The UVSS Board of Directors recently voted unanimously in favour of fossil fuel divestment at UVic. Along with the group Divest UVic, the UVSS is asking the university to immediately freeze all current investments in fossil fuels and remove their investments from all existing fossil fuel holdings within the next three years. They are attempting to collect 2 000 signatures from students while also requesting support from faculty, staff, and alumni.
“We believe that if it’s wrong to wreck the climate, then it’s wrong to profit off that wreckage. Investments in fossil fuels condone the environmental and human rights abuses associated with resource extraction based industries,” said Kelsey Mech, UVSS chairperson, in an email.
According to Assistant Treasurer of the University of Victoria Foundation Andrew Coward, UVic had $37.6 million of the University of Victoria’s Foundation portfolio invested in energy sector stocks as of Dec. 31, 2013. With that much money invested in fossil fuels, it begs the question of what will happen to UVic’s funding if it were to take that investment away. According to a study done by the Aperio Group (an investment management firm), the effect divestment would have would be small, citing only a 0.0036 per cent drop in returns.
Mech added that, due to changing climate, the value of fossil fuels will go down in the years to come. “Scientists, industry, and government leaders have all come out saying that catastrophic climate disruption will take place if warming exceeds 2º Celsius. In order to prevent warming beyond that threshold, two-thirds of the oil, coal, and gas in proven fossil fuel reserves must stay underground,” said Mech. “Not too far down the road, investments in fossil fuels will begin to lose their value as we come to terms with the fact that there is more carbon in the ground than we can safely burn.” She went on to say that reports from the International Energy Agency, United Nations, and financial groups like Standard and Poor’s have stated that investment in fossil fuels is just not worth it. “One HSBC report showed that some companies could lose up to 60 per cent of their market value,” she said.
Coward, however, says that divesting would limit the investment options for UVic in the future. “Companies that are involved in fossil fuels make up a significant portion of all companies—at Dec. 31, 2013, the energy sector represented 25 per cent of the S&P/TSX Index (based on the Canadian stock market) and 10 per cent of the MSCI World Index,” said Coward in an email. “The foundation hires investment managers to consider how different countries, sectors, and companies will perform now and in the future. Diversification is an important component of prudent investment principles and removing this sector entirely would significantly reduce the ability to diversify investments.”
According to Coward, the UVic Foundation requires its investment managers to report on how they consider environmental, social, and governance factors when making investment decisions. The foundation has received a letter from the UVSS regarding divestment, and the letter will be presented to the UVic Foundation’s board as well as the university Board of Governors.
“The foundation does support responsible investing,” said Coward. “UVic does share students’ and others’ concern about climate change, and is a leader in the fields of global change and sustainability. Over the past few decades, the university has received international attention for its commitment to green campus operations, interdisciplinary research, real life learning opportunities, and innovative community partnerships.”
With UVSS elections coming up, students will have to wait and see whether the new UVSS Board of Directors will continue to support this campaign or not. With student groups at other universities, such as UBC, pushing for divestment as well, it does appear that it is an issue many universities will have to deal with in the future.