NEWS Igniting Protest: Will UC Make History By Pulling the Plug on Fossil Fuel Investments?

In the wake of the his­toric vote by Uni­ver­sity of Cal­i­for­nia fac­ulty to divest from fos­sil fuels, Cal­i­for­nia Mag­a­zine is re-​​running a 2014 arti­cle where action lead­ing to the divest­ment vote took off.

Daniel Kammen’s Op Ed, “UC’s invest­ments in fos­sil fuels are hurt­ing the planet”, in the Daily Cal­i­forn­ian from Decem­ber 3, 2013 is here.

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That Arti­cle, from July 2014 is reprinted in the July 2019 Cal­i­for­nia Mag­a­zine is here, and is below.

When 29-​​year-​​old UC Berke­ley stu­dent Ophir Bruck spot­ted Sherry Lans­ing, the for­mer CEO of Para­mount Pic­tures, on her way to a Uni­ver­sity of Cal­i­for­nia Regents meet­ing, he was hold­ing on to a key that he hoped she wouldn’t refuse.

We’re here to call on the UC Regents to take bold action on cli­mate change,” Bruck told Lans­ing last May, as she walked past 58 chant­ing stu­dents chained to two home­made struc­tures designed to rep­re­sent oil drilling rigs. “Will you sym­bol­i­cally unlock us from a future of fos­sil fuel depen­dence and cli­mate chaos?”

I drive a Prius,” Lans­ing replied, with­out stopping.

But now the issue is com­ing to a head at the Uni­ver­sity of Cal­i­for­nia sys­tem, as activists push hard for it to become the nation’s first large pub­lic research insti­tu­tion to jet­ti­son fos­sil fuel invest­ments. Over the com­ing months, the UC Board of Regents—trustees of a $6.4 bil­lion endow­ment, one of higher education’s greatest—will be forced to grap­ple with the question.

As cli­mate change accel­er­ates faster than ever before—and with the world’s top oil, gas and coal com­pa­nies already con­trol­ling a tremen­dous amount of fos­sil fuels—college stu­dents all over the coun­try are urgently pres­sur­ing uni­ver­si­ties to divest their hold­ings of these cor­po­ra­tions. Thus far 10 U.S. col­leges and uni­ver­si­ties have com­mit­ted to divest, and the move­ment is active on 450 cam­puses nation­wide. To date, over 60 more enti­ties (mostly munic­i­pal­i­ties, churches and foun­da­tions) have heeded the call to divest, attribut­ing their actions in part to a desire to leave a world that future gen­er­a­tions will be able to inhabit.

But it has par­tic­u­lar fris­son at UC Berke­ley, where on Mon­day stu­dent activists dressed in black kicked off Earth Week 2014 by lying down in Dwinelle Plaza to sim­u­late a “human oil spill”—and to demand the UC sys­tem divest itself of fos­sil fuel com­pa­nies. With his­tor­i­cally suc­cess­ful divest­ment cam­paigns tar­get­ing then-​​apartheid South Africa, tobacco com­pa­nies and Sudan, Cal stu­dents have been cat­a­lysts for turn­ing finan­cial cal­cu­la­tions into moral ones.

If we do not divest from fos­sil fuels, and con­tinue busi­ness as usual, future UC stu­dents will not have liv­able futures—and it’s part of the Regents’ fidu­ciary duty to ensure that they do,” says 21-​​year-​​old UC Berke­ley junior Vic­to­ria Fer­nan­dez, one of Fos­sil Free Cal’s cam­paign leaders.

Fer­nan­dez, an envi­ron­men­tal stud­ies major, has made her cause con­sis­tently vis­i­ble to the Regents over the past year. She repeat­edly turns up at their meet­ings to give pub­lic com­ments, was one of the 58 chained to the oil rig, and reg­u­larly tries to engage the throng of stu­dents rush­ing through Sproul Plaza to join divest­ment efforts.

