University of Toronto divesting from fossil fuels

Checking through my routine administrative emails today, I was completely surprised to see a message from president Meric Gertler announcing that U of T will divest from fossil fuels:

The evidence of a climate crisis is now incontrovertible. The most recent report of the Intergovernmental Panel on Climate Change adds further urgency to the need for individuals, businesses, institutions and governments to act swiftly to respond to this global threat, using every tool available to them. World leaders will begin gathering in Glasgow at the end of this month for the COP26 meeting, where progress in the fight against climate change will be assessed and new strategies to avert a climate catastrophe will be considered.

As owners of financial assets such as endowments and pension funds, universities have both an economic imperative and a moral obligation to manage these assets in ways that encourage carbon emission-reducing behaviour in the wider economy. With the increasing financial risks associated with fossil fuel production – as well as those downstream economic activities that rely heavily on fossil fuels as their energy source – there is a strong motivation for universities to shift their financial capital away from carbon-intensive sectors and firms, and towards those businesses that are leveraging the shift to green energy and carbon-conserving technologies.

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First, UTAM will divest from investments in fossil fuel companies in the endowment fund beginning immediately. Within the next 12 months, it will divest from all direct investments in fossil fuel companies. For those investments made indirectly, typically through pooled and commingled vehicles managed by third-party fund managers, UTAM will divest from its investments in fossil fuel companies by no later than 2030, and sooner if possible.

Second, UTAM will commit to achieving net zero carbon emissions associated with the endowment portfolio by no later than 2050. Moreover, UTAM has recently joined the UN-convened Net-Zero Asset Owner Alliance, making the University of Toronto the first university in the world to join this group of institutional investors. Membership in the Alliance compels signatories to achieve progressively demanding targets every five years en route to net zero, ensuring achievement of this ambitious objective in a transparent and accountable way.

Third, UTAM will allocate 10 percent of the endowment portfolio to sustainable and low-carbon investments by 2025. Based on the current size of the endowment, this represents an initial commitment of $400 million to such investments.

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[I]n the last few years I have heard from many members of the U of T community who have urged me to deploy every means available to address the existential crisis we now face. None have been more eloquent or impassioned than our students, who have the most at stake. I want to thank them – and other members of our community – for their activism and commitment to this important cause. I would also like to acknowledge the important work of the President’s Advisory Committee on Divestment from Fossil Fuels, whose report marked a key milestone in the journey towards today’s announcement.

It will be fascinating to learn more about what prompted the decision. It certainly hasn’t been the result of a highly visible and escalated recent activist campaign. While the Toronto350.org campaign was ongoing, we would often remark that the most helpful thing for us would be if Harvard divested…

The campaign began on April 16th, 2013 when I went to the president’s office for information and ended up meeting with Tony Gray.