By Giacomo Bologna, Daily Staff Reporter
Published March 27, 2013
The University has divested funds from its endowment for social reasons only twice — the first time from South Africa during apartheid, the other from tobacco companies in 2000. A group of students on campus, the Divest and Invest Campaign, wants to make fossil fuels the University’s third target.
Rackham student Dave Marvin, a leader of Divest and Invest, said the campaign wants the University to divest from companies “primarily involved in the extraction, production, transport, or burning of fossil fuels,” which accounts for about $900 million of the nearly $8-billion endowment.
According to Marvin, the $900-million figure came mainly from Freedom Of Information Act requests but doesn’t account for private equity or venture capital portions of the endowment.
Marvin said that the first step of divestment would be to prohibit any new investment in these companies. A five-year period of divestment would then follow, but he noted that the campaign is aware that the University has some contractual agreements with companies that make the five-year goal a soft deadline.
“The goal of divestment is not to financially harm these companies. We have no illusions that we could ever do such a thing,” Marvin said. “It really is about drawing attention to the pernicious practices of the industry in terms of their contributions to politicians, contributions to think tanks which are running a sustained campaign to discredit the science of climate change.”
On Monday, Erik Lundberg, the University’s chief investment officer, told members of the Senate Advisory Committee that the Board of Regents has established a policy of selecting investments based on potential returns, not social or political purposes.
“We can’t let our personal views influence the investments we pursue,” he said.
LSA senior Megan Pfeiffer, another leader within the campaign, said she predicts the University could begin divestment in five years.
“It’s also about putting our values here at the University of Michigan into practice and saying that as a socially responsible institution we should be socially responsible in our investments,” Pfeiffer said.
Marvin said that while the energy sector of the University’s endowment has been the “top performer” during the last decade, past success doesn’t ensure future success.
“You can’t use historical returns to predict the future. That’s just poor investment practice,” Marvin said. “So the argument that the energy industry has done terrific and will continue to do terrific just because it has been doing well doesn’t have any basis in reality.”
The campaign has about 150 total members, which includes a range of students, the campaign has partnered with numerous organizations, including the Program in the Enviornment club, the Public Health Sustainability Initiative, Students for Clean Energy and the Student Sustainability Initiative. Pfiefer said the group plans to raise awareness on campus by attending regents’ meetings and hosting a Diag Day on April 3.
Still the movement has not been met with widespread acceptance.
While LSA Student Government passed a resolution in support of divestment from fossil fuels two weeks ago, the Central Student Government voted down a similar resolution after weeks of deliberation.
Rackham Rep. Wonwoo Lee voted in favor of the resolution to support divestment from fossil fuels.
“As an institution — as the Leaders and the Best — we really, truly have to consider these institutional divestments as a necessary measure to curb climate change,” Lee said.
LSA junior Russ Hayes, an LSA representative, said he doesn’t think divestments are something student government should focus on.
“We’re a student government that ought to be supporting realistic, tangible, impactful resolutions for campus,” he said. “I don’t think the divestment resolution, while well-intentioned, met those goals.”
The issue has also become an issue in the CSG presidential elections. The Divest and Invest campaign endorsed forUM candidates.
forUM, the Defend Affirmative Action Party and the campaign of independent Scott Christopher said they supported divestment from fossil fuels in individual statements. youMICH, however, said that while it supports sustainability, divestment is not the best solution.
“YouMICH supports sustainable efforts on campus through research and clean energy,” the statement read. “However, divestment from the 900 million dollar endowment poses significant monetary risk.”