She’s moti­vated by her father, the son of a braceros agri­cul­tural worker from Zacate­cas, Mex­ico who labored on a date farm in Indio, Calif. “My dad never wanted to waste any­thing and recy­cled everything—those val­ues were cemented in me grow­ing up,” she said. When her father immi­grated to the U.S. at the age of 5, the fam­ily lived in the one tiny shack sit­ting in the midst of a huge stand of palm trees.

Bruck, an envi­ron­men­tal stud­ies re-​​entry stu­dent who is poised to grad­u­ate next month, says that divest­ing presents trans­for­ma­tional promise for soci­ety. “It’s more than about just reduc­ing car­bon emissions—it’s a jus­tice issue,” he says. “It’s an oppor­tu­nity to rethink out­dated polit­i­cal, eco­nomic and social sys­tems out of which the cri­sis was born.”

Video of UC Regents’ meet­ing excerpted from the forth­com­ing doc­u­men­tary “The Future of Energy”

While UC has been lis­ten­ing to what Fer­nan­dez and Bruck are say­ing about the need to divest, it’s not fully con­vinced. UC Regent Bon­nie Reiss—who served as a cli­mate advi­sor to for­mer Cal­i­for­nia Gov. Arnold Schwarzenegger—and UC Chief Finan­cial Offi­cer Peter Tay­lor ques­tion the ben­e­fits of divest­ment from a port­fo­lio tasked with bring­ing in returns to sup­port fac­ulty research and stu­dent schol­ar­ships, as well as whether divest­ment would actu­ally weaken the indus­try at all.

UC’s mis­sion is not just to fight cli­mate change—our pri­mary mis­sion is access and afford­abil­ity to receive a great edu­ca­tion,” Reiss says. “So it should be a really rare inci­dent where you’re putting any restric­tions on your invest­ment cri­te­ria that are any­thing but max­i­miz­ing your return on investment.”

I don’t think it’s ap­pro­pri­ate for staff mem­bers to make value judg­ments on wheth­er we should in­vest in to­bacco com­pan­ies, if ge­net­ic en­gin­eer­ing is good or bad, if fos­sil fuels are good or bad. Where do you draw the line?” —UC Chief Fin­an­cial Of­ficer Peter Taylor

Both Reiss and Tay­lor point to the UC’s deci­sion to divest from tobacco stocks in 2001 as proof of such risk. Each year, the uni­ver­sity sys­tem ana­lyzes how the port­fo­lio would have per­formed had it not divested. Dur­ing the 2012–2013 fis­cal year, the port­fo­lio earned $44.9 mil­lion more with­out the tobacco stocks.

But when look­ing at its cumu­la­tive dif­fer­ence cal­cu­lated between the port­fo­lio and its hypo­thet­i­cal alter ego between 2001–2013, the port­fo­lio lost $471.6 mil­lion. “Are tobacco com­pa­nies any less vibrant since 2001?” Tay­lor asks. “I don’t think it’s appro­pri­ate for staff mem­bers make value judg­ments on whether we should invest in tobacco com­pa­nies, if genetic engi­neer­ing is good or bad, if fos­sil fuels are good or bad. Where do you draw the line? What’s the answer to that? I’d love to know.”

Back in 2011, a divest­ment cam­paign tar­get­ing a select group of coal com­pa­nies failed to take off on cam­pus. But a broader ini­tia­tive gained momen­tum last spring, a few months after cli­mate activist Bill McK­ibben spoke at Berke­ley as part of a national tour to rally sup­port­ers around the cam­paign orga­nized by his non­profit orga­ni­za­tion 350​.org. Its call: Insti­tu­tions should divest from the top 200 oil, gas and coal companies.

Bruck was in the crowd that evening—one of just 15 to 20 stu­dents among a few hun­dred peo­ple, he observed, when McK­ibben asked all the stu­dents in the room to stand up.

