With COP26 just days away, while most UK universities have voted to divest from fossil fuels, pressure increases on the remaining 40 per cent to follow suit.
A seismic shift has occurred in the divestment movement in recent weeks. It started in September when Harvard University, the world’s richest university, announced plans to divest its $42 billion endowment fund from fossil fuels.
A few weeks later Aberdeen University, Europe’s premier university for petrochemical studies, which historically has been deeply connected with oil and gas money, similarly voted to divest. These particular announcements have resonance well beyond the higher education sector, signaling that fossil fuels are no longer necessary, viable or acceptable investments.
For the remaining minority, there appears to be little reputational or financial upside to continued fossil fuel investment.
The science is now clear, fossil fuel use needs to fall by about 3% each year between now and 2050 in order to give us a 50% chance of staying within 1.5. According to Carbon Tracker, our carbon budget for staying within this limit is 540 GtCO2 and given that we are emitting about 41.5 GtCO2 globally per year, time is of the essence.
We currently have far more oil, coal and gas reserves than we can safely burn, and the fossil fuel industry is projecting significant expansion in the medium term. Even industry bodies such as the IEA concur that new fossil fuel expansion needs to stop now, this year.
Many fossil fuel companies have set net zero targets by way of demonstrating their engagement with the climate crisis. However, Dr Ellen Quigley who wrote Cambridge universities landmark 2020 paper on divestment, says that these kinds of targets are irrelevant if companies’ actions do not align with a 1.5C trajectory. The trajectory we are on globally currently is taking us towards 2.7C of warming according to the UNFCC.
Time to divest
The fossil fuel divestment movement arose as a response to fossil fuels companies lack of accountability and serious engagement with the threat they pose to our climate. Divestment involves selling assets connected to fossil fuel companies.
Selling non-share asset classes such as bonds impacts fossil fuel companies by limiting capital available for expansion. Another primary aim of divestment is to help remove the social license for fossil fuel companies to act with impunity. With trillions of dollars currently earmarked for divestment by institutions, private investors, sovereign wealth funds and pension funds it is a campaign that has increasingly broad support across society.
Whereas in the early days of the campaign, moral concerns predominated, now financial arguments and fiduciary duty are central to the issue. Returns from investments in renewables have been seven times greater than returns from fossil fuel investments over the last decade. Furthermore, with each regulatory shift, the threat of stranded assets increases, making the financial argument for staying invested in fossil fuels increasingly precarious.
Getting in early
The higher education sector was a relatively early adopter of fossil fuel divestment with a majority of UK universities having now adopted divestment pledges, including all but two Russell Group Universities. In addition to undertaking divestment and positive reinvestment of released funds into the green transitional economy, many universities have exceeded initial targets completing divestment ahead of schedule for examples, The University of Edinburgh and Kings College London.
COP26 has been one motivational factor, as has increasingly vocal student bodies. Laura Clayson, Campaigns Manager at People and Planet says that UK students are displaying sustained commitment on the issue of divestment. She gives the example of Aberdeen University where a number of student cohort groups ran and then handed over the campaign to successive students over an eight-year period in order to secure a win.
She has witnessed the impact of increased visibility connected to COP26 which she feels is bringing even more energy into the student divestment movement and says that “for those universities yet to divest it’s now a question of when rather than if.”
Students want to feel proud of their university, but it can be particularly difficult to feel proud of a university that may teach climate science, produce research or be involved in environmental dialogue more widely, while continuing to profit from the fossil fuel industry. Students feel that universities should be helping prepare them for their future lives, not perpetuating an industry that endangers those future lives.
Attitudes to historical university funding from sources such as slavery should serve as an indication of how profiting from oil, coal or gas will be judged in the future. COP26’s focus on climate finance may serve as a wakeup call for any universities who have not yet divested. For those institutions who want to be considered climate leaders or who are concerned with their academic reputation or fiscal viability, it is past time to ditch fossil fuel investments.