UNC systems need to divest endowments

James Smith and Meredith Bain
James Smith- [email protected]
Meredith Bain [email protected]
Following world leaders meeting in Katowice, Poland for COP24 and the G20 summit in Argentina, it seems international momentum toward climate action is growing, despite President Trump being the only leader at G20 not to sign onto an agreement reaffirming commitment to the Paris Climate Accord.
In fact, Trump’s administration plans to hold a sideshow at COP24 to promote “clean coal,” detracting from the global action on climate change. The urgency of climate action was made clear by the recent IPCC Report on Global Warming of 1.5 C, and the even more recent National Climate Assessment.
The responsibility for U.S. action on climate change lies on leaders in America with the power to make change. University endowments often invest heavily in the fossil fuel industry, sotop-level administrators in higher education have the potential to be these leaders.
Fossil fuel divestment targets polluters who have ravaged the environment and accelerated climate change. Divestment has already shifted $8.05 trillion away from fossil fuel companies.
The premise is simple: institutions with investments in fossil fuels remove their holdings from such companies and reinvest them in climate solutions like renewable energy or sustainable agriculture. Notable divestment commitments include the country of Ireland, New York City, New York and London, England, as well as many systems of higher education across the globe.
In the U.S., some public university systems that have divested from fossil fuels include the University of Massachusetts, University of California, and University of Maryland systems.
In the state of North Carolina, Warren Wilson and Brevard colleges both divested, citing the moral obligation for systems of higher education to discontinue profiting off of climate destruction.
While these are great steps they do not address the combined UNC System endowment, which totaled a collective $6.2 billion as of June 2018. This sum includes the endowments of 17 institutions in the UNC System.
Students from UNC Chapel Hill, NC State University, UNC Asheville, UNC Wilmington, Western Carolina University and Appalachian State University united to form the NC Reinvest Coalition recognizing both the moral imperative behind fossil fuel divestment as well as the promising financial returns that have been demonstrated by sustainable investing. We are committed to ensuring the UNC System’s investments are aligned with its values and we cannot condone our institutions’ environmental destruction and contributions to the climate crisis.
Administrators in the UNC System suggest that divesting would negatively impact returns on investment, but that is not the case. In fact, at NCSU, a small portion of the endowment is already invested exclusively in socially and environmentally (SRI) responsible funds.
Since its inception in 2015, this $50 million portion of the endowment has consistently outperformed its traditionally invested counterpart, according to Bloomberg and publicly available information on both funds. If one acknowledges that addressing climate change means ending use of fossil fuels as we do today, then fossil fuels pose a long term investment risk. Therefore, they are financially unsuited for university portfolios, which aim to preserve long term returns.
Furthermore, divestment is inconsistent with the missions of our institutions. Institutions that express a commitment to incorporate economic, social and environmental sustainability into our institutional practices shouldn’t invest in companies doing just the opposite by contributing millions of dollars to dirty fuel companies.
The decision to divest is not just one that has to be embraced by universities within the UNC System. Jon King, the president of the UNC Management Company, which invests the UNC System endowments, has expressed firm resistance to fossil fuel divestment and sustainable investing.
The lack of transparency and commitment to client satisfaction from UNC Management Company is shocking. UNC System schools do not receive any information about where our money is invested apart from what is publicly available online. This is almost unheard of, especially considering that the UNC System schools are clients of the UNC Management Company.
NC Reinvest Coalition and UNC System students are demanding that universities remove their endowed holdings from UNC Management company if UNCMC refuses to become a signatory to the United Nations Principles of Responsible Investment (UNPRI), and grant a fossil fuel divestment request. Beyond fossil fuel divestment, we ask that UNC Management Company
incorporate SRI investment approaches into their management approach. If not, a new management company ought to be considered.

Members of UNCA Divest display signs showing their advocacy for fossil fuel divestment. Photo courtesy of UNCA Divest.

The social and environmental health of North Carolina depends on it.
UNCA Divest will be active on the quad at Greenfest on April 5th from 11am-2pm! Come join us to learn more about divestment.
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