Investments In the Fossil Fuel Industry

The following summary and recommendations were submitted to the Board of Trustees by the Advisory Committee on Socially Responsible Investing on April 9, 2016, for its consideration:

In the fall of 2014, the Advisory Committee on Socially Responsible Investing (the “ACSRI”) considered several possible next topics, which were submitted to the ACSRI via its email account or to the administration via proposals/petitions, and decided that the topic of fossil fuel divestment was most pressing. During meetings throughout the last 18 months, the ACSRI members have sought to educate themselves, hear others’ perspectives, and explore the topics of climate change, divestment options, investment options, and ways to promote reduction of the University’s carbon footprint. As part of this process, the ACSRI developed and posted related material on its webpage, sponsored five events including four speaker forums and a panel discussion, heard presentations from two faculty groups and one student group as well as from the director of Sustainability@BU and the senior vice president of operations, and received feedback from its student representatives that summarized student perspectives shared during the student listening session (or via the associated electronic site).

In the course of its discussions, the ACSRI decided that it was more compelling to (a) advocate for a broader approach rather than to make only a narrow divestment recommendation, and (b) make a series of recommendations that would seek to ensure that the University would build into every aspect of its future activities a focus on sustainability and reduction of greenhouse gas emissions. Climate change threatens to cause grave social harm through extreme weather events, sea level rise, decreased crop yields, political and economic instability, and negative human health impacts, including the spread of vector-borne illness. Because climate change poses these threats to society at large and is a direct threat to the ability of Boston University to carry out its mission, we believe the University should respond proactively. Therefore, the ACSRI hereby proposes for consideration by the Boston University Board of Trustees the following three recommendations:

(1) To signal the importance of, and the University’s commitment to, the global effort to reduce the human carbon footprint, the University should, within its endowment, prohibit new and divest of any existing direct investments in those companies that (a) continue to explore for new fossil fuel reserves of any kind, since the global fossil fuel reserves are estimated to be larger than the amount that can be used and still remain under the accepted estimated warming limit of 2 degrees Celsius, or (b) extract coal and tar sands, the most carbon-intensive fuels, until, in the University’s judgment, those companies curtail such activities in order to drive their carbon footprint to acceptable levels.

(2) In order to speed up the global effort to reduce the human carbon footprint, the endowment investment office should seek to include managers who specialize and have expertise in renewable energy sources and/or technologies focused on the reduction of greenhouse gas emissions. It is expected that the number of institutional-quality “green” investment products will continue to grow in the future, which will offer an expanding opportunity set for the endowment investment office to consider.

Recommendations 1 and 2 must be undertaken in concert with the requirement to meet the University’s fiduciary duties to its endowment.

(3) In order to increase the University’s commitment to and focus on sustainability across teaching, research, and operations, the University should develop and incorporate into its Strategic Plan a detailed Climate Action Plan (the “CAP”) that should outline specific near, intermediate, and long-term plans and associated goals for markedly increasing:

  1. The amount of energy sourced from green alternative power producers (e.g., solar and/or wind either via the University’s power purchasing arrangements or on-campus installations);
  2. Energy use efficiency to reduce power demand;
  3. Educational opportunities for students to understand climate change, its ramifications, and the need to solve the problem in their lifetimes; and to explore mitigation and adaptation strategies;
  4. The University’s cross-disciplinary coordination and support of research related to climate change, mitigation, and adaptation;
  5. The understanding of all community members (students, faculty, and staff) that their individual choices and actions can have a profound impact on reducing the University’s (and their own personal) carbon footprints; and
  6. The University’s preparation for the possible effects of future climate change on its physical plant.

The CAP should include implementation time frames, associated costs, and funding sources, as appropriate; articulate specific measurable goals with respect to both sourcing greener energy and reducing overall energy demand; and be a living document that is continuously refreshed and updated. Also, given its inclusion in the University’s Strategic Plan, the CAP should be posted publicly on the University’s website and progress with respect to its contents should be regularly reported to the Board of Trustees and the community.

Recognizing that the operating budget is a zero-sum proposition and that preservation of intergenerational equity for endowment distributions is important, the entire community will bear the burden of the compensating operating budget pressures (e.g., reduced student services, employee compensation, financial aid and/or tuition increases). However, the savings generated by the University’s efforts to reduce overall energy demand should partially offset this burden.

Additionally, the ACSRI applauds the University for its current commitment to reduce (a) its carbon emissions by 35% in an additional 4 million square feet of buildings by 2020, and (b) its energy consumption between 2012 and 2017 by 10%. The ACSRI also would like to express its profound appreciation of Sustainability@BU’s important work, past and continuing, with partners across the community to (a) reduce the University’s greenhouse gas emissions by reducing energy demand and increasing energy use efficiency, and (b) educate the community on individual decisions/actions that collectively can make a meaningful difference. Current activities and University goals are presented in the 2015 annual report of Sustainability@BU.

In concluding, the ACSRI would like to thank the faculty for their help with the ACSRI website’s current content, the forum attendees for their interest and active participation, and the faculty and student group representatives for their thoughtful presentations to the ACSRI. The input from these Boston University community members helped the ACSRI to develop and finalize its recommendation to the Board of Trustees. Lastly, the ACSRI would like to express to the committee’s staff and administrative liaisons its appreciation for their support.

The ACSRI’s recommendations were presented to the Board of Trustees at its meeting on April 15, 2016. In accordance with established practice, the recommendations were referred to the board’s Executive Committee for discussion, with further deliberation by the full board at its fall meeting in September 2016.

Trustee consideration of a divestment proposal is guided by certain principles which are set forth here.

An April 2016 BU Today article about the ACSRI’s recommendations can be found here.

At the September 2016 meeting, after considering the recommendations, the Board took actions as described in the following letter to the ACSRI from Chairman of the Board of Trustees Kenneth Feld. The letter can be found here.

A letter to the BU Community from President Brown about these actions can be found here.

A BU Today article about the Board’s actions can be found here.