, was a leader in her campus' successful movement to drop fossil fuel investments.
Raven Rutledge, a San Francisco State environmental studies major, was… (Al Seib, Los Angeles Times )

In the 1980s, student protests against apartheid led universities to sell off stocks in companies doing business in South Africa. More recently, concerns about genocide in Darfur, the health effects of tobacco and handgun violence led to more college divestments.

Now another issue — the effect of fossil fuels on global temperatures — is rousing a new generation of student activists to press their schools to drop coal, petroleum and natural gas investments from campus endowments. Student campaigns, such as "Fossil Free UC," are underway at about 300 colleges and universities nationwide, organizers estimate.

"We look at our schools as a representation of ourselves," said Raven Rutledge, a San Francisco State environmental studies major who was a leader in her campus' successful movement for divestment. "I would like to know my school is putting its money in companies that are looking out for the best welfare of people."

In what is seen as a pioneering step by a large public university, San Francisco State's fundraising foundation voted in June to sell some stocks and bonds of companies with significant coal and tar sands holdings from its overall $51-million portfolio. The school also plans to more widely divest from fossil fuel in the future.

Five liberal arts colleges in the Northeast, including Unity and Hampshire, have committed in various ways to divest. But some larger universities, including Harvard and the 10-campus UC system, say they are concerned about the financial effect of dropping, over the next five years, the 200 companies with the world's largest oil, natural gas and coal reserves, as activists want.

Many of the campus divestment efforts are guided by the environmental group 350.org, founded by writer Bill McKibben, whose 1989 book "The End of Nature" warned about global warming. ("350" comes from scientists' calls for carbon dioxide to be reduced to 350 parts per million in the atmosphere — it's nearly 400 parts now — to avoid severe climate effects.)

Colleges face a "fundamental tension" between maximizing investments that fund scholarships and research and "on the other hand, being responsible to larger public policy initiatives like the environment," said Robert J. Nava, San Francisco State's vice president for university advancement and its foundation president.

While selling off those stocks, San Francisco State expects to keep its endowment earnings at least steady with alternative investments, including some in clean energy, Nava said.

Many more colleges will face similar decisions in the next year or so, predicted Kenneth E. Redd, director of research and policy analysis for the National Assn. of College and University Business Officers. But he warned that such change could be harder than aiming at apartheid and tobacco, since fossil fuel industries loom so much larger.

His group estimates that the endowments of all American colleges total about $406 billion, of which $24 billion is directly invested in fossil fuel companies, not including mutual funds. If all $24 billion was sold off, he said, that would equal only about 6% of Exxon Mobil's market value.

"Divestment might be important from a symbolic standpoint for students and others, but its effect on global warming or other issues would likely be minimal at best," Redd said.

The oil and coal industries contend that many jobs are at stake and tout their own investments in cleaner fuels and solar energy. Revenues from oil and natural gas "help fund higher education," said Sabrina Fang, a spokeswoman for the American Petroleum Institute. "This is allowing colleges to provide aid to students who may not otherwise have an opportunity to attend college."

Student activists, however, insist that colleges need to take the moral stance. They say it is hypocritical to teach about global warming and ecological protection while investing in firms the students contend are hastening climate change by mining and drilling for fuels to be burned in massive amounts.

They also argue that gradual divestments over the next five years makes good business sense, saying that regulatory and societal changes will hurt the earnings and value of oil and coal companies.

While similar moves by some cities and churches have been important, universities' actions have special significance, said Ophir Bruck, a UC Berkeley senior who is among the activists urging the UC regents to vote for divestment this fall.

"College campuses have served as wellsprings for social changes. So when those institutions take a stand on something, folks pay attention," Bruck said.

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