(UPDATE: 6/12/20 3:45pm ET): Stanford University rejected divestment for the second time. In a press release, the Board noted that fossil fuels will continue to play an important role in providing the world with its energy needs and transitioning to lower emissions sources:
“In considering the Fossil Free Stanford request for divestment of any investments in the top 100 oil and gas companies, the Board was guided by its Statement on Investment Responsibility. That statement notes SMC’s approach to evaluating investments and also provides an avenue for the Board to require divestment, saying that “very rare occasions may arise when companies’ actions or inactions are so abhorrent and ethically unjustifiable as to warrant the University’s disassociation from those investments.
In evaluating the request and consulting with stakeholders and experts, the Board said it was unable to conclude that all investments in oil and gas companies could be deemed to meet that threshold.
‘Based on the opinions of experts in the field, however, the Board has concluded that, in the absence of readily available alternatives at scale, the transition to clean energy will require the continued, time-limited use of less carbon-intensive fossil fuels, and that loss of these alternatives today is both unfeasible and would impose a particularly harsh cost on energy-impoverished communities,” the Board said in its statement.'”
Instead, Stanford said it would work to lower the endowment’s overall emissions profile.
**(Original Post: June 10, 2020, 12pm ET)**
In the midst of a global pandemic, the recession, and nationwide protests in just about every major city, one would think that fossil fuel divestment is not necessarily at the top of any academic institutions’ priorities, right?
Not quite.
This week, Stanford University’s Board of Trustees will once again decide whether or not it will heed to the requests to divestment from the oil and gas industry. This decision comes as recent pressures by the student group Fossil Free Stand and the Associated Students of Stanford University hopes to renew the call for closing financial ties to the fossil fuel industry, and as of right now, it’s off to a pretty rocky start.
Recent weeks
On May 28th, the Faculty Senate of Stanford University rejected a resolution to ask the Trustees to divest from all oil and gas companies within 90 days and to cancel all private partnerships with the industry within five years. Many of the senators thought that the resolution, as presented by the ASSU, was far-reaching and not the right approach to the question of divestment.
Likewise, a group of senators made the argument that many of the outcomes of industry-funded innovation have contributed to the health of the planet as well as financial support for more than 1,000 students and postdocs in the university’s science and engineering departments. A vote in favor of divestment would severely hinder those partnerships, which took years to build.
Other senators said divesting from an entire industry of companies may be the wrong approach, suggesting a case-by-case strategy rather than “the top 100 oil and gas companies” as the resolution specified. Some senators said any investment-related decisions should be directed to the Stanford Management Company; the body tasked with managing the university’s endowment.
The Board Already Said No
Back in 2016, Stanford’s Board of Trustees voted against a proposal by Fossil Free Stanford asking them to divest the university’s endowment from the fossil fuel industry. In their response to the university community, the Board felt that practical climate solutions were the best path forward in addressing global climate change rather than blanket gestures towards a whole industry.
The Board also responded with a list of ways in which the university community has contributed to mitigating carbon emissions. The list included the development of an off-campus solar plant to help Stanford achieve having 65 percent of campus powered by renewable sources, funding for more than 5 research institutes and facilities focused on sustainability and retrofitting 500 campus buildings for energy efficiency.
In the end, the Board came up with the idea of creating a new “climate task force” that would specifically solicit input from the Stanford community on how to improve the ways in which Stanford is already addressing climate change through operations, research, and teaching.
What to Expect
Gene Sykes, the chair of the Board’s Special Committee on Investment Responsibility hinted that after conducting a formal internal investigation, the Board was pleased to have learned of Stanford Management Company’s recent changes to address climate-related risks:
“I can share what the committee has learned about Stanford Management Company’s approach to ethical investing and management of the endowment relating to energy investments. The framework particularly highlights climate change, noting that climate change alters ‘the risk and return characteristics of conventional energy holdings’ and requires SMC to consider carbon-related damage to the environment when investing in this rapidly evolving sector.”
Sykes also mentioned that SMC’s energy holdings have decreased since 2011 and make up a small percent of the university’s endowment portfolio.
Conclusion
Whether it’s even appropriate to table the topic of divestment or not, Stanford’s decision will show just how committed the school is to being a global leader in climate mitigation efforts. Like it previously feared losing, Stanford should continue to leverage industry partnerships to fund clean energy research and opportunities for students.
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