Op-Ed by Yonatan Strauch
When the Board of Governors meets today, the University of Waterloo will be presented with recommendations from its responsible investment committee to reject a call from students and faculty to divest its endowment and pension fund from fossil fuels. This recommendation, however, is based on woefully incomplete analysis. Rather than approve it, the university should take the time to properly study the financial and moral cases for divestment.
Investing in fossil fuels is an increasingly risky bet. Given the University’s $68 million in fossil fuel investments (as revealed in a partial data disclosure), outside estimates suggest that our campus lost $20 million over the last five years thanks to these investments. This is a global trend. The Bill Gates foundation, for example, lost $1.9 billion after refusing to divest in 2015.
These losses are driven by the very low carbon innovation and climate action the University claims to champion. Renewables prices continue to plunge with Alberta’s recently purchasing new wind-power at prices well below those of coal. At the same time Canada leads a global “power past coal coalition.” University investments are more concentrated in oil than coal, but with the rise of electric vehicle the climate closer to the brink each year, a widespread disruption of oil markets may be on the horizon next.
Still, the secretariat of the Board of Governors refused a request from the Faculty Association of the University of Waterloo to slow down and vote on the just-released recommendations in the fall. The administration also declined to study whether its investments in fossil fuels have lost money, or whether they present a systemic financial risk to its fund in a world increasingly shifting to clean energy.
The moral case for fossil fuel divestment is equally compelling, because if fossil fuel stocks do thrive, this is an even worse reason to stay invested. Avoiding catastrophic climate change means keeping warming to below 2 degrees as committed to in the international Paris Agreement. And that requires leaving more than two-thirds of existing fossil fuel reserves in the ground; they are ‘un-burnable’. Yet the University of Waterloo seeks to profit from the companies working to dig up those very un-burnable fossil fuels. To ensure financial returns to the university, these companies also need to succeed in their ongoing multi-billion-dollar efforts to obstruct government climate action and confuse the public. How can the university tout its newly minted leadership within the UN’s Sustainable Development Solutions Network while it seeks financial success at the cost of a climate unfit for civilization?
The University’s rush to reject divestment ignores both its financial and moral obligations. And it is based on a flimsy rationale. The responsible investment committee report claims that divestment from a whole sector is too broad, even though other institutions have tailored their own approach – for example, divesting only from coal-related stocks. It also claims that divesting would be against its “fiduciary duty,” even as dozens of universities and major pensions bound by the same duty have formally announced divestment of managed funds totally $6.15 trillion.
Like the Bill Gates Foundation, the University of Waterloo appears ready to quickly brush aside divestment and risk losing millions once clean energy and climate policy finally hit oil stocks. Whatever the board decides today, with a growing number of students and faculty keenly aware of what is at stake, the pressure will grow on the university to practice what it preaches and invest like the climate matters.