Yesterday, the University of California Office of the President Media Room issued a statement celebrating the fact that the UC’s “investment portfolios are fossil free after the sale of more than $1 billion in assets from its pension, endowment and working capital pools.” The UC Sustainability Office promptly forwarded the statement throughout the campus. The LA times went even further, announcing “UC becomes the nation’s largest university to divest from fossil fuels.” Almost immediately, Bill McKibben tweeted the LA times piece, commenting: “Just amazing – Univ of California system finishes its massive divestment from fossil fuels.” By now, the good news has gone round the world.
We are climate activists at the University of California who have been working hard to push the university to get real about emissions reductions and divestment. While the divestment campaign began in 2012, and hundreds worked hard for this moment, we feel this announcement doesn’t do justice to those efforts. The problem is, it’s unclear whether this is a genuine and enduring commitment.
Let’s wind back to the origin of the claim that UC is going fossil free. The statement originated in the UC Regents’ Investment Committee meeting yesterday, a video of which is publicly available. After listening to a presentation of the current financial situation, the Committee Chair asked the Chief Investment Officer for “an update on where we stand on our exposure in the fossil fuel asset class, given what’s going on in the energy markets…?” Jagdeep Baccher replied “…I’m happy to announce that, actually as of today, the endowment, the pension and all of our working capital pools are fossil free at the University of California. In fact, you could extend that to say that our 125 billion dollars of assets are fossil free.”
Stop the video there, and you might be tempted to break out the champagne! Keep watching, however, and a more complicated truth comes out. After explaining that he was keeping billions in cash to take advantage of investment opportunities that might present themselves in the near future, Baccher made a revealing statement: “By the way … we don’t look at oil and gas as a goal that has to be accomplished by a certain amount, to reduce a certain amount of investment. We look at it as financial risk or a financial opportunity.”
So, it is clear to us that this is not yet a commitment to divestment, it is instead de-risking. It means the university can, and surely will, buy back fossil fuel investments any time they are attractive. We think it is fair to assume that if Baccher buys back fossil fuel assets, the Office of the President will not announce it in a celebratory press release.
In fact, however closely we monitor this situation, we will never be able determine if and when the university gets back into the fossil fuel game, because there is no transparency about investments. Even now, we cannot evaluate the claim that the “entire investment portfolio is fossil free.” This is because many kinds of investments are exposed to fossil fuels.
What is needed is a fully transparent listing, such as we are now requesting via committees of the academic senate, of all the University’s investments in companies involved in the exploration, extraction, transportation, refining and utilization of fossil fuels.
Getting real with emissions reductions and genuine divestment takes moral purpose, which must start at the top, with the Office of the President and the Regents. It is not enough to avoid fossil fuel investments because they are risky at a time when the world is in pandemic shutdown. The concentrated energy in oil and gas will always make them attractive to investors who are prepared to gamble with the future of the planet. The University of California can and should do better. We are being hailed as leaders on the environment, but the truth is not quite as inspiring.
This gap between inspiring image and sober reality does not stop with de-risking of some unspecified fossil-fuel investments. While the University has sustainability officers on all 10 campuses, and a central office in Oakland, the capital planning for 2018-2028 doesn’t contain a single word about sustainability. There are no capital outlays for replacing campus energy systems that use natural gas with renewable electricity input, or for boosting public transportation. Yet combined, the campuses emit several millions of tonnes of carbon dioxide per year.
The University claims it will deal with its emissions under a “carbon neutral 2025” goal, but this depends not on genuine emissions reductions, but on the false solution of carbon offsets. As many researchers, scholars and journalists have pointed out, offset schemes range from woefully inadequate to actively harmful. Meanwhile, the campus is using Bank of America for its transactions, when that bank has financed the fossil fuel industry to the tune of over 150 billion dollars over the last four years.
These are serious matters. The international consensus of climate scientists, backed by the world’s governments, has given us until 2030 to reduce our emissions by 45% from 2010 levels, in order to have a chance of keeping global heating to non-extreme levels. Is it any wonder that the United States is failing to take climate action, when the University of California is failing? We must see dramatic emissions reductions soon at our local institution, one of the largest employers in what is effectively the fifth biggest economy in the world.
Getting real with emissions reductions and genuine divestment takes moral purpose, which must start at the top, with the Office of the President and the Regents. A recent petition to make the climate crisis a criterion in the search for a new UC President listed thousands of UC members, including Nobel Prize Winners, Deans, and Provosts, as well as staff, research scientists and students. We are all hungry for good news, and we welcome the bulletin that UC investments may now be fossil free. But, as environmentalists, we need to know that this is for real now, and into the future, because our future is what is at stake.
The authors are Adam Aron, Professor, and Monica Nelson, graduate student, at UC San Diego.