Fossil fuel divestment is a moral imperative, a political strategy, and a prudent financial choice.
Fossil fuel divestment is the shifting of investments away from fossil fuels, which make up approximately 6% of UBC's endowment, to alternative investments.
Morally, investing in industries that perpetuate the catastrophic effects of climate change is wrong. Approximately 85% of oil reserves in Canada’s tar sands must stay in the ground in order for us to have a reasonable chance of limiting global warming to 2˚C, as agreed upon in the Paris Agreements. It is morally wrong to financially support an industry that solely exists to extract the maximum amount of carbon reserves. This is an industry that continues to use its financial resources and lobbying power to undermine climate action, and by investing in it, UBC remains complicit in the crisis that is global warming.
Politically, divestment challenges the social license of fossil fuel companies to continue expanding the scale of fossil fuel extraction and lobbying against climate policy. As the founder of 350.org, Bill McKibbin explains, divestment changes social norms and delegitimizes the fossil fuel industry, thereby removing consent in an attempt to “politically bankrupt” an industry whose expansion is fundamentally incompatible with climate action.
Financially, divestment protects UBC’s endowment from the risks of a "carbon bubble:” as climate action continues and renewable energy slowly replaces fossil fuels, investments in the fossil fuel industry are in trouble. As we push to leave the majority of fossil fuel reserves unburned, as is needed to limit warming to 2˚C, financial risk to this type of investment increases significantly. Indeed some have argued that UBC’s failure to divest thus far has actually meant that the University lost out on money.
The UBC divestment campaign is part of a growing global movement. Over 730 institutions representing over $5.4 trillion in assets have already committed to divest.
What we're calling for
We call on UBC to make a commitment to transition its investments away from fossil fuels as is consistent with the University’s sustainability goals and the world’s greenhouse gas reduction commitments established under the 2015 Paris Agreement.
Fossil free funds already exist and offer equivalent returns to those that include fossil fuels. Indeed, some universities, such as Simon Fraser University, Université Laval and Concordia University , have committed to divesting a proportion of their respective endowments. Meanwhile, UBC currently financially supports some of the top 90 publicly traded fossil fuel companies , which have been found to have contributed to two thirds of global emissions alone.
What is Canada’s emissions reduction timeline?
To limit warming to the internationally agreed upon 2˚C, Canada needs to reduce its carbon emissions by a minimum of 30% by 2030 compared to 2005 emissions levels. However, if we use equity-based emissions allocations that ensure that developing countries, which are typically disproportionately affected by climate change, can prioritize development instead of solving a problem that they did not create, then Canada needs to reduce its emissions to 2005 levels by 2030 .
It’s clear that business as usual investing is no longer enough.
Divestment at UBC
The divestment campaign was started by students from UBCC350 in 2013. Over the past four years we've had thousands of face to face conversations with students and faculty, organized a petition receiving over a thousand student signatures, and spent many days procrastinating on our essays in order to research climate change and divestment to make sure we've got our facts straight.
Due to our efforts, two referendums took place. In the 2014 AMS referendum, 6786 UBC students (76.9% of voters) voted yes to the question:
Whereas the University of British Columbia has demonstrated a strong commitment to environmental sustainability, and whereas it is unconscionable to fund our education with investments in fossil fuels that threaten our future on this planet, UBC should immediately forgo further investments in fossil fuel companies, and divest from all existing fossil fuel holdings within five years. Do you call on the Alma Mater Society to make all reasonable efforts to urge UBC to divest from fossil fuels?
As a result, divestment is now official policy of the UBC Alma Mater Society!
AMS Policy states that "UBC should take all possible measures to forgo future investments in fossil fuel companies and divest from all existing fossil fuel holdings within five years". They outline their reasons for supporting the call to divest here.
A second vote took place in February 2015, in which an overwhelming 62% of UBC faculty joined students in supporting divestment in their University-wide referendum. 228 faculty members also signed our open letter .
With two major campus constituencies in support of divestment, the AMS and UBCC350 submitted a proposal to the UBC Board of Governors. We hoped this proposal would start a discussion and collaboration with the Board about UBC's investments, their role in climate change, and divestment.
The UBC Board of Governors' Response
The UBC Board of Governors' response to divestment has been a fundamentally inadequate and flawed process.
The Board's initial decision to reject our divestment proposal was based on a failure to adequately consider the proposal, an alarmingly wrong interpretation of their own legal mandate and a set of illogical criteria that were nearly impossible to satisfy.
These many shortcomings are discussed below and were addressed in open letter to the Board that we released prior to the Board's final vote against divestment.
Failure to undertake any fair process
The UBC Board's consideration of divestment consisted of taking a single divestment proposal, excluding all other evidence for divestment, handing it to a lawyer, and asking if we had satisfied the Board's illogical criteria. We think this was a sham intended to reach a pre-determined decision: to reject divestment.
The Finance Committee also refused to meet with us at any point in their deliberations, despite our repeated requests (including on 21 May 2015; 3 June 2015; 16 June 2015; 22 June 2015; 25 September 2015).
The day before the Finance Committee held its first public meeting on divestment, when we were allowed to address the Board for the first time, they accidentally released the wrong agenda. This revealed their recommendation to "not support the Fossil Fuels Divestment proposal, as it is not consistent with the University’s fiduciary responsibility."
Not only did the Board get one of its central mandates - fiduciary responsibility - wrong, it tried to pass off a meeting with a foregone conclusion as "consultation."
