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December 19, 2013 at 6:12 AM
Why UW, Seattle U. should divest from fossil-fuel companies
Editor’s note: Nicole Gaddie, a Seattle University student, is interning with The Seattle Times opinion section this fall.
A new movement is building traction among colleges across the nation: withdrawing endowment investments from major fossil-fuel companies.
Historically this is not new territory. In the 1980s college students demanded divestment from companies that supported the apartheid regime of South Africa. In the 1990s college endowments divested from Big Tobacco.
Students should once again make a statement, this time by seeking a solution to climate change.
Student groups at more than 300 campuses — including Seattle University, the University of Washington and Western Washington University — have joined the campaign to withdraw from investment in fossil-fuel companies. If it is wrong to destroy the environment, then it is also wrong to profit from that wreckage.
By ending fossil-fuel investments, colleges can set a clear path for larger institutions such as state governments and nonprofit foundations to follow.
Sarra Tekola, a UW student and Climate Change intern for the Environmental Protection Agency said, “We’re all proud of our universities and we would like to see them at the forefront because that’s our social and political legacy. That establishes who and what you are as an institution.”
Currently, 200 publicly traded companies hold the vast majority of the world’s proven coal, oil and gas reserves. Seattle University has an endowment of $185 million and the University of Washington has an endowment of $2.3 billion. While Seattle University does not release information related to specific endowment investments, the University of Washington reports that 11 percent of its consolidated endowment fund’s equity exposure is invested in energy, which includes energy services, oil, gas and consumable-fuels.
Because colleges potentially have large energy investment holdings, students should push their institutions to immediately freeze any new investment in fossil-fuel companies and divest from direct ownership of equities and corporate bonds.
“The amount of benefits we gain from the coal industry is much less than the cost. In short, the coal industry is harming society more than they are contributing to it,” said Alex Lenferna, part of the University of Washington student-led Fossil Fuels Divestment Campaign.
In addition, some believe the energy market is experiencing a carbon bubble. Like the housing and debt bubble that led to the financial crisis of 2008, the carbon bubble is projected to create economic disaster as fossil-fuel reserves are exhausted.
According to a recent report by The Guardian, the carbon bubble is the result of an over-valuation of oil, coal and gas reserves held by energy companies [“Carbon bubble will plunge the world into another financial crisis,” April 18]. At least two-thirds of these reserves will have to remain underground if the world is to meet targets countries have agreed on to avoid the threshold for “dangerous” climate change. According to the agreements, these reserves are worthless — leading to massive market losses.
So why don’t colleges divest now? The answer unfortunately lies in fear of investment loss, according to a statement released by Drew Faust, president of Harvard University. In her statement, Faust explains that universities don’t want to behave like political actors instead of academic institutions. “The endowment is a resource, not an instrument to impel social or political change,” wrote Faust.
Ann Sarna, UW’s Associate Treasurer believes that selling its investments would not substantially impact billion-dollar companies such as Exxon, BP and Chevron.
“Since colleges and university endowment holdings in the fossil industry represent less than one-tenth of one percent of the fossil fuel industry, the University of Washington divesting from fossil fuel companies has no financial impact to the fossil fuel companies,” said Sarna.
If endowment growth slows, universities would receive less revenue each year from the endowment and have to seek other sources for additional revenue.
Is money and convenience more important than the long-term sustainability of the world we live in? I think not.
Divestment’s goal is not solely to disrupt the fossil-fuel companies’ behavior, but more importantly, to change the narrative surrounding climate change and the reputation of these large companies.
A university’s role is to serve the students and the students’ interest. Since the divestment movement is growing faster than any previous divestment campaign (according to a study from the University of Oxford), it is plain to see this is a priority for students.
For those concerned about the investment funds lost, colleges can cut costs in other areas such as moving more classes online or by reducing lavish facility renovations.
Ultimately, there is no ethical excuse for colleges to not redirect their investments and raise awareness about global warming.
This is a call to action students and investment boards cannot afford to ignore.