Letter for Petition

NC Reinvest Coalition

2018

Institutions of higher education provide an environment where learning, debate, and innovation are allowed to flourish. However, the values of educational institutions are compromised because an industry that threatens the future of our climate subsidizes them. Efforts by universities to create sustainable initiatives and reduce greenhouse gas emissions fall short when fossil fuels invest in those same institutions. Fossil fuel divestment is the next step for The University of North Carolina System to reclaim its role as an institutional caretaker of our future. The North Carolina Reinvest Coalition seeks to address The UNC System’s investment in fossil fuels based on ethical and fiscal responsibility. We are made up of students and faculty from fourteen North Carolina universities, and we ask that the UNC System set a finite time frame to reinvest endowment funds currently invested in fossil fuels and reinvest in environmentally and financially responsible alternatives.

 According to scientific and academic consensus, fossil fuels increase the rate of climate change, which is causing unprecedented damage to the stability of nations, economies, and environments around the world. Effects of climate change are already apparent in food production, water availability, air pollution, and the emergence and spread of infectious diseases. Extreme weather will increase costs and dangers on UNC campuses, local ROTC students may be called in to combat climate-related crises, and future students will experience flooding, drought, and sea-level rise. The World Health Organization estimates that by 2030, climate change will cause approximately 250,000 premature deaths worldwide each year.[1] The Lancet Commission on Health and Climate Change argues that climate change is a “catastrophic risk to human health” and threatens to “undermine the global health gains achieved during the past half-century.” [2]

Globally, commitments to fossil fuel divestment from faith-based, educational, and governmental institutions have risen to $6.15 trillion.[3] Cities around the world, from Berlin, Paris, New York City, and Boone, North Carolina are committed to divesting from fossil fuels. Nationally, large educational institutions like the University of Maryland and the University of Massachusetts have committed to full fossil fuel divestment, while others like Yale, Harvard, and the University of California system have committed to partial divestment.[4] In North Carolina, Warren Wilson College[5] and Brevard College[6] have divested from fossil fuels, and the Board of Governors at UNC Asheville began the process of finding a new management company for their endowment in 2018. UNC Asheville has submitted a Request For Proposal to multiple companies due to the unwillingness of the UNC Management Company to remove funding from fossil fuel investments.[7] The UNC System can set a positive example and lend impetus to national change by reinvesting money into funds that protect both the UNC System’s long term financial portfolio and the long term stability of our environment. As of 2018, fourteen campuses in The UNC System invest $5.4 billion of endowment funds through the UNC Management Company. Although the UNC Management Company acknowledges the importance of renewable energies in annual reports, it invests 5.4%, or $307 million in fossil fuel energy, while it only invests $19.5 million in renewable energy.[8]

Divestment is not only an act of ethical and environmental responsibility but one of fiduciary duty as well. For the past decade, fossil fuels consistently have underperformed other asset classes, signaling a structural change in the field of energy. As fossil fuels comprise only a small percentage of the UNC System’s endowment portfolio, it is unlikely that the removal of these investments will damage returns.[9] If investment in energy is an essential element of diversification in the UNC System endowment portfolio, investing in renewable energy is an alternative that provides less volatility and more reliable returns.[10] The U.S. Energy Information Association calculates that even unsubsidized renewable energies already have the most favorable cost characteristics, and are projected to naturally overtake both nuclear and coal generation in the next decade in total electricity generation.[11] Although the vast majority of North Carolina’s electricity generation comes from fossil fuel-based sources, North Carolina is rapidly becoming a leader in renewable energy; as of June 2018, North Carolina has the second-most installed solar capacity in the nation.[12] Endowments typically are invested in long term index or mutual funds, so funds that take the UNC System values into account are an available option. Sustainable and Responsible Investment (SRI) and Environmental, Social and Governance funds (ESG) incorporate environmental, social and governance factors in their investment processes, and are highly competitive to conventional mutual funds that include harmful industries.[13] Several studies, including one by S&P Capital I.Q., indicate that over the last ten years, an endowment reflecting the S&P 500 without fossil fuel companies would have outpaced one with them. [14]

Although shareholder resolutions or shareholder advocacy could be considered an alternative for divestment, The UNC System is far from an industry majority shareholder, therefore not able to exert effective change through retaining stock. The goal of divestment is not to eliminate industries, but to raise public awareness and change corporate attitudes. As demonstrated during South African Apartheid, when U.S. Universities divest for humanitarian and ethical reasons, dramatic change follows.[15] Leading the charge on unjust or ethically irresponsible investments, American Universities have long been forces of societal change, and removing funding from fossil fuel industries is the natural next step for the UNC System. Recent pronouncements from authoritative figures in financial and international institutions support our call for action.