He called upon us, say­ing that you have the power to take action and to lever­age your posi­tion as stu­dents and push your insti­tu­tions to act on cli­mate,” Bruck says. “The whole presentation—it gets you mad, it gets you scared. Not fearmongering-​​scared, but real­is­ti­cally con­cerned about every­thing you care about.”’s argu­ment is based on research show­ing that if the top com­pa­nies burned all of their reserves, it would raise the earth’s tem­per­a­ture beyond 2 degrees Celsius—the amount that gov­ern­ments agreed not to exceed col­lec­tively in the inter­na­tional cli­mate agree­ment bro­kered at Copen­hagen in 2009. Any­thing beyond this thresh­old, U.N. cli­mate sci­en­tists pre­dict, will cre­ate a world of heat waves, unprece­dented sea-​​level rise and not enough food and water to sup­port an increased pop­u­la­tion of nine bil­lion peo­ple by 2050. Recently, the UN’s Inter­gov­ern­men­tal Panel on Cli­mate Change released a report con­clud­ing that green­house gas emis­sions need to be cut from 40 to 70 per­cent by mid­cen­tury in order to pre­vent a cli­mate catastrophe.

And accord­ing to Car­bon Tracker, the London-​​based think tank that con­ducted the top 200 com­pa­nies research, these cor­po­ra­tions have five times more car­bon to burn than the amount that would keep the earth below the two-​​degree limit.

After McK­ibben addressed the stu­dents, Bruck recalls feel­ing a respon­si­bil­ity to take action, though he had never really com­mit­ted him­self to orga­niz­ing on an issue before. “Things in my life cul­mi­nated where I was ready to engage myself at this moment—and cli­mate change was not one of those issues until I came out of that talk,” he says.

Stu­dents at Cal and other UCs adopted’s call for action. They began ask­ing the Regents to divest $11.2 bil­lion  (a $6.4 bil­lion gen­eral endow­ment pool and an addi­tional $4.8 bil­lion sit­ting in cam­pus endow­ments) from these top 200 com­pa­nies within five years of mak­ing the com­mit­ment. Their kick­off rally was at the Regents’ Sacra­mento meet­ing last May, when they chained them­selves to the sym­bolic oil rig, chanted calls for divest­ment and gave a 15-​​minute speech to the regents via 15 stu­dents speak­ing one minute at a time, so as not to vio­late the one-​​minute pub­lic com­ment limit.

At the end of the day, we’re try­ing to stig­mat­ize the fos­sil fuel in­dustry and take away their so­cial li­cense to op­er­ate.” —stu­dent act­iv­ist Vic­tor­ia Fernandez

In Jan­u­ary, after Fer­nan­dez and Bruck dis­cussed the issue with a group of Regents over lunch, the Regents agreed to set up a task force com­prised of stu­dents, Regents and fac­ulty that would exam­ine the issue and bring its find­ings to the Regents’ Com­mit­tee on Invest­ments. The task force would then make a rec­om­men­da­tion to the com­mit­tee, which would in turn make their rec­om­men­da­tion to the full body of Regents. Finally, Regents would vote on whether to divest its endowment.

It’s the same process that the Regents went through before vot­ing to divest from Sudan in 2006,” says Bruck.

But unlike the Sudan divestment—one that involved just nine companies—oil, gas and coal com­pa­nies are a trick­ier and more per­va­sive propo­si­tion. Tay­lor esti­mates that of the uni­ver­sity system’s $6.4 bil­lion gen­eral endow­ment hold­ings, “just north” of $100 mil­lion are invested in fos­sil fuel stocks.

It’s not impos­si­ble, but it’s an uphill bat­tle for the Regents to approve this,” says Reiss. “We need to ana­lyze the true costs and benefits.”

She con­tends that UC ini­tia­tives such as its green build­ing require­ments, and UC Pres­i­dent Janet Napolitano’s goal to get the nine-​​campus sys­tem car­bon neu­tral by 2025, are more effec­tive ways to fight cli­mate change. Green con­struc­tion, she says, not only reduces car­bon emis­sions, but also cre­ates mar­kets for sus­tain­able build­ing mate­ri­als and clean technology.

