UCOP Declares Major Withdrawal from Fossil Fuels

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The UC Office of the President (UCOP) has committed to reallocating $500 million from its fossil fuel assets to other areas in its portfolio. Decided by UC Chief Investment Officer (CIO) Jagdeep Singh Bachher on March 13, the announcement was made public last week — but without a strict deadline to accomplish it.

The UCOP relies on investments in all manner of stocks to support retirement funds, endowments, day-to-day capital and cash assets. Reallocation of funds means that instead of completely pulling out of a stock, the CIO will be reinvesting the same funds elsewhere.

“UC is not making any new investments in oil and gas assets,” Bachher said at the March Board of Regents meeting. “In addition, based on market risk, UC plans to reduce certain oil and gas holdings over the long-term while investing in alternate assets.”

The UCOP hesitated to refer to the changes as “divestments,” stating that UC does not typically make blanket divestments. Instead, it considers a variety of factors including governance, risk and environmental and social effects when adjusting its investment strategy, said UCOP media specialist Stephanie Beechem.

Bachher credited fiscal reasons for the decision to divest, but said UCOP was influenced by pressure from Fossil Free UC (FFUC), the UC-wide campaign for university divestment from fossil fuel energy.

Illustration by Lizzy Choi

Fossil Free is an international campaign that focuses primarily on divestment, or “un-investing,” from non-renewable energy sources. Its “stop, drop and roll” policy pushes institutions to stop investing in the fossil fuel industry, drop remaining investments over a five year period and roll out a reinvestment strategy that is sensitive to carbon impact. The UCOP’s choice to reallocate rather than divest completely isn’t what the campaign had in mind, but is considered a step in the right direction.

The FFUC, founded seven years ago, is a grassroots student-run campaign across all 10 UC campuses to emphasize the social justice aspects of climate activism.

“We organize around the premise that holding investments in the fossil industry is both morally and socially irresponsible, on the basis that climate change is a social justice issue,” said Laurel Levin, a UCSC fourth-year and student activist with FFUC. “It’s hypocritical for an institution that prides itself on sustainability, diversity, inclusion and so on to be profiting off an institution that perpetuates injustice.”

The UC has previously invested in clean energy, having purchased the largest solar farm in Fresno by any U.S. school system to date, and divesting $150 million from resources related to the construction of the Dakota Access Pipeline. About 3 percent of UC’s public equities are in fossil fuels, the profits of which support employee pensions and endowments. However, UCOP’s involvement with non-renewable energy sources completely eclipse divestments at $2.6 billion in fossil fuel stocks and equities.

“Their fiduciary duty is to the faculty and students, but as we’ve been saying for so long, the faculty and students don’t want to invest in fossil fuels. It’s not even economically feasible anymore,” said UCSC third-year Martin Genova, a FFUC student activist.

Continuing its divestment campaign, the FFUC will also be writing an open letter to be distributed to campus newspapers and the UCOP CIO office, imploring the UC to acknowledge the moral reasons for divestment.

“This announcement marks a turning point,” reads the FFUC open letter. “For the first time, the UC publicly admitted what we knew to be true all along — investments in fossil fuels are an unacceptable financial risk. [T]hey are a survival risk to our future, our climate and our communities, as well as communities around the world.”