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Table of Contents:
- What is Divestment?
- What are we asking for?
- What is an endowment?
- How much money does the University of Maine System have invested in fossil fuels?
- Which fossil fuel companies is the University of Maine System invested in?
- If we take the endowment out of fossil fuels, will we lose a lot of money?
- Can the University of Maine System Divest?
- Will divestment really make a difference to the fossil fuel companies?
- Is divestment an extreme tactic?
- UMaine fights climate change through research and education – do we need divestment?
- Is divestment counterproductive because fossil fuel companies are some of the largest investors in renewable energy research?
- The fossil fuel industry creates a lot of jobs. Are you trying to leave people jobless?!?
- Is the endowment meant to be a tool for making political statements?
- Are individuals at fault for using fossil fuels?
When you invest your money, you might buy stocks, bonds or other investments that generate income for you. Universities and Colleges, like religious institutions and pension funds, put billions in these same kinds of investments to generate income to help run their institutions.
Divestment is the opposite of an investment–it simply means getting rid of stocks, bonds or investment funds that are unethical or morally ambiguous. Fossil Fuel investments are a risk for investors and the planet–that’s why we’re calling on institutions to divest from these companies.
We are calling on the University of Maine System to immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years.
200 publicly-traded companies hold the vast majority of the world’s proven coal, oil and gas reserves. Those are the companies we’re asking our institutions to divest from. Our demands to these companies are simple, because they reflect the stark truth of climate science:
- They need to immediately stop exploring for new hydrocarbons.
- They need to stop lobbying in Washington and state capitols across the country to preserve their special breaks.
- Most importantly, they need to pledge to keep 80% of their current reserves underground.
What is an endowment?
Most schools have two pots of money: a general operating account, which is like a checking account, and an endowment, which is like a savings account. The sole purpose of the endowment is to make money, typically through investments. Once invested, the endowment earns returns from interest on the principal investment. The principal is built up over time using contributions from alumni, foundations, corporations, governments and philanthropists. Older schools tend to have larger endowments because their principal has had more time to grow. In theory, the endowment is managed for the benefit of the institution — students, faculty and staff.
The University of Maine System’s endowment is valued at $121 million.
As of December 2012, The University of Maine System currently has $7.5 million dollars, about 6% of the total endowment, invested in fossil fuels.
The University of Maine System is invested in over 40 of the top 200 publicly traded companies, including Exxon Mobil, ConocoPhilips, Chevron, and Peabody Energy.
Divesting from fossil fuels likely will not result in large losses. A recent report from the Aperio Group, found that the theoretical risk to return when you take fossil fuels out of a portfolio is very small (0.0044%).
In the long run, investments in fossil fuels are not good investments. The value of investments in fossil fuels is based off of the expected earnings on their reserves. However, 80% of the fossil fuel companies’ reserves must not be burned in order to sustain the planet’s life supporting systems. Thus, carbon is being falsely valued, creating a carbon bubble. Additionally, as public opinion continues to shift and people demand government action to address climate change, the value of carbon will likely decline further.
Unity College, the first college to divest from fossil fuel investments, recently released a report stating that the college did not experience any loss from divestment.
Yes. A number of institutional investors currently use socially responsible screened funds. Negative or avoidance screening–used as far back as the 1920s–works by avoiding investment in companies whose practices are inconsistent with the values of the investor. The University of Maine System previously divested $1.9 million dollars from companies with holdings in South Africa in protest against Apartheid.
Divestment is primarily a moral and political strategy. Just like in the struggle for Civil Rights in America or the fight to end Apartheid in South Africa, the more we can make climate change a deeply moral issue, the more we will push society towards action. If it is wrong to pollute the environment, then it is wrong to profit from environmental pollution. By investing in fossil fuel companies, the University of Maine System is sponsoring climate change, and that is morally impermissible.
Divestment draws attention to the importance of addressing climate change NOW by building power. Divestment campaigns have already spread to over 300 campuses across the country including Harvard, Bowdoin, University of California, Yale, Stanford, Williams, MIT, Swarthmore, Dartmouth, Brown, and many more. Pension funds, cities, state governments, and individuals are also working to divest. 5 colleges; Unity College, Sterling College, Hampshire College, College of the Atlantic, and Green Mountain College have already divested from fossil fuels. The cities of Seattle, WA; Madison, WI; Bayfield WI; Ithaca, NY; Boulder, CO; Rochester, MN; Eugene, OR; Richmond, CA; Berkeley, CA; and San Francisco, CA have announced that they too will be divesting from fossil fuel investments.
Even though divestment is primarily a moral and political strategy, there are important economic impacts. The top ~500 College and University endowments hold nearly $400 billion. Getting all of that money out of coal, oil and gas is significant. Add in the big state pension funds, and church, synagogue and mosque investments, and we’re well on our way to making the fossil fuel industry worry.
