The University of California announced on May 19 that it has completely divested from fossil fuels, making it the largest university system in the nation to have made the decision to do so.
In divesting from fossil fuels, the University of California (UC) has sold off over $1 billion in assets from its “pension, endowment and working capital pools,” while simultaneously meeting its five-year goal of investing $1 billion into renewable energy development, according to a press release from the UC Office of the President.
The UC’s renewable energy investments have contributed to the development of 9.2 gigawatts — or the equivalent of 3,790 wind turbines — of renewable energy capacity around the world, according to the press release.
“Sustainable climate solutions and sustainable investing are more important than ever, especially given the challenges we face in a world altered by COVID-19,” UC President Janet Napolitano said in the press release.
The UC environmental, social and governance (ESG) policy, which began in 2015, requires the UC to consider the three factors when considering investments, UC Chief Investment Officer Jagdeep Singh Bachher said in the press release. Both the decision to divest from fossil fuels and invest in renewable energy were made under this policy, according to the press release.
“We believe the university and its stakeholders are much better served by investing in promising opportunities in the alternative energy field rather than gambling on oil and gas,” Richard Sherman, chair of the UC Board of Regents’ Investments Committee, said in the press release.
Bachher also noted in the press release that the journey to divestment took a significant step when the UC sold off its investments in coal and oil sands one year after the UC Investment Office adopted the ESG policy.
In response to concern from investors about the coronavirus pandemic’s effect on fossil fuel stock prices, Bachher said in the press release that the UC’s divestment represents an important turning point.
“While we certainly could not have predicted the speed nor depth of the recent downturn in the traditional energy sector, signs point to a structural shift — not merely another cycle of boom or bust,” he said.
Bachher also said in the press release that the “lowered demand and oversupply” of fossil fuels “could portend an even longer price drought in oil and gas” as the world recovers from the pandemic.
Going forward, the UC investments team is committed to growing its investments in sustainable practices such as renewable energy, waste conversion, sustainable agriculture and technology associated with these goals, the press release stated.