The University of California system is planning to drop fossil fuel investments from its endowment and pension funds as early as October as part of a pledge to invest more than $1 billion in climate change solutions and incorporate more ESG solutions into its investment decision-making.
The University of California revealed its divestment plans in an op-ed published in the Los Angeles Times on Sept. 17.
“We believe hanging on to fossil fuel assets is a financial risk,” wrote CIO Jagdeep Singh Bachher and chairman of the U.C. Board of Regents’ investments committee Richard Sherman. “That’s why we will have made our $13.4 billion endowment ‘fossil free’ as of the end of this month, and why our $70 billion pension will soon be that way as well.”
According to Vox, it is the single-largest action to date in the growing movement of institutions withdrawing their financial stakes in the fossil fuels industry in favor of climate change initiatives.
In 2014, the Univeristy of California system became the first public university in the United States to sign onto the United Nations’ Principles for Responsible Investing, and a year later, U.C. Investments published its own Framework for Sustainable Investing, according to Bachher and Sherman. In 2018, the U.C. Board of Regents publicly changed the university’s investment policy to explicitly include ESG in investment decision making.
“The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for U.C.’s diversified portfolios,” wrote Bachher and Sherman. “We have been looking years, decades and centuries ahead as we place our bets that clean energy will fuel the world’s future.”
