March 5, 2020

Brown University Adopts New Investment Approach, Specifically Says Not a Divestment Decision

On Wednesday, Brown University President Christina Paxson presented an update on sustainability efforts at Brown University. In an open letter, Paxson followed up on the 2019 four-phase energy efficiency strategy to reduce Brown’s environmental footprint, announcing in the letter that Brown’s endowment had also sold off about 90 percent of its fossil fuel holdings as the University moves toward a new “approach to managing the portfolio’s investments in fossil fuels.”

Before divestment activists jump for joy, let’s take a look at what really happened.

Brown did not commit to divestment. President Paxson was careful to frame the conversation around Brown’s investments in fossil fuels as a portfolio management decision, emphasizing that the action did not constitute divestment and could be reversed based on these companies’ involvement in sustainable and renewable energy. According to the Brown Daily Herald, Paxson also said that the decision was not influenced by protests:

“Though the past several years have seen student protests and activism regarding divestment from fossil fuel companies, this activism did not have a direct impact on the University’s decision to sell these investments, Paxson said. “I think that the activism we’ve seen on campus is very much part of growing awareness that fossil fuels are not the future.””

The Herald also reported that Paxson “purposely stayed away from the language of divestment” in the letter due to political considerations on campus.

Brown’s leadership has actively opposed divestment for years. President Paxson has openly questioned divestment’s effectiveness as a policy tool for addressing climate change in the past. In 2013, she remarked in an update to the campus community on coal divestment, “Divestiture would not have a direct effect on the companies in question. Brown’s holdings are much too small for divestiture to reduce corporate profits.”

Likewise, Paxson has also weighed the benefits of the “symbolic gesture” of divestment of fossil fuels over tangible, defined actions. In her words,“Divestiture would convey only a nebulous statement—that coal is harmful—without speaking to the technological and policy actions needed to reduce the harm from coal.”

In February 2019, as Brown University announced its goal to reduce its GHG emissions to net-zero by 2040 by focusing in a four-phase energy efficiency plan, President Paxson again stood by her decision against divestment. From her remarks in the Brown Daily Herald:

 “Right or wrong, (divestment) is just not effective. I don’t see how it does any good. In some ways, if people think that that’s all they need to do, and that it lets them off the hook … that’s a really easy way out of doing the hard work of actually making real change.”

Brown’s investment decision stands in opposition to the technology and commitments of many energy companies. Ironically, Brown’s decision comes as many traditional energy producers are pushing forward to innovate for the future. From independent operators investing in new technology to large integrated companies changing their business model, like BP’s announcement to become a net-zero emission company by 2050, Eni’s commitment to cut all its emissions by 80% by 2050, and Chevron’s investment in electric vehicle charging technology, these companies will drive the energy of tomorrow.

Brown made it clear this is not a divestment decision, but either way they are taking a risk by moving away from many of the companies that will drive energy development of all types in days ahead.