University of California Chief Investment Officer Jagdeep Singh Bachher said he is considering investments in the oil and gas market, five years after the institution divested its portfolios from fossil fuels.
“I know we went ex-fossil fuels a while back. There’s a lot of policy shift happening in the energy space,” Bachher said during a March 18 investment committee meeting. “As much as I’m thinking about the growth sectors … I’ve also been looking closely at what’s going on in the energy markets.”
In May 2020, the university announced that its investment portfolio became free of fossil fuels following the sale of over $1 billion in assets from its pension, endowment and working capital pools. The investment office also noted it surpassed its five-year goal of deploying $1 billion in clean energy projects.
At the time, Bachher said that the university’s push to make its investments align with ESG considerations began in 2015, and his office sold coal and oil sands assets the following year.
Bachher noted in a 2018 committee meeting that in the long term, fossil fuels are “a financial risk we do not want to take in the context of real assets. We will fundamentally reduce those holdings.” The pension plans and endowments would invest in cash-flowing assets such as infrastructure, including investment in transmission lines and utilities, he added.
In the March 18 meeting, Baccher noted that the university’s investments in infrastructure — particularly in data centers amid the accelerating growth in artificial intelligence — have paid off.
“I can’t tell you we were smart about data centers other than we got lucky by doing it in 2017 or 2018,” he said. “The best real estate investment in the world today is a data center. You wouldn’t even categorize that as a real estate investment five years ago, right?”
At the start of U.S. President Donald Trump’s second term on Jan. 20, he signed an executive order “in the national interest to unleash America’s affordable and reliable energy and natural resources.”
The order encouraged energy exploration and production on federal lands and waters, and eliminated the so-called electric vehicle mandate enacted under former President Joe Biden. The mandate refers to the bipartisan $1.2 trillion Infrastructure Investment and Jobs Act, which encouraged new spending in electric vehicle infrastructure.
“I think so far, being ex-fossil fuels has been OK, but there is no policy of ours that says we shall never invest in fossil fuels, oil and gas,” Bachher added. “I’m putting that on the table because it’s a consideration that I entertain as I think about what happens in the energy markets, in the oil and gas market.”
The University of California’s investment office had $184 billion in assets as of March 14. This includes $142.7 billion in pension and retirement assets, $30.1 billion in its two endowment pools, and $10.7 billion in working capital.
