University of California, Oakland, announced it is now fossil-fuel free after selling more than $1 billion in assets from its pension fund, endowment and working capital pool.
“Today, we remain convinced that continuing to invest in fossil fuels poses an unacceptable financial risk to UC’s portfolios and therefore to the students, faculty, staff and retirees of the University of California,” CIO Jagdeep Singh Bachher said in a news release.
“While we certainly could not have predicted the speed nor depth of the recent downturn in the traditional energy sector, signs point to a structural shift — not merely another cycle of boom or bust,” Mr. Bachher added. “Given geopolitical tensions and likely, a bumpy and slow global financial recovery in a post-pandemic world, lowered demand and oversupply could portend an even longer price drought in oil and gas.”
Mr. Bachher had announced at a university investment subcommittee meeting in March 2018 that moving out of fossil-fuel investments was the long-term goal for the $68 billion pension fund and $13.4 billion endowment.
Separately, Cornell University’s board voted on May 22 to institute a moratorium on new fossil fuel investments on behalf of the Ithaca, N.Y.-based university’s $6.9 billion endowment, effective immediately.
“There’s a growing recognition that we’re transitioning away from fossil fuels globally, and the economic competitiveness of renewable energy sources is rising,” said Ken Miranda, the university’s chief investment officer, in a news release. “We’re doing the right thing from an investment perspective, particularly for an endowment with a perpetual time horizon.”
The moratorium applies to new private equity and bond vehicles focused on fossil fuels, which currently makes up 4.2% of Cornell’s long-term investments. That percentage is expected to reduce to zero over time as existing investments mature and assets are redeployed to other areas, including renewables.
The new policy does not apply to indexed and other public equity mandates, such as the S&P 500.