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The global significance of fossil fuel divestment (opinion)

Warning lights are flashing. “It’s now or never, if we want to limit global warming to 1.5°C (2.7°F),” cautioned Jim Skea, the co-chair of the United Nations’ Intergovernmental Panel on Climate Change working group on climate change mitigation. “Without immediate and deep emissions reduction across all sectors, it will be impossible.”

The IPCC states unequivocally in its April 2022 report that human behaviors have warmed the globe, and that—to limit warming to 1.5 degrees Celsius—drastic action is needed to cut greenhouse gas emissions 43 percent by 2030. This will require “a substantial reduction in fossil fuel use … and [increased] use of alternative fuels.”

Universities and colleges throughout the world have been responding to the crisis. Scholars have carried out essential climate research from a variety of disciplinary perspectives, students have mobilized to push universities toward divestment from fossil fuels and alumni have joined the movement, even launching a “no donations until divestment” initiative.

More than 1,500 institutions of higher learning, foundations, pension funds and faith-based organizations from around the world, including such famous universities as Harvard University and the Universities of Cambridge and Oxford, have committed to remove fossil fuels from their portfolios. One of the world’s largest and most influential investors, the New York State Common Retirement Fund, with $226 billion in assets, announced in late 2020 that it would fully divest from fossil fuels by 2040. The total amount of capital committed to be removed from the fossil fuel energy sector now stands at more than $40 trillion.

By contrast, the vast majority of American colleges and universities continue to hold endowment investments in fossil fuel. Of the approximately 140 universities and colleges with endowments over $1 billion, we estimate that fewer than a quarter have committed to fully divest from fossil fuels as of this writing. (Compare this with the 65 percent of universities in the United Kingdom that have pledged to divest.) This means that of their aggregated endowment—which amounted to nearly three-quarters of a trillion dollars for fiscal year 2021—a substantial portion continues to underwrite companies that have brought us to the brink of climate chaos.

And this is to say nothing of those financial institutions holding university and college retirement funds. The Teachers Insurance and Annuity Association of America, for example, an investment fund with $1.3 trillion in assets under management and contracting with over 15,000 institutions for retirement services, has an estimated $78 billion invested in oil, coal and fracked gas. TIAA is now the subject of a complaint filed by hundreds of its customers with the U.N.-supported group Principles for Responsible Investment.

Toxic Financial Investments

Some universities and colleges continue to question the financial exigency of fossil fuel…

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2022-12-01 02:03:45

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