The Board's "ill-informed understanding of the university’s legal obligations"
The Board has repeatedly claimed that divestment “would not be consistent with the board’s fiduciary obligation to endowment donors.”
In response, two UBC law professors, including a former University Counsel and Vice President External and Legal Affairs, wrote about why this is clearly false:
“As trustee of charitable purpose trusts (the endowment funds), if UBC owes fiduciary obligations to anybody, it surely has to be to be those persons intended to benefit from the purposes of the trust — namely, students and faculty. [...] The university does not owe a fiduciary duty to its donors unless they are under the trust made beneficiaries. To make them beneficiaries would jeopardize the charitable status of their tax deduction.”
As such, the Board's interpretation of fiduciary duty appears to contradict a legal opinion obtained by the University of Toronto President’s Advisory Committee on Divestment as well as previous research from UBC's Allard School of Law.
Illogical and nearly impossible to satisfy criteria
The Board also attacked divestment through their "Responsible Investment Policy," which was curiously released shortly after divestment proponents first asked UBC to consider the issue. The Policy sets out 5 criteria that at face value are not unreasonable. However, the fine print requires a level of proof that is nearly impossible to satisfy. For example, the Policy specifies that the proposal demonstrate that:
- UBC’s divestment from a sector does not facilitate investment opportunities for other, less responsible investors in the same sector.
- This requirement misunderstands how markets function. Selling stocks, whether for divestment or during routine management of funds, does facilitate an investment opportunity for a less responsible investor. Imagine applying this criterion to an extremely controversial investment, such as investments in an arms company selling weapons to ISIS. Would the possibility of investors who are less responsible than UBC buying the University’s stock from such a company really stop UBC’s divestment from such a company?
- There is reasonable evidence that divestment is an effective way to achieve the desired outcome. This would be most compelling if divestment changes the behaviour of an offending company or industry.
- Changing the behavior of the industry is not what divestment aims to achieve. It's not about incremental improvements in the operation of a coal company; it's ultimately about policy changes that reduce our society’s reliance on the use of fossil fuels.
- There is an absence of alternative policies that are as effective at a lower cost, or more effective at the same cost, when compared to divestment.
- Asking us to prove that divestment is the most effective policy at addressing climate change is, frankly, completely bizarre. Divestment should be undertaken if it is judged to be morally right, effective, and reasonable, not only if it is proved to be the most cost-effective policy in existence. We would love to see UBC attempt a benefit-cost analysis on political strategies like divestment. Good luck with that, UBC.
- The choice to divest is demonstrably superior to engagement.
- The UBC administration must be more optimistic than we are, since we don't hold out much hope that politely asking coal companies to shut down their operations will be effective. UBC should be undertaking both engagement and divestment where appropriate. Right now, they are doing neither. Asking us to prove that divestment is superior misses the point.
Because of the significant failure of fair process by the Board, we do not accept the rejection of our proposal. It is notable and commendable that none of the student representatives on the Board - those most impacted by the consequences of climate change - voted against the divestment proposal, and all spoke out about UBC’s governance failure.
The UBC community deserves an open, transparent, timely, and evidence-based consideration of divestment. Indeed, this is the minimum standard to which students and faculty are entitled after two university wide referendum votes in favour of divestment. As such, we are continuing to push for full divestment.
UBC’s Response: the "Sustainable Future Fund"
In response to our proposal, UBC created a $10 million “Sustainable Future Fund” from a $1.4 billion endowment. In doing so, the Board has recognized they now have a $1.39 billion dollar "Unsustainable Future Fund." We would like to remind the Board that 0.7% of the endowment is not a passing grade at UBC.
We discuss our take on the fund here .
- Vancouver Sun, February 15 2017, UBC votes for sustainable investment fund to be free of fossil fuel companies
- CTV News, February 14 2017, UBC's sustainable investment fund to be free of fossil fuel companies
- Vancouver Magazine, February 26 2016, The Van Mag follow-up: Divest UBC’s Alex Hemingway
- Vancouver Magazine, February 23 2016, The Van Mag Q and A: UBC’s Philip Steenkamp on divestment
- The Tyee, February 16 2016 UBC Rejects Divestment against 'Expressed Will' of Students and Faculty, Says Campaigner
- Globe and Mail, February 15 2016, UBC board of governors rejects proposal to divest from fossil fuels
- CBC News, February 15 2016, UBC board of governors votes against divestment from fossil fuel industry
- Huffington Post, February 15 2016, University of British Columbia Votes To Keep Fossil Fuel Investments
- CKNW AM 980 Radio, February 15 2016, BC’s board of governors vote not to divest from fossil fuel investments
- National Observer, February 3 2016, UBC Finance Committee rejects fossil fuel divestment
- Vancouver Sun, February 1 2016, UBC board to vote on fossil fuel divestment
- Ubyssey, March 15 2016, UBC divestment decision based on perplexing understanding of legal obligations
- Vancouver Sun, January 27 2016, Opinion: The growing cost of UBC’s fossil fuel gambit
- Globe and Mail, October 1 2015, UBC urged to lead on fossil-fuel divestment
- Vancouver Observer, February 6 2015, UBC economics prof: I am voting yes to divest fossil fuels
- Vancouver Sun, October 22 2014, Opinion: Fossil-fuel divestment urged at UBC
- Macleans, April 17 2014, UBC policy addresses fossil fuel ‘divestment’
- CTV News, Canada AM: Universities Divesting Fossil Fuels