This past Saturday, the Barnard College Board of Trustees voted to divest from all fossil fuel companies that deny climate science or otherwise seek to thwart efforts to mitigate the impact of climate change. The decision was based on the recommendation of a Presidential Task Force to Examine Divestment, which cited our report The Climate Accountability Scorecard: Ranking Major Fossil Fuel Companies on Climate Deception, Disclosure, and Action as a potential resource for differentiating among companies. As other investors follow in Barnard’s footsteps, it will create incentives for and put pressure on companies like ExxonMobil, Chevron, and Shell to improve their climate-related positions and actions.
“Setting a new standard for investment”
In her final message to students, outgoing Barnard College President Debora Spar wrote:
“At today’s Board meeting, the trustees unanimously approved a path-breaking recommendation from our Task Force to Examine Divestment that will put Barnard at the very forefront of organizations striving to have an impact on climate change and fossil fuel use. Thanks in large part to student activists from Divest Barnard, and backed by crucial insights from faculty members and trustees, the Task Force proposed — and the Board accepted — a decision to divest Barnard’s endowment from those companies that deny climate change.
“Working with outside experts such as the Union of Concerned Scientists, the College will now be able to use its endowment funds both symbolically and responsibly, setting a new standard for investment that seeks to balance the fiduciary need to manage our resources with the moral responsibility to harness science for sustainability.”
“The Task Force decided to use the UCS criteria as a starting point. These criteria include the extent to which a company (1) renounces disinformation on climate science and policy, (2) plans for a world free from carbon pollution, (3) supports fair and effective climate policies, and (4) fully discloses climate risks…
“The issue of how to define companies that deny climate science is a central one. The Union of Concerned Scientists (UCS) recently developed extensive criteria that institutions can use to screen fossil fuel companies for behavior that is antithetical to efforts to mitigate climate change. The UCS criteria… should be considered by the Committee on Investments in discussions with the working group and with Barnard’s OCIO [Outsourced Chief Investment Office].”
An innovative approach to divestment
As of December 2016, fossil fuel divestment affected $5 trillion in assets, after more than doubling in just over a year. According to a report by Arabella Advisors, 688 institutions and nearly 60,000 individuals in 76 countries have committed to some form of divestment from oil, gas and coal companies. UCS and the Unitarian Universalist Association (on whose Socially Responsible Investing Committee I serve) are among those institutions.
Divestment or screening of portfolios is one strategy that can be informed by the UCS scorecard, which differentiates among fossil fuel companies on the basis of their climate-related communications, positions, and actions. This analysis can also support those seeking to invest in clean energy solutions or exercise an active ownership role in the companies they hold. For an investor like Barnard, the New York State Common Retirement Fund, the California Public Employees Retirement System, or the Church Commissioners for England, active ownership can include:
- Voting proxies in accordance with environmental, social, and governance principles and commitments;
- Engaging with corporate management on sustainability or human rights issues;
- Filing shareholder proposals on matters such as company strategies to align their business models with a carbon-constrained world or ensure that their climate-related lobbying is consistent with their stated positions and goals.
UCS applauds Barnard for taking this innovative approach to aligning the college’s investments with its values. Our climate accountability campaign team is eager to provide research, analysis, and other types of support to Barnard College, additional educational institutions, and other asset owners and asset managers seeking to use their leverage as investors to accelerate the transition to low-carbon energy.