“In accordance with Stanford’s commitment to ethical investment, the University should divest its endowment from fossil fuel extraction companies in order to avert further environmental and social harm caused by climate change.”
Throughout this past winter quarter, members of Fossil Free Stanford collected over 1,000 student signatures in order to put the above amendment on the ballot in the current ASSU election. Now, we are writing to encourage you to vote in favor of fossil fuel divestment.
The evidence in favor of divestment is clear. Fossil fuel companies have known about their role in climate change since the 1980’s, and they actively suppress this information through funding climate denial. Additionally, not only will divestment not harm our endowment’s financial outcomes, but fossil fuel assets are demonstrably bad investments and threaten to be stranded assets in the future. For those who are interested in further understanding Stanford’s positioning in terms of divestment, we have written and published two FAQ sheets (link to #1 and link to #2), as well as this comprehensive report.
The tactic of divestment is twofold. On the structural level, divestment leverages Stanford’s institutional power to generate sufficient social pressure to create meaningful policy, as we have seen in Stanford’s divestments from coal, tobacco, and apartheid. On another level, divestment asserts the ethical position that investments have both moral weight and social significance. These two dynamics of divestment coexist and interface with one another–in investment, like many spheres of life, we cannot disentangle the pragmatic from the ethical. A perfect example of this dynamic at work at Stanford is one of the School of Earth, Energy, and Environmental Science’s largest sources of flexible funding: The Petroleum Investment Fund.
The Petroleum Investment Fund
In addition to Stanford’s $24.8 billion endowment, many additional funds exist. The School of Earth, Energy, and Environmental Science’s Petroleum Investment Fund (PIF) was founded in the 1950s by a group of Stanford alumni led by Harold Hoots, a prominent petroleum engineer, under the terms that the fund be invested in petroleum whenever possible. As of 2013, the fund had grown to $45 million—serving as one of the largest sources of flexible funding for Stanford Earth.
The PIF demonstrates that investments are never value neutral–the existence of the PIF itself serves as an ideological statement favoring the “desirability of investment in the fossil fuel industry.” To be sure, nobody in the 1950s knew the degree to which fossil fuel emissions were and are contributing to catastrophic global climate change. But today, this information is well known. In continuing to benefit from the PIF as an investor, Stanford Earth complicitly endorses the fossil fuel industry. Such an endorsement is hypocritical and antithetical to the school’s stated mission of “solv[ing] the enormous resource and environmental challenges facing the world.” And beyond passively benefitting from fossil fuel investments through the PIF, Stanford Earth continues to solicit donations for it. If the desire to create a ideologically-driven petroleum fund in the 50’s came from ignorance, its present-day perpetuation is reprehensible.
The terms of the fund, as dictated by its founders, state that the PIF’s assets must be invested in petroleum-based companies whenever possible. However, in his “Gift to the Petroleum Investment Fund of Stanford University,” founder Harold Hoots wrote that the PIF would:
“be administered by said Board of Trustees in accordance with the terms and conditions herein stated insofar as said terms and conditions are not inconsistent with, contrary to, or violative of any of the general or specific rights, powers, limitations, restrictions and duties binding upon the said Board of Trustees or governing their actions and undertakings in administering the affairs and business of Stanford University.”
In other words, he established that the fund should be administered in accordance with any decision made by the Board of Trustees. So, if the Board decided that the University would no longer hold investments in the fossil fuel industry, they could also reallocate the Petroleum Investment Fund’s assets away from fossil fuels. Divestment by the university as a whole would allow divestment of the PIF.
SE3’s dependency on PIF is indicative of the danger in separating morals from pragmatics, and furthermore PIF is a symptom of larger structural problems with how the university manages investments. Thus, in order to address the problems posed by the PIF, we must address divestment by the university as a whole.
Undergraduate and graduate students need to show the Board of Trustees that they support divestment from fossil fuels by voting in favor of the ASSU divestment referendum. Voting is open on April 11th and April 12th.
Justin Wilck ’20