After eight years of student-led divestment campaigns, the University of Toronto announced earlier this fall it would end its investments in the fossil fuel industry. The move followed similar announcements by other postsecondary institutions, notably Harvard University in September and the University of Waterloo in June of this year. All told, 10 Canadian universities have now committed to full or partial divestment.
“The growing severity of the climate crisis now demands bold actions that have both substantive and symbolic impact,” U of T president Meric Gertler said in a statement from the university announcing the divestment. Months earlier, he had rejected doing so, saying “divestment is such a simple solution to a very, very complicated problem.”
Leaders at the helm of a huge and growing number of organizations are having a similar change of heart. Some 1,500 asset managers in the global finance industry, who oversee a combined $39.2 trillion, have committed to offloading their holdings in fossil fuel companies. This includes Canada’s second-largest pension manager, Caisse de Dépôt et Placement du Québec. At the recent United Nations Climate Conference of the Parties (COP26) in Glasgow, financial institutions representing up to $130 trillion in private capital said they were committed to decarbonization.
‘Poor financial investment’
Divestment, particularly for a leading institution like U of T, is “all about making a bold, public statement” said Evelyn Austin, a member of the school’s student-faculty-staff coalition Divestment and Beyond and student-activist group Leap UofT. “It’s not really about fossil fuels being a poor financial investment.”
Like nearly all postsecondary institutions, only a small percentage of U of T’s $4 billion endowment was invested in fossil-fuel companies. Those companies have been a poor investment for the past 10 years, according to the Ohio-based Institute for Energy Economics and Financial Analysis. A recent report commissioned by New York City also found that investment performance was neutral or better following divestment.
The student-led divestment movement began in the United States around 2010. Two years later, Unity College in Maine became the first to announce it would divest. Oxford, Cambridge and more than half the public universities in the United Kingdom have since done likewise, along with major U.S. schools including the University of California, the University of Michigan and Harvard.
Thousands of students have been involved along the way, learning practical lessons about public engagement, finance and politics. “I hear often from students that it’s been one of the most educational parts of their university careers,” said Bill McKibben, a leading voice on fossil fuel divestment, co-founder of international environmental organization 350.org and bestselling author. Many of those students have gone on to do great things, said Mr. McKibben. Varshini Prakash, who organized a successful divestment campaign at the University Massachusetts, went on to co-found The Sunrise Movement that helped U.S. President Joe Biden get elected. Chloe Maxmin, who founded the divestment campaign at Harvard, is now a state senator in Maine.
Which schools have pledged full or partial divestment?
- February 2017 – Université Laval
- November 2017 – Université du Québec à Montréal
- November 2019 – Concordia University
- December 2019 – University of British Columbia
- April 2020 – University of Guelph
- November 2020 – Lakehead University
- February 2021 – University of Victoria
- June 2021 – University of Waterloo
- October 2021 – University of Toronto
- November 2021 – Simon Fraser University
Divide between students and boards
Polls consistently show Canadians, and particularly youth, are increasingly worried about climate change. Ms. Austin attributes Canadian universities’ reluctance regarding divestment to ties between key decision-makers and fossil fuel companies as well as those in related sectors like mining, banking and finance. Canada’s Big Five banks are major financiers of fossil fuel projects, with Royal Bank of Canada being the fifth largest in the world, she said. (Ms. Austin is currently project manager at Banking on a Better Future, a youth organization.)
The curriculum vitae from university boards of governors often reveal those direct or indirect ties. One example is McMaster University’s board chair, Bradley Merkel, a former senior executive at Imperial Oil and ExxonMobil who continues to live in Houston.
“Students, faculty and every organization at Mac endorse divestment, but it still hasn’t happened,” said Adeola Egbeyemi, a fourth-year arts and science student and member of the student organization MacDivest. “Students are ashamed of this inaction.” Even though the university’s president, David Farrar, supports divestment, Ms. Egbeyemi said, there’s been little engagement or dialogue with the board. Its members met a day after the U of T’s announcement, and decided they would not be following suit.
Wealthy and powerful actors – including multinationals, fossil fuel and mining companies, electric utilities and heavy manufacturers – “have a vested interest in slow-walking action on climate change,” said Jessica Green, a political scientist at the U of T. Through political processes and behind the scenes, they’re fighting to maintain the value of their assets, she said.
The fossil fuel industry has successfully pushed a kind of “petro-nationalism” that equates the national interests of Canada with its own, said James Rowe, an associate professor of environmental studies at the University of Victoria. The industry has a very powerful political lobby as well as direct and indirect connections with universities in Canada, he said.
Dr. Rowe’s own institution – a self-proclaimed global leader in sustainability – is also slow-walking divestment, he said. A student-faculty divestment effort started there eight years ago, and this year UVic moved some of its investments into a fossil-free fund. More recently, the UVic Foundation that manages the university’s endowment committed to reducing the “carbon intensity of their portfolio by 45 per cent by 2030.”
The counter-argument to divestment is that shareholder engagement is a better strategy. But that’s been very ineffective, Dr. Rowe said. A recent analysis by Dr. Green and three colleagues found that between 2005 and 2018, fossil fuel companies’ invested no more than 0.1 per cent of their revenues in renewable energy.
“We’re seeing accelerated impacts of climate change,” said Dr. Rowe. “The science is clear. We need fossil fuel companies to stop producing fossil fuels, period.”