Stanford University has announced it will not divest its stakes in fossil fuel companies.
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 has now 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 meet these needs, the endowment invests broadly in economic activity around the world. Divestment is rare, and consideration of it is reserved for specific cases in which, among other things, the demonstrated social injury by a company substantially outweighs any social benefits it provides.”
It stated that it has been evaluating Fossil Free Stanford’s proposal for some time, as well as examining the threat of global climate change, and instead of divestment it will now implement “a new climate task force that will solicit new ideas from across the Stanford community addressing climate change”.
The university had established an Advisory Panel on Investment Responsibioity and Licensing (APIRL) to advise the board on whether or not to divest.
“APIRL recommended divestment of companies whose primary business is oil sands extraction, a method that studies have found requires more water, and releases more carbon into the atmosphere, than other forms of fossil fuel extraction,” Stanford said.
“However, Stanford Management Company has advised that the Stanford endowment has no direct exposure to companies whose primary business is oil sands extraction; therefore, there is no action for the Board of Trustees to take.”
In terms of the fossil fuel industry itself, APIRL stated it was unable to effectively evaluate if the social injury caused by the industry outweighed the social benefit it provided, and therefore could not recommend divestment.
“Oil and gas remain integral components of the global economy, essential to the daily lives of billions of people in both developed and emerging economies,” Stanford’s board said.
“Moreover, some oil and gas companies are themselves working to advance alternative energy sources and develop other solutions to climate change. The complexity of this picture does not allow us to conclude that the conditions for divestment outlined in the Statement on Investment Responsibility have been met.”