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February 22, 2021

Pittsburgh Ad Hoc Committee Says No to Complete Divestment

An Ad Hoc Committee at the University of Pittsburgh highlighted its commitment to sustainability over divestment last week, releasing a 124-page report on Friday responding to calls from students and activists to divest from oil and natural gas companies. The Ad Hoc Committee, made up of a small group of Board of Trustees’ members, was created back in June to decided to what extent the University and its investments should give up its investments in the energy industry. The Committee outline a total of five different approaches the Board can and should consider moving forward, but not one of them mentions completely divesting from fossil fuels.

The report will now head to the Board of Trustees’ Chancellor, who will likely bring it to the Board for discussion next week. None of the options put forth a scenario where fossil fuel investments are completely out of the picture, however, they all put forth strategies to reduce such investments.

Here are the five strategies as outlined in the Ad Hoc Committee’s report:

  • Continue with the current strategy of “modern portfolio strategy”, to produce the highest rate of returns on investments. However, this theory suggests that putting blanket restrictions on a single sector or asset class, like fossil fuels, may increase volatility without the promise of increasing returns.
  • Urge the university’s investment team to adopt the University’s Environmental Social and Governance (ESG) policies into its investment decision making process.
  • Support the University’s investing strategy and goal to reach zero investments in fossil fuel exploration and production by 2035 become carbon neutral by 2037; a commitment made earlier in February 2020.
  • Proactively identify and pursue “attractive” investments that avoid and reduce Greenhouse Gas Emissions (GHGs).
  • Require Pitt to increase the level of transparency into the endowment’s specific holdings by means of a yearly report.

As the report outlines, the Ad Hoc Committee did not produce its report without ample input from the University of Pittsburgh’s stakeholders. Over the course of several months the Ad Hoc Committee reviewed background and resource materials put forth by the activist group Fossil Free Pitt; held interviews with financial and investment experts; and held two public open forums to gather feedback from the Pittsburgh community.

All in all, the recommendations issued in the report are not far away from the solutions being implemented at institutions across the country. Many schools that committed to fossil fuel divestment found out it’s not as easy, or as effective, as hoped. Many of the Ad Hoc Committee’s recommendation focus on implementing ESG tactics to decrease the endowment’s impact on the environment, on-par with initiatives at schools like Harvard and the University of Michigan—Ann Arbor.

Unpleased by the report, students with Fossil Free Pitt called the Ad Hoc Committee’s solutions “passive divestment”, stating on Twitter they plan to continue pushing for full divestment.

The report concludes by reiterating the Ad Hoc Committee’s commitment to the school’s mission and values:

“The Ad Hoc Committee’s findings are anchored in the strong consensus that the Board of Trustees must not sacrifice the University’s core values, while also maintaining fidelity to its primary CEF responsibility of maximizing long-term risk-adjusted returns that provide financial support to the University in perpetuity. Ultimately, the University’s strong commitment to its values is demonstrated through action, as reflected in its 2018 Pitt Sustainability Plan, soon-to-be-released Pitt Climate Action Plan, and recently developed ESG Policy.”

For years experts across industries and academia have agreed that divesting has no direct impact on the environment. By committing Pittsburgh to tangible investment initiatives, the Board can continue serving out its fiduciary duties to the school and its commitments to net-zero.