“Investment that considers sustainability isn’t about changing the world- it’s about understanding how the world is changing.” –Mercer Consulting.[16]

“Divestment is speeding up the clock on the final accounting that will show fossil fuels are out and clean energy is in.” -Lou Allstadt, former Vice President of Mobil Oil.[17]

“It’s clear the transition to a clean energy future is inevitable, beneficial and well underway, and that investors have a key role to play.” – Ban Ki Moon, Former Secretary General of the UN.[18]

“Global climate change will aggravate problems such as poverty, social tensions, environmental degradation, ineffectual leadership and weak political institutions that threaten stability in a number of countries.” – US Department of Defense, 2015.[19]

“The continued and dangerous rise in greenhouse gases in the atmosphere is in large part the direct result of past investments in energy and mobility systems based on the use of fossil fuels. New investments must now assist in reversing this unsustainable trend, and quickly if the world is to have a chance of staying under a 2 degree Celsius temperature rise.” – Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change. [20]

The North Carolina Reinvestment Committee is made up of students and faculty across fourteen North Carolina Universities, and we are asking for your support in convincing the UNC System to reinvest funds.

We, the undersigned, are students, faculty, administration, and citizens who are urging the University of North Carolina System to support societal progress on the issue of climate change by reinvesting financial holdings in fossil fuels. We appeal to our colleagues, alumni, and fellow citizens that, as an act of ethical and fiscal responsibility, we ask the UNC System to set a deadline to reallocate these investments in the fossil fuel industry.

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[1] “Climate Change and Health,” World Health Organization, http://www.who.int/news-room/fact-sheets/detail/climate-change-and-health, 2018 (Accessed May 27, 2018)

[2] Nick Watts et al., “Health and climate change: Policy responses to protect public health,” The Lancet, 2015

[3] “Overview: Commitments,” Go Fossil Free, https://gofossilfree.org/divestment/commitments/, (Accessed July 4th, 2018)

[4] “Overview: Commitments,” Go Fossil Free

[5] “Warren Wilson College’s Commitment to Environmental Sustainability 2015-16,” Warren Wilson, October, 2015, https://www.warren-wilson.edu/wp-content/uploads/2017/08/environment-achievements-v4.2.pdf

[6] “Brevard College Commits to Fossil Fuel Divestment,” Brevard College, February, 2015, https://brevard.edu/brevard-college-commits-to-fossil-fuel-divestment/

[7] Annabel Gibson, “UNCA Divest petitions against fossil fuels on campus,” The Blue Banner, April 25, 2018, http://thebluebanner.net/unca-divest-petitions-against-fossil-fuels-on-campus/

[8] “Fiscal Year 2017 Annual Report”, UNC Investment Fund LLC, https://uncmc.unc.edu/files/2018/01/UNCIF-FY2017-AnnualReport.pdf

[9] “MSCI ACWI Ex Fossil Fuels Index,” MSCI, June, 2018, https://www.msci.com/documents/10199/d6f6d375-cadc-472f-9066-131321681404

[10] Adam Vaughan, “BP aims to invest more in renewables and clean energy,” The Guardian, February, 2018, https://www.theguardian.com/business/2018/feb/06/bp-aims-to-invest-more-in-renewables-and-clean-energy

[11] , Linda Capuano, “Annual Energy Outlook 2018,” U.S. Energy Information Administration, 2018

[12] “Solar Spotlight- North Carolina”, Solar Energy Industries Association, https://www.seia.org/states

[13] “S&P 500 Fossil Fuel Free Index, S&P Dow Jones Indices, https://us.spindices.com/indices/equity/sp-500-fossil-fuel-free-index (Accessed June 25, 2018)

[14] Tom Zeller, “Fossil Fuel Divestment: Smart Bet or Losing Strategy?” Forbes, February 2015, https://www.forbes.com/sites/tomzeller/2015/02/10/fossil-fuel-divestment-smart-bet-or-losing-strategy/#7930ddfc29b4

[15] Robert Edgar, Sanctioning Apartheid (Trenton, NJ, Africa World Press, 1990), p. 67-91

[16] An Investment Framework for Sustainable Growth, Mercer, June 2014

[17] Susan Gately, “Ireland’s lead on Divestment will inspire other countries,” Catholic Ireland, January 27, 2017, https://www.catholicireland.net/ireland-lead-on-divestment-will-inspire-other-countries/

[18] Damian Carrington, “Value of investment funds committed to selling off fossil fuel assets jumps to $5 trillion,” Business Insider, December 14, 2016, http://uk.businessinsider.com/fossil-fuel-divestment-funds-5-trillion-dollars-2016-12

[19] “DoD Releases Report on Security Implications of Climate Change,” US Department of Defense, July 29, 2015 https://www.defense.gov/News/Article/Article/612710/

[20] Matt McGrath, “Get your cash out of fossil fuel backed funds says UN climate chief,” BBC, January 15, 2014, https://www.bbc.com/news/science-environment-25743457