Divestment will add to the momentum for moving money into clean energy, community development, and other more socially-responsible investments. If this campaign succeeds in moving just 1% of the$400 billion that is in college endowments towards sustainable alternatives, that’s roughly $4 billion worth of new investments in things like solar bonds, revolving loan funds, and advanced energy industries.
Climate change is an extreme problem. Our ask is very reasonable: for the University to align it’s mission statement with its endowment, by freezing new investments in fossil fuel companies and to divest any investments they have in the 200 publicly traded fossil fuel companies that own the majority of the world’s untapped carbon reserves within the next five years.
It is important to consider the scale at which climate change will affect the planet’s life-support systems. Scientists agree that levels of carbon in the atmosphere need to be kept below 350 ppm. Today we are above 400 ppm, and that number is steadily rising. 2012 was the hottest year on record and witnessed the worst drought since the 1950s. Climate change has already wreaked havoc as we’ve seen more severe storms, horrible droughts, sea-level rise, and an increase in ocean acidity among other things. A recent report released by the World Bank says that if we don’t act within five years, we could be locked into 4 °C global temperature rise by the end of the century.
The contributions that The University of Maine System makes through its research are crucially important for the fight against climate change. However, that doesn’t excuse the University for investing in the companies that cause climate change. It is inconsistent for the University of Maine System to fight climate change with one hand and sponsor it with the other.
Even as climate change research has proliferated at universities across the country, fossil fuel emissions have risen. There is no reason to think that business-as-usual will work in the future. We must strike at the root of the problem – the fossil fuel companies – or else all of our research and education will literally be for nothing.
Fossil fuel corporations have had a dodgy history with renewable energy investments. Several years ago, BP changed its named to “Beyond Petroleum” but then ditched all its solar investments and changed the name back to “British Petroleum.” It took 18 years of advocacy by the Rockefeller Foundation to get Shell to even include a page about climate change on their website.
Fossil fuel corporations have the capital and power to steer our energy infrastructure towards renewables, but they likely will not do it without a lot of pressure because they are making so much money from fossil fuels. Divestment is a great tactic for pushing the fossil fuel industry to change. If a company makes a serious commitment to transforming its practices, we can rescind our call for divestment. But after multiple failed attempts at discussing change with these companies, we’ve seen clearly that it’s going to take more than just asking nicely.
Should we be fighting climate change in other ways (ie. individual and political action)?
Working to stop fossil fuel infrastructure projects (coal plants, tar-sands, fracking, pipelines, etc.) is important. However, we can’t stop global warming one pipeline, coal plant, or fracking well at a time – the sheer number of projects is overwhelming. To make our efforts to stop these projects count, we need to loosen the grip that fossil fuel companies have on our government and financial markets. The University of Maine System is a leader in campus sustainability with LEED certified buildings and an ambitious campus carbon reduction goal, but what’s the sense in greening the campus if we’re not going to green the portfolio?
It’s time to strike at the root of the problem – the fossil fuel companies themselves – and make sure they hear us in terms they understand, like their share price, or else the devastating effects of climate change will make life intolerable
Automation and corporate consolidation are cutting jobs in the fossil fuel industry, even as production increases. Transitioning to a renewable energy economy will create jobs as companies spring up to take advantage of the new technology. Additionally, fossil fuel companies could continue to make a profit and provide jobs if they focus their massive wealth and expertise towards renewable energy.
We are an institution of higher learning. The consensus of climate scientists is that climate change is real and occurring rapidly. Divestment is an academic and ethical statement, not merely a political statement. Climate change is bigger than politics. It is a global issue that transcends race, class, gender, and age.
The University of Maine System’s investments are a reflection of its values, regardless of the political impacts of divestment. Currently, the University actively sponsors climate change by owning shares of fossil fuel companies. This damages the quality of life not only for University of Maine students, but for all life around the globe for thousands of years into the future.
This is not a matter of politics, it is a matter of a responsibility. Until The University of Maine System divests, it will be an active sponsor of climate change.
There are many things we can do to reduce our energy consumption and we should do these things, but we are not to blame for using fossil fuels when we have no alternative.
The fossil fuel industry is extremely wealthy and exerts a great influence over our government. Compared to renewable energy companies, fossil fuel industry groups spend 20-times more on lobbying and get 6-times more in federal subsidies. By making huge contributions to candidates, the fossil fuel industry exerts significant control over national policy. They work to block carbon controls in Congress, and continue to aggressively fund climate skeptics.
We are not advocating for a world without energy. Fossil fuels have powered the modern world and led to incredible advances. We want to live in a modern world, just not one that is polluted, unsustainable and ethically abusive. Divestment is about making this a fair fight, so that alternatives to fossil fuels can flourish and consumers can choose clean renewable energy.