La Trobe to divest from fossil fuels

La Trobe University plans to completely divest from fossil fuel related companies, the first to divest fully in Australia.

According to the university, it will carry out its divestment over the next five years and “commit to greater transparency on the carbon footprint of companies held in its investment portfolio.

“We are committed to divesting from the top 200 publicly-traded fossil fuel companies ranked by the carbon content of their fossil fuel reserves within five years,” La Trobe University vice-chancellor professor John Dewar said.

“In addition, we will disclose the carbon exposure of our investments and provide annual reports of our divestment progress over the next five years.

“We will do this with clear and realistic targets to achieve our desired return on investment of CPI plus four per cent per annum.”

La Trobe CFO Gary Seach explained the university used pooled funds rather than self-managed funds, as it only has a relatively small investment portfolio compared to other universities.

“While the size of our funds does not allow La Trobe to have an individual mandate over any particular stock held within that pool, we are working proactively with new investment manager to reduce the carbon exposure of our investments and to identify or develop funds to ensure full divestment from the top 200 fossil fuel companies over time,” Seach said.

The university follows in the footsteps of ANU, Sydney University, and the University of Maine which all pledged to exit from fossil fuel stocks to some degree.

Sydney Uni announced it will work towards reducing the carbon footprint of its listed share portfolio over the next three years, however this does not include a wholesale exit from fossil fuels.

“The decision follows a comprehensive review taking into account leading practice on sensitive investments, and the current global views and actions surrounding fossil fuel investments,” the University said in an official announcement.

The review included examining whether it should divest entirely from the fossil fuels industry.

At the same time the University of Maine announced a decision to completely divest its stakes in coal mining companies.

The university released a statement which said the decision was made based on “potential costs of climate change, the steady decline of coal as a non-renewable resource and the emergence of new green technologies”.

The university also said it would consider divestment from fossil fuels across the board.

Fellow Australian educational facility ANU last year carried out a divestment plan, stating its intention to exit from fossil fuels.

However questions arose as to the criteria of many of those companies chosen for divestment.

At the time ANU vice chancellor Ian Young, who has since announced his retirement, stated that “[ANU] should not invest in companies that cause social harm,” adding that the companies in question were “not socially responsible and doing harm”.

The achievement of persuading the ANU to divest from companies that profit from fossil fuel was regarded as a great success by the student collective Fossil Free ANU (FFANU), however of the companies divested only two fell into that category: Santos and Oil Search.

Since that time ANU has received a significant backlash, as has the consultancy firm – CAER- upon whose research ANU’s ‘socially harmful’ divestment decision was based.

However Stanford University has bucked the trend, announcing it will not divest its fossil fuel holdings.

The university’s board of trustees had formerly pledged to divest its coal mining company stocks that lay within its US$18.7 billion worth of holdings.

At the time the group said it had acted within its own guidelines on investments regarding whether “corporate policies or practices create substantial social injury”, after pressure from student group Fossil Free Stanford.

The decision was expected to affect around 100 companies.

However the university’s board of trustees then reversed its decision.

“The trustees have concluded that Stanford’s endowment will not divest, based on a review of criteria in the university’s Statement on Investment Responsibility and input from the Advisory Panel on Investment Responsibility and Licensing,” it said in an official statement.

The board explained that its investments fund critical functions at the university and represents the largest source of funds for the organisation, twice as large as Stanford tuition.

 

 

 

 

 

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.