Stu­dents such as Fer­nan­dez and Bruck admit that if UC decides to divest from fos­sil fuels, it would be a sym­bolic ges­ture and prob­a­bly not make an impact on the huge cor­po­ra­tions’ bot­tom lines. But they insist there is more to gain by chang­ing pub­lic opinion.

At the end of the day, we’re try­ing to stig­ma­tize the fos­sil fuel indus­try and take away their social license to oper­ate,” Fer­nan­dez says. “The harm­ful things fos­sil fuel com­pa­nies do to com­mu­ni­ties are not seen by the econ­omy and the world as a whole. They hurt them eco­nom­i­cally and health-​​wise. Look at Chevron in Rich­mond.”

Cre­at­ing that social stigma has worked before. Although UC Regents and Berke­ley chan­cel­lors ini­tially resisted thou­sands of anti-​​apartheid activists push­ing for divest­ment from South Africa, the uni­ver­sity sys­tem did so in 1986 after 18 months of demon­stra­tions and phys­i­cal con­fronta­tions between pro­tes­tors and cam­pus police, anti-​​apartheid activist and Berke­ley alumni Steve Masover has recalled. In 1990, Nel­son Man­dela cred­ited the Berke­ley move­ment with play­ing a sig­nif­i­cant role in the down­fall of apartheid.

Bruck is brac­ing for the long haul. After grad­u­a­tion, he says, he can see him­self con­tin­u­ing to do cli­mate change orga­niz­ing full-​​time.

CEO Andrew Behar of As You Sow, an Oakland-​​based share­holder activist group, sees another com­pelling finan­cial rea­son to divest. He’s among a grow­ing group of investors warn­ing of the risk of invest­ing in fos­sil fuel com­pa­nies because of the “car­bon bub­ble”—the idea that the value of fos­sil fuel stock is over­priced. The the­ory goes like this: If gov­ern­ments pass cli­mate reg­u­la­tions or car­bon taxes to pre­vent the earth’s tem­per­a­ture from ris­ing beyond 2 degrees Cel­sius, fos­sil fuel com­pa­nies will be forced to leave most of their reserves in the ground. To keep that tem­per­a­ture thresh­old, accord­ing to a 2013 study by Car­bon Tracker, only 20 to 40 per­cent of those reserves could be burned.

Behar esti­mates the value of the car­bon bub­ble, or the industry’s “stranded assets,” as they’ve also been dubbed, to be $20 tril­lion. He says that in the last year, the bub­ble has already started to burst as coal has been dumped in favor of nat­ural gas and renew­able energy sources.

Nine coal com­pa­nies went bank­rupt last year. If you bought coal two years ago, you lost 58 per­cent of their portfolio’s orig­i­nal value,” he says. “It’s mov­ing more rapidly even than any­one thought possible.”

More peo­ple are really well versed in tech­no­logy and eco­nom­ic poli­cies in the big en­ergy com­pan­ies than any­where else. It would be crazy not to forge part­ner­ships with them and build on their re­sources.” —Berke­ley en­ergy pro­fess­or Daniel Kammen

In March, in a response to pres­sure from activists, Exxon­Mo­bil released a report to share­hold­ers that con­cluded “we are con­fi­dent that none of our hydro­car­bon reserves are now or will become ‘stranded.’ We believe pro­duc­ing these assets is essen­tial to meet­ing grow­ing energy demand world­wide, and in pre­vent­ing consumers—especially those in the least devel­oped and most vul­ner­a­ble economies—from them­selves becom­ing stranded in the global pur­suit of higher liv­ing stan­dards and greater eco­nomic opportunity.”

Out of the 10 col­leges that have cho­sen to divest in fos­sil fuels, most are small and pri­vate. The largest was Pitzer Col­lege, which announced on April 12 (via trustee Robert Red­ford) its deci­sion to divest its $130 million.

