UD touts move away from fossil fuel investments

Critics say divestment policies are expensive, symbolic.


Divest/Invest Conference

What: Acting on Pope Francis' Call: Divestment and Investment in Care for Our Common Home

When: Thursday-Saturday

Where: University of Dayton River Campus, 1700 South Patterson Blvd.

Cost: $250 for individuals, $120 for students. Registration begins at 5:30 p.m. Thursday.

Keynote: Stephen Colecchi of the U.S. Conference of Catholic Bishops, 6:45 p.m. Thursday (this talk is free, open to the public)

More info: www.udayton.edu/artssciences/

The University of Dayton’s decision to stop investing in fossil fuel holdings will be among the topics highlighted this week at an on-campus conference designed to build support for the movement.

UD was the first Catholic university to divest in fossil fuels, which previously made up about 5 percent of its long-term investment pool of nearly $700 million.

The university is one of 460 institutions worldwide that have committed to divest, according to 350.org, which launched the movement three years ago to put pressure on big oil and coal companies.

“UD took a leadership position; it’s important to have integrity around your mission and your beliefs,” said George Hanley, a member of the UD board of trustees and president of TFH Partners, an investment management company in Chicago. “This is a movement that has got a lot of momentum.”

Hanley and his wife, Amanda, donated $12.5 million to UD last year to help create the Hanley Sustainability Institute, one of the conference organizers. UD touts the event as a “how to” for institutions interested in divesting.

Hanley will be a speaker at the conference, which begins Thursday at UD’s River Campus with a keynote address by Stephen Colecchi of the U.S. Conference of Catholic Bishops. That talk is open to the public and begins at 6:45 p.m.

UD interim provost Paul Benson said the university stopped investing in the world’s top 200 coal and oil and gas companies that have the most untapped fossil fuel reserves. Giant companies such as ExxonMobil, BP and Chevron are on that list.

“All of us are dependent on oil and natural gas, we know that,” Benson said. “But if there’s a way we can use our own investment strategy to foster development and support for new energy technologies, we feel that’s a good reflection of our core values.”

Losing money?

Critics of fossil fuel divestment says universities will lose millions by taking a stance that is largely symbolic.

A widely cited paper published in August by Brad Cornell, a visiting professor of financial economics at the California Institute of Technology, predicts that the value of a divested portfolio will be 23 percent lower than a non-divested portfolio over the next 50 years.

“Divestment, other than its symbolism, has no benefit,” Cornell said last week. “Even if you could punish the oil companies by lowering their stock prices, which quite frankly is unlikely, if their cost of capital rises they’re going to cut their marginal products — things like alternative energy products, not their core business, which is producing carbon fuel.”

Hanley supports UD’s strategy.

“That report is just outright false,” he said. “First off, does (Cornell) have a crystal ball? The whole thing about the reasons not to divest, they’re all very weak for anyone who understands the financial industry.

“Yes, it takes work, but there’s a big reward if you can be impactful with your investing and make a market return.”

Hanley and Benson both referenced Pope Francis’ encyclical on the environment, a letter that was written earlier this year.

“When you look at what the pope said, it says we really have to be mindful of how we invest our dollars,” Hanley said. “Some people think that the fiduciary duty is to make money at any costs. I think it’s to be mindful how you’re making that money.”

Cornell’s work, entitled “The Divestment Penalty,” was commissioned by the Independent Petroleum Association of America.

“If you believe global warming is a serious problem, then divestment is not the issue,” Cornell said. “Divestment makes it look like the problem is the people producing fuels. It’s not; it’s people consuming fuels, namely us.”

‘Performing well’

Benson said UD’s current portfolio is performing well compared to what it would look like if it included companies that produce fossil fuels.

“There are actually some areas where we’ve seen some gains,” he said. “But we realize over the long haul we’ll see some years where our divested portfolio will perform a little less well than our previous portfolio. We’re content if they track essentially on a similar trajectory.”

Benson said UD’s decision to divest was studied “for well over a year.” Other universities that have divested from fossil fuels include Stanford, Georgetown and Syracuse. Cities that have committed to the movement include San Francisco, Minneapolis and Ann Arbor, Mich.

“It’s difficult to predict the net economic impact this may have on various fossil fuel companies, but certainly when one sees the growth over the past year I’d say there’s an increasing probability this will have some practical impact on the fossil fuel industry,” Benson said.

The conference will conclude Saturday and will feature speakers from universities across the country, including a panel of students from Notre Dame, Georgetown and Boston College.

“There’s no better place on earth to be hosting that conference,” said Bill McKibben, a noted environmentalist and founder of 350.org. “The University of Dayton is the first big Catholic institution I know of that really buckled down and took this question seriously.

“They were listening to what the Pope was saying even when he was saying it quietly.”

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