Press: Demands for Fossil Fuel Divestment at UO

The Register Guard — Eugene Oregon April 19 2014;

The University of Oregon Foundation should sell its fossil fuel stocks, according to a UO student body vote tallied late Friday afternoon in an Associated Students of the University of Oregon election.

The nonbinding 2,427-899 vote also asks the foundation, a nonprofit organization that manages the university’s $734 million in long-term investments, to “use its power, connections and influence to address the issue of climate change.”

The vote demonstrates that “we get it,” said Zach Mulholland, a recent UO graduate in applied physics and political science and co-founder of the Divest UO campaign. “We know we shouldn’t be profiting from the destruction of our planet,” he said.

The Foundation has only about 1 percent of its holdings in fossil fuels, said Paul Weinhold, president and chief executive officer, adding, “I don’t see this as an issue at all, frankly.”

Ahead of the vote tally, Weinhold said his response to students would be to explain that, “This is what we’re doing, this is why we’re doing it. Thank you for the input, but we will not be divesting.”

“We certainly appreciate the students and their energy and commitment to these things,” he said, but, “That commitment and energy can change daily based on somebody else’s belief of what’s important.”

Calls to various UO administrators seeking comment for this story were not returned.

Mulholland said climate change activists would not be deterred by a rebuff from the foundation. Similar campaigns are underway at as many as 400 colleges and universities across the country.

At Harvard University, the debate over fossil fuel investments in the largest endowment in the nation has raged for two years.

“Our parents’ generation, the people who are in power right now, aren’t willing to make the changes that people of our generation know are necessary,” Mulholland said.

Divest UO is part of the national 350.org campaign, which itself is the outgrowth of Middlebury College Professor Bill McKibben’s activism.

The significance of 350?

“Scientists have said that to avoid the worst effects of climate change, we need to stay under 350 parts per million of carbon dioxide in the atmosphere. We recently broke the 400 mark,” Mulholland said. “Red lights should be flashing.”

The 350 campaign targets 200 oil and coal companies that “are some of the largest companies in the world: Chevron, BP, Exxon-Mobil,” Mulholland said. “These are the companies that own the large majority of fossil fuel reserves that we need to keep underground.”

The divestiture campaign has proved popular on student ballots across the country, with yes votes of 72 percent at Harvard, 83 percent at Yale and, this month, 78 percent at Stanford.

“For climate change legislation, the public pressure isn’t there yet, and this is the way that we as students can start to build our skills and start to build the connections we need to bring about real change through the legislature in the future,” Mulholland said.

An hour’s drive north of the UO, at Oregon State University, it was the faculty that took the lead in the Divest OSU campaign.

In December, the OSU faculty senate voted 38-30 to ask the OSU Foundation to remove fossil fuel company stock from its $600 million asset pool. In February, OSU’s Associated Students governing body unanimously approved the faculty’s resolution.

The OSU Foundation formed an advisory committee on divestment concerns to listen directly to concerns about its investments, said Jesse Pettibone, an OSU environmental economics and policy major.

“I’m actually optimistic,” Pettibone said. “Ultimately, we’re on the right side of history. This has to happen. The alternative is much worse.”

The Divest UO students said their next move in the campaign to persuade the UO Foundation to dump fossil fuel stock is to get a resolution before the UO Faculty Senate.

While students across the country are pushing for divestment, some universities are pushing back. Harvard President Drew Gilpin Faust has maintained that the proper role for an endowment is to support its university, not a political goal.

But a handful of small liberal arts colleges have announced their intentions to divest, including Unity College in Maine, Green Mountain College in Vermont and the Santa Fe Art Institute in New Mexico.

The biggest so far has been San Francisco State University, with 26,449 students, and the most prominent was tiny Pitzer College in Southern California.

The UO Foundation’s 34 members last spring adopted an investment policy that says “things have to be legal, ethical and take in the concerns of being a global citizen,” Weinhold said.

“The University of Oregon Foundation is the first university in the Pac-12 and one of the first in the country to establish an ESG policy, which is Environmental, Social and Governance policy,” he said.

Weinhold, however, declined to provide a copy of the policy to either the Divest UO students or to The Register-Guard.

“We don’t share that,” he said. “That’s part of our investment policy. It’s a larger issue. But we do have one on file or we do have one in our investment strategy and in our investment policy. …

“It’s certainly something that we believe in, and we believe strongly in, but it’s not required. The fact we do have a policy and we feel like it’s a good one, we feel is enough. The policy is not up for debate.”

College foundations have several reasons for keeping politics out of their investment strategy, such as the risk of angering a major donor or the fear they won’t get the same returns on their investments.

At the UO, the memory lingers of 2000, when the university joined the Worker Rights Consortium to improve wages and working conditions in third world countries — and angered primary university donor Phil Knight. For a time, Knight withheld tens of millions in contributions.

The UO Foundation is a so-called value investor that keeps its core holdings in dominant multi-national corporations and fixed income investments in U.S. treasuries and corporate bonds, according to its website.

Generally speaking, older investors are more conservative and not enthusiastic about looking at the social and environmental dimensions of their investments, said Jan Schalkwijk, portfolio manager for JPS Global Investments in Portland.

They accept the conventional wisdom that screening out certain stocks limits their investments, and that means weaker returns, Schalkwijk said.

“That has largely been discredited, although that misconception persists in the traditional investment community.

“It seems if you constrain yourself in any way you’re going to do less well or you are going to have a smaller opportunity set,” he said. “In reality, it’s not the case.”

Studies show that portfolios without fossil fuels can do very well, said Schalkwijk, who teaches socially responsible or “impact investing” at the Lund–quist College of Business.

Conversely, “There’s a pretty good case to be made for the risk of fossil fuels in endowment portfolios, because arguably a lot of the oil companies are valued based on how much they have in oil reserves.

“Realistically, they can’t take all of that out of the ground because it would put the planet way beyond any reasonable red line in terms of the carbon in the atmosphere,” he said.

When stock prices of the oil companies adjust in recognition that proven reserves can’t be taken from the ground, investors with those stocks will lose, Schalkwijk said.

To Weinhold, divestment from fossil fuel holdings in the midst of a carbon fuel-based economy sounds a little silly.

“Do you drive a car?” he said. “Do students drive cars? Do they take buses? Do they fly to and from games? Do parents travel to see their kids? Are people not using fossil fuels?”

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posted in jps press on may 9, 2014.