There’s a rea­son why no large pub­lic insti­tu­tion has stepped into the ring thus far. “Many uni­ver­si­ties remain unwill­ing to risk their endow­ments and need, frankly, more cer­tainty,” says Tay­lor, cit­ing an op-​​ed by the Uni­ver­sity of Michigan’s Chief Invest­ment Offi­cer Erik Lund­berg argu­ing that divest­ment was impractical.

And with a $32.7 bil­lion endowment—the largest trea­sure chest among all U.S. col­leges and universities—Harvard Pres­i­dent Drew Faust emphat­i­cally dis­missed divest­ment, cit­ing con­cerns that the uni­ver­sity would inap­pro­pri­ately appear to be a “polit­i­cal” actor, as well as risk future returns. (Recently, the uni­ver­sity signed on to UN-​​backed prin­ci­ples for “respon­si­ble invest­ment.” That is a non-​​binding frame­work, which crit­ics see as an empty gesture).

But those who have stud­ied the impacts of fos­sil fuel divestment—as well as at least one col­lege that divested—refute the idea that it will inevitably lead to finan­cial losses.

Our analy­sis found that if you are doing mar­ket cap weighted index­ing, there is very lit­tle cost to divest­ment from a risk stand­point,” said Liz Michaels of Ape­rio Group, a Sausal­ito, Calif.-based invest­ment man­age­ment firm spe­cial­iz­ing in value-​​based invest­ing. The com­pany doesn’t main­tain a posi­tion on fos­sil fuel divestment.

Aperio—which sub­scribes to the phi­los­o­phy that investors can only match the mar­ket, not beat it—used Barra pro­pri­etary soft­ware to remove a portfolio’s hold­ings in the fos­sil fuel sec­tor, then asked it to rein­vest and reweight them to match mar­ket per­for­mance as much as possible.

We’ve done much bet­ter after divest­ment,” said Stephen Mulkey, the pres­i­dent of Unity Col­lege in Maine, which divested in Novem­ber of 2012. “We’ve achieved sig­nif­i­cant gains because we are pay­ing closer—almost daily—attention”—a con­stant watch of its port­fo­lio funds to ensure that fos­sil fuel hold­ings stay below 1 per­cent of the college’s endow­ment. The col­lege also invests all pro­ceeds from the fos­sil fuel hold­ings into an inter­nal fund that pro­vides financ­ing for energy effi­ciency, renew­able energy, or other sus­tain­abil­ity projects, with the money saved then invested back into the fund.

The UC Regents’ Com­mit­tee on Invest­ments Task Force has yet to be con­vened. At last month’s Regents meet­ing, Fer­nan­dez and Bruck duti­fully waited their turn to speak at the pub­lic com­ment ses­sion and remind the assem­bled group of the task force’s impor­tance. Still, the stu­dents say that a vote on divest­ment is pos­si­ble within the year; Tay­lor says a Regents dis­cus­sion by Novem­ber is realistic.

Many divest­ment back­ers sim­ply advo­cate switch­ing from fos­sil fuel hold­ings to clean­tech and green bond hold­ings. But Berke­ley energy pro­fes­sor and divest­ment advo­cate Daniel Kam­men, a mem­ber of the Inter­gov­ern­men­tal Panel on Cli­mate Change, says it’s also impor­tant to draw on the exper­tise of the oil, gas and coal com­pa­nies, spurring them to help cre­ate an econ­omy that does not rely on fos­sil fuels.

In the tran­si­tion to renew­able energy, we need to move them from extrac­tive com­pa­nies to knowledge-​​based com­pa­nies,” he says. “There are more peo­ple that are really well versed in tech­nol­ogy and eco­nomic poli­cies in the big energy com­pa­nies than any­where else. So it would be crazy not to forge part­ner­ships with them and build on their resources.”

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