URBANA — As young activists marched around the globe for action on climate change, University of Illinois students this week continued their 10-year-old campaign to end the UI’s investments in fossil fuels.
Two students representing campus environmental groups urged UI trustees to freeze those investments and divest from the top 200 publicly traded fossil-fuel companies over the next three years. Fuels like coal and oil emit carbon dioxide when burned, a reaction that gets part of the blame for climate change.
While the university made no promises, administrators are researching how they can use the wealth of data now available about companies’ environmental, social and governance practices to inform investing decisions, a UI official said Friday.
That’s partly a response to a state law that takes effect Jan. 1. The “Illinois Sustainable Investing Act” (Public Act 101-0473) requires public bodies to consider factors such as corporate governance and environmental and social impact in their decisions on how to invest public funds.
The act says it’s designed to “maximize anticipated financial returns, minimize projected risks, more effectively execute fiduciary duties, and contribute to a more just, accountable, and sustainable State of Illinois.”
Over the last decade, various constituencies have pressed universities and other institutions to consider environmental and social issues in their investment practices.
Asset managers have access to “much more robust” information today about corporate governing boards, environmental practices and how companies treat their workers than they did 10 years ago, said Peter Newman, the UI’s associate vice president for treasury operations.
“That may lead us to a solution that allows us to address environmental, social and governance concerns” and still earn a good investment return on the UI’s endowment, he said.
Officials have said the university and its foundation do not invest directly in any coal or oil companies, as almost all stocks are held through externally managed, low-cost market index funds. A 2015 report found only about $5.1 million was invested indirectly in coal through those index funds, a tiny share of the university’s total endowment.
The UI Board of Trustees would make the ultimate decision on any significant changes in investment allocations, Newman said.
But Newman and investments director Geri Melchiorre are looking into how to balance various concerns, comply with the new law and protect the UI’s investment, he said.
“I think there’s an environment right now where there’s a solution that, it’s not going to make everybody happy, but could move into the direction a lot of stakeholders are concerned about,” he said.
UI senior Cheyenne Wendell, president of UIUC Fossil Free, argued that the move would make environmental and financial sense.
“If not for us or your children or your grandchildren or for the future of this earth, do it for your money,” Wendell said while addressing trustees Thursday in Urbana.
She cited the recent attack on Saudi Arabia’s oil fields and pipelines, which caused oil prices to spike, as well as the University of California system’s decision this week to make its $13.4 billion endowment and $70 billion pension fund “fossil free.”
Two Cal system officials — Jagdeep Singh Bachher, chief investment officer and treasurer, and Richard Sherman, chairman of the Board of Regents’ Investments Committee — wrote in the Los Angeles Times that they believe “hanging on to fossil fuel assets is a financial risk.”
“The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for UC’s diversified portfolios,” they wrote.
At the UI, trustees Chairman Don Edwards — CEO of Flexpoint Ford, a private equity firm — declined to comment on the demands from Wendell and UI sophomore Veronica Casey after Thursday’s meeting.
Newman offered to meet with the students later this semester once the UI’s study is complete.
“We don’t have the perfect solution yet, but we’re working on it,” he said.
Wendell called that “a step in the right direction,” but said she would still like to see the UI freeze its fossil-fuel investments now while it considers longer-term moves.
UI students starting pushing the school to divest from coal companies in 2009, an idea supported in various student votes over the years. The campus Academic Senate also endorsed the move in a 2016 vote. The campaign has since broadened to include other fossil fuels.
The combined endowment held by the university and its fundraising arm, the UI Foundation, totaled $3.7 billion in June 2018 with about $2.73 billion actively invested. Current amounts for indirect investments in coal or oil companies were not available Friday.
More than 1,000 UI students, high school students and others marched around the university Friday as part of a global “climate strike,” passing by numerous UI classroom buildings before meeting for a rally at the Alma Mater, where they urged government leaders to take action to support clean-energy jobs, sustainable agriculture and biodiversity protections, among other goals.
The march at one point stretched the length of the Quad and beyond, with students chanting, “No more coal, no more oil, keep the carbon in the soil” and “Climate change is not a lie, we won’t let our planet die.”
Robin Feller of Urbana brought her 4-year-old daughter, Hazel.
“Our world is too dependent on fossil fuels; it’s time to make a switch. We’re killing our planet,” she said.