FAQs

FAQs on Fossil Fuel Divestment

  1.     What is divestment?

Quite simply, it’s the opposite of investment – selling assets and avoiding investment in stocks, bonds, or direct forms of ownership that are unethical, financially unwise, or morally ambiguous. These monies are replaced with more secure investments that lead to less social and environmental harm.

  1.     Why is it a good organizing strategy?

In an era where the influence of corporate power on our economy, environment, education and democracy is rarely understood, divestment provides an opportunity for us to expose the destructive power of the fossil fuel industry. Fossil fuel divestment weakens the hold of fossil fuel corporations on our institutions and on our lives. Removing financial capital sends a signal to the industry and has the potential to induce companies to re-direct their own commercial priorities in order to avoid a loss of their financial base. It is a way of communicating with private companies in a language they understand.

  1.     What is the difference between direct and portfolio investments?

Whereas portfolio investment involves indirectly putting capital into companies, usually through an independent intermediary (e.g., investing in a mutual fund or index fund run by a fund manager), direct investment involves the purchase of ownership (usually part ownership) in a company.

  1.     Exactly how much is U of T invested in the fossil fuel industry?

According to UTAM’s (University of Toronto Asset Management corporation’s) most recent annual report in 2018, the University currently has $4.9 billion invested in pension funds; $2.9 billion in endowment funds; and $2.2 billion in short-term working funds. Leap U of T submitted a Freedom of Information Request to the University in the fall of 2019 in order to access more precise details of its investment portfolio, but the University neglected to give a full disclosure. Leap U of T is currently in the process of preparing a response.

  1. Which institutions have divested from fossil fuels?

Since the movement began in 2016, a total of $12.01 trillion USD has been removed from oil, coal and gas companies fueling the climate crisis. In North America, prominent universities that have divested include Stanford, Georgetown, Yale, Columbia, Brandeis University, Boston University, Johns Hopkins, Brevard College and the University of California. An extensive list can be found at gofossilfree.org/. In Canada, the list includes Concordia, Laval, U Ottawa, Université de Québec à Montréal, and UBC (the latter on a partial basis at this point). 

  1. Won’t divestment hurt the endowment, including U of T’s ability to provide scholarships? 

There is strong evidence that portfolios that exclude companies causing social injury do not suffer a financial penalty for doing so [1]. Deutsche Bank and Mercer have conducted major meta-studies on portfolios that consider environmental, social, and governance (ESG) factors and found that there is either a neutral or positive relationship between financial performance and the incorporation of ESG factors into portfolio management [2, 3]. Hedge fund billionaire Tom Steyer explained in a letter to the Corporation of Brown University: 

The available research, looking backward, shows that the return penalty would be tiny—but in any event good investors rarely look backward. Looking to the future, the data on climate change makes it clear that something has changed, and as the rest of the world realizes this, coal stocks will come under increasing pressure. At the moment, other investors have not fully realized the risk that carbon reserves will become a stranded asset; if you acknowledge what your own science departments are telling you this gives you an edge relative to those investors [4, 5]. Unlike fossil fuel divestment, failing to deal with the ‘carbon bubble’ could harm the university’s financial standing in the long term [6]. 

 

[1] See also “Divestment means investors will lose money” in: Carrington, 10 myths about fossil fuel divestment put to the sword.

[2] Deutsche Bank Group, Sustainable Investing: Establishing Long-term Value and Performance.

[3] Mercer, Shedding Light on Responsible Investment: Approaches, Returns and Impacts. 142Steyer, Letter from Tom Steyer to the Brown Corporation.

[4] See also: Steyer, To the Middlebury College Board of Trustees.

[5] Begos and Loviglio, College fossil-fuel divestment movement builds.

[6] 350’s Fossil Fuel Free Campaign: Divestment Intro Course

U of T Climate Action Petition FAQ

  1. What does it mean to declare a climate emergency and why is it important?

Declaring a Climate Emergency is a formal admission from an institution that Climate Change is real, that it poses an imminent threat, and that measures need to be taken to address and limit the effects.

As many of us have discovered in our own lives, the first step to solving a problem is admitting that there is one; formally admitting that we are in the midst of a crisis is crucial in order for U of T to take effective climate action. Making a formal declaration would open the door to conversations about what measures the University can take as an institution to lessen the effects of climate change.

Furthermore, in the wake of the numerous climate strikes and initiatives that have taken place across the globe over the past several months, U of T’s declaration of a Climate Emergency would act as a meaningful declaration of solidarity, a way of saying “we hear you” to all of those fighting for change.

2. What are the financial benefits for U of T in divesting from Carbon intensive companies?

In 2015 Corporate Knights released a detailed analysis of a number of Canadian institution’s financial holdings, calculating how much each had lost by not divesting from carbon intensive companies 3 years prior. This report explains that, as of 2015, U of T’s returns on investments were $419,418,629 USD less than they would have been if they had decarbonized in 2012. This amount was equivalent to almost $600,000,000 CAD by today’s exchange rate[1], and the amount lost has only increased since that 2015 report.

3. Is Carbon Neutrality by 2030 a realistic goal?

The answer to this question is complicated. It is true that most institutions look to 2050 as the most realistic deadline for carbon neutrality, but carbon neutrality by 2030 is possible, primarily if methods of Carbon Offsetting are adopted. We acknowledge that this might be very challenging, but by setting a target date of 2030, we intended to shift our outlook away from “what needs to be done in the future?” and closer to “what can we do now to meaningfully address this crisis?” We understand that a longer time frame allows for things to be put off and deadlines to be pushed back, but we insist that this is not good enough when it comes to the state of the climate and our world. When it comes to neutralizing our carbon emissions, it’s time to just do it!

 

[1] Toronto350. University of Toronto loses $550 million by not divesting from fossil fuels. CISION. November 2015.