USC halts fossil fuel investment
USC will halt making new investments in fossil fuels and will begin liquidating current investments in an effort to make sustainability a priority, the University announced in a news release Wednesday.
The decision comes after a Feb. 4 vote from the USC Board of Trustees Investment Committee and efforts by faculty, staff, student groups including DivestSC and student governments urging the University to divest its $277 million in fossil fuel investments — 5% of the $5.5 billion endowment.
“Going forward, our new investment policies reinforce USC’s commitment to generate strong returns while also upholding USC’s values, including sustainability,” Chief Investment Officer Amy Diamond said in the press release. “We see this approach as a way to grow our portfolio and support clean, new technologies for the 21st century.”
USC’s decision to phase out fossil fuel investments also followed ongoing climate concerns and the possibility of a reduced demand for fossil fuels as the sector becomes unattractive with governments and corporations investing in renewables and businesses combating climate change, Diamond said in an interview with the Daily Trojan.
“We’re very excited about increasing our efforts to identify attractive investments in funds or strategies that are looking to tackle climate change,” Diamond said. “The important thing is that we’ll be looking for investments that have attractive investment returns. And so, you will see us making more investments.”
According to the press release, USC has not made fossil fuel investments for the last two years. However, the liquidation process will take several years as investments are “primarily in long-dated private partnerships” and “illiquid in nature.”
Pleased by the recent announcement, DivestSC co-founders Nathaniel Hyman and Tianna Shaw-Wakeman said they were shocked, not by USC’s plans to freeze and liquidate their fossil fuel investments, but by the University’s fast-paced nature in implementing this sustainability effort.
“It shows a clear intention and a sense of purpose that they’re doing this, not just because it’s the financially healthy thing to do but because it’s the ethically healthy thing to do,” said Hyman, who is also one of the co-chairs for DivestSC. “It’s great that this is happening. We’re not under the impression that our work is done yet; we recognize that there’s going to be a process, a process by which students and faculty will need to be involved to ensure transparency and robustness or thoroughness.”
For Shaw-Wakeman, the decision shows future commitment to taking action, including the large amount of money to be diverted to green technology and renewable energy and USC’s change as an institution more focused on sustainability, equity and their “responsibility to the wider world.”
However, after months-long efforts of urging the University to divest that included protests, campaigns and various meetings with President Carol Folt, the Investment Committee and the former CIO, Shaw-Wakeman also said the decision also displays the efforts of the student activists involved. Working to solve difficult issues, such as climate change at USC, can feel like a “consistent uphill battle as students,” she said — but added that seeing the efforts pay off was inspiring.
“When you do find out that things are changing, and it’s certainly somewhat related to efforts that you worked on with your fellow students; it feels like other things are possible,” Shaw-Wakeman said. “You revel in the moment, and you think about how amazing it is that advocacy and activism actually works and that it really does yield change that is needed in our world.”
Hyman said the significance of the University committing to divesting all of its endowment in the future is “fairly massive,” as USC is the second largest private university in the United States to divest from fossil fuels — Columbia University being the first — and will set a precedent for other schools to follow. Shaw-Wakeman said this was particularly impressive due to the size and esteem of the USC endowment.
“The actual significance of the move will lead to the ripple effects of a lot of other institutions, hopefully doing the same thing, us being one of the many institutions who have done it,” Shaw-Wakeman said. “And then of course, the actual act of moving funds from the fossil fuel industry into more responsible energies that are going to hopefully help our endowment grow, that are going to be a part of us fighting climate change, that are going to be a part of our futures.”
The University will also create an Advisory Committee on Investment Responsibility to review ethical and social concerns and advise the Investment Committee on issues regarding endowment investments. Set to start Fall 2021, the committee will consist of faculty, students, alumni and staff who will report directly to the president, Diamond said.
“I am very pleased with the decision made by the Investment Committee and look forward to working with the advisory committee on investment responsibility,” said Folt in the press release. “This is the right action for USC.”
According to Victoria Petryshyn, assistant professor of environmental studies, the move means that the money being invested into fossil fuels can now be targeted toward other sustainable renewable energy.
“I think it’s a great optics move,” Petryshyn said. “It does send a message when a place like Harvard or Stanford, some place with an enormous multibillion dollar endowment says we are no longer going to invest in fossil fuel corporations.”
Petryshyn added that while USC has not known in the past what to do in regard to sustainability, having Folt who has a background in environmental sciences means that a lot of conversations regarding sustainability that weren’t previously considered can now take place.
“We’ve been very behind other universities for a long time,” Petryshyn said. “We had like one person in the Office of Sustainability and … you look at what other major universities are doing and you’re like ‘wow this is embarrassing.’ But now, I mean Carol Folt is serious about it.”
The Undergraduate Student Government Senate passed a resolution in support of DivestSC in mid-November that called for University administrators to reinvest these funds in clean technologies and renewable energy.
“This is an example of administration, refining what our mission is, refining what values we all have and making sure that action and money … is in alignment with those values,” USG President Gabe Savage said. “I’m thrilled that the University has made this decision not just thinking about money, but thinking about the morality of it and the ethical implications of how the University spends its money.”
The decision is part of USC’s environmental eight-year master plan for “ambitious sustainability goals.” The University’s environmental efforts have up until now included initiatives such as employee discounts for bus and rail passes, solar panels installed at the Galen Center and their Urban Forest Project in partnership with the city of Los Angeles.
Twesha Dikshit, Ana Mata, Shaylee Navarro, Cari Spencer and Kacie Yamamoto contributed to this report.