University of California Endowment, Pension to Divest All Fossil Fuels

CIO and investments chairman say faculty, student protests did not push the decision.

The University of California will divest all fossil fuels from its $13.4 billion endowment and $70 billion pension fund, according to two of its top officials.

Plans surfaced Tuesday in a Los Angeles Times opinion piece penned by Chief Investment Officer Jagdeep Bachher and UC Board of Regents and Investments Committee Chairman Richard Sherman. The two wrote that fossil fuel and coal and oil sands —which it has divested from over the past four years— posed “a long-term risk” to the organization’s portfolios.

“We believe hanging on to fossil fuel assets is a financial risk, ” they wrote, noting that between 2014 and the present, no new fossil fuel investments were made. “That’s why we will have made our $13.4-billion endowment “fossil free” as of the end of this month, and why our $70-billion pension will soon be that way as well.”

The institution had also experienced protests over these holdings in recent years from both faculty and students. In a July public meeting, staff voted nearly 77% in favor of the UC Board of Regents dumping its fossil fuels, which Bachher and Sherman addressed.

However, they said the decision was not due to faculty or student pressure, instead citing that the two “are part of a university system where diversity of opinion thrives.”

Bachher and Sherman both joined the University of California in 2014 and shortly after made the organization the first public university in the US to sign the United Nation’s Principles for Responsible Investing. The following year, UC’s investment office published its own sustainable investing framework.

Last year, the Board of Regents changed the school’s investment policy to include environmental, social, and governance (ESG) in its decision-making.

The University of California also has a five-year goal of investing a minimum $1 billion in climate change solutions, which Bachher and Sherman said it is “on track to beat.”

“We have been looking years, decades and centuries ahead as we place our bets that clean energy will fuel the world’s future. That means we believe there is money to be made.” the two wrote. “We have chosen to invest for a better planet, and reap the financial rewards for UC, rather than simply divest for a headline.”

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