Citing Risk to Investments, U. of California Will Divest Holdings in Fossil-Fuel Companies

The University of California system is divesting both its endowment and its pension fund of fossil-fuel investments, officials announced on Tuesday.

The system’s chief investment officer and treasurer, Jagdeep Singh Bachher, and the chair of its governing board’s investments committee, Richard Sherman, made the announcement in an op-ed in the Los Angeles Times, writing that the system’s $13.4-billion endowment and its $70-billion pension fund would soon be completely divested of holdings in fossil-fuel companies — by the end of the month for the endowment.

Bachher and Sherman denied that the system, which has one of the largest endowments among public universities, was bowing to political pressure or to any moral imperative. Instead, they wrote, the decision hinged on long-term, risk-averse financial planning.

“The reason we sold some $150 million in fossil-fuel assets from our endowment was the reason we sell other assets,” they wrote. “They posed a long-term risk to generating strong returns for UC’s diversified portfolios.”

That sort of reasoning, they admitted, “might not jibe with what you will read in a newspaper headline or scroll through in a news feed on your phone.”

The decision came just two months after the system’s Academic Senate presented a petition to the Board of Regents that called on the system to divest its endowment portfolio of major fossil-fuel companies, including ExxonMobil, Gazprom, and Shell. In a vote on the petition that spanned the 10-campus system, nearly 77 percent of faculty members asked the regents to divest.

But according to Bachher and Sherman’s op-ed, the university’s investments were “already going there” — or at least, they were on a path toward zero. “All of this is by way of saying that we don’t make investment decisions simply based on the preferences of one group or another of our stakeholders, which is not to say we don’t listen to them,” they wrote.

With Tuesday’s announcement, the California system joins a growing list of institutions that have divested their fossil-fuel holdings in recent years. While students’ demands for divestment have often fallen on deaf ears, colleges have become more susceptible to the financial argument cited by the California officials.

Lauren Fisher is an editorial intern at The Chronicle. Follow her on Twitter @lauren__fisher, or email her at lfisher@chronicle.com.