CU Regents consider divestment from fossil fuels following public pressure

Oct. 12—More than 100 people, largely students, have visited University of Colorado Board of Regents meetings over the past few months demanding that the CU system divest from fossil fuels.

About 3% of the CU system's investments are in the energy sector, including oil and gas. CU has no direct holdings in any companies per state statute.

On Wednesday, the University of Colorado Board of Regents finance committee heard two presentations about withdrawing the system's investments away from fossil fuels.

There were two opposing viewpoints presented. Tom Sanzillo, the director of financial analysis at the Institute of Energy Economics and Financial Analysis, spoke in favor of divestment from fossil fuels and made a financial case for it. Nick Loris, vice president of public policy at C3 Solutions, argued divestment is ineffective and counterproductive.

Sanzillo presented data to show that fossil fuels have underperformed in the stock market for a decade and have a negative long-term financial outlook.

He said this decline in performance is due to changes in competition among producers of fossil fuels, competition from new technologies and a lack of preparation to navigate the energy transition.

Because of this, Sanzillo argued, investments in fossil fuels pose risks to the long-term value of investment funds.

"The reason for the argument (to divest) is a financial reason, and that's that the energy sector over the last 10 years or so has been in trouble and it remains in trouble and it looks like it will continue going forward as a negative outlook," Sanzillo said.

Sanzillo acknowledged what the Regents are being asked to do is "not fun," but that climate change is a necessary issue they must face.

"You also have another function, a leadership function, as university leaders and that means you don't get to choose whether you're going to do something on climate change," Sanzillo said. "The university obviously has another responsibility to its students, and as leaders you're an example to them as how this gets remedied and what steps get taken to address this issue."

Other universities have made the decision to divest from fossil fuels, including the University of California, Harvard, Stanford, Princeton, the University of Michigan, Columbia, Johns Hopkins and the University of Minnesota.

Loris presented an opposing viewpoint and said divestment is ineffective because it opens up investment opportunities for others, others who potentially care less about environmental and social returns. He cited prominent scholars and investors who care deeply about climate change but argue the emissions impact of divestment is trivial.

Additionally, he said divestment is counterproductive because it reduces the ability to engage directly and influence behaviors of the companies, even though CU does not hold individual stock in companies per state statute.

He said there are potential losses and costs associated with divestment including trading and compliance costs and lowering of the diversification of investments.

"The reality is that I don't know if divestment is a financially prudent decision," Loris said, adding, "The evidence I've seen on the pain divestment can cause investors has been mixed."

Loris said fossil fuels will continue to play a prominent role in successful transition from fossil energy to clean energy.

"I understand that the sentiment of advocates of divestment may want these companies to go away entirely and fossil fuels to be shrunken down to zero, but to the extent that you can engage these companies seriously about sound investments in low carbon technology ... as opposed to greenwashing, I think that's a meaningful step in the right direction," Loris said.

No action or next steps regarding divestment from fossil fuels were discussed by the regents following the presentations.

Regent Lesley Smith said she would support divestment but doesn't think the Board of Regents has the appetite to do so. She said she wants to see CU become more aggressive with its sustainability goals.

"I just feel like if we're not going to divest, then at the very least we should be as aggressive as we can," Smith said. "Obviously we have constrained budgets with not very much funding from the state, but just trying to move more and more toward a clean energy CU system."

CU System Chief Financial Officer Chad Marturano concluded the session with an overview of CU's sustainability efforts.

The CU strategic plan includes sustainability goals by measuring energy use intensity, greenhouse gas emissions and facility condition index. Each is reported annually and measured toward the system's 2026 energy goals.

Marturano said all campuses take part in environmental practices including waste diversion, composting, recycling and renewable energy production.

He said CU Boulder's Climate Action Plan is nearing completion and will be adopted in 2024. The campus is also switching to electric vehicles and offers 474 sustainability-related courses in 52 departments.

All major renovation and new construction projects are subject to additional review by the CU Design Review Board, Marturano said. CU Boulder employs a sustainability expert to consult on all major projects to continue to make progress towards energy goals. CU Boulder's goal is to reach zero emissions by 2050.

"All of these things we approve, what we do, how we conduct our business to achieve our mission at CU, these are places where we have a tangible impact on sustainability in the state and the globe as a whole," Marturano said. "A lot of these tie to our footprint in terms of our buildings where we are actually reducing and can quantify the number of greenhouse gas emissions in metric tons that we're reducing over time."

For more information on the meeting and presentations, visit go.boarddocs.com/co/cu/Board.nsf/Public