A path forward for fossil fuel divestment

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On June 12, the Stanford University Board of Trustees neglected their ethical responsibility and decided not to divest from the top 100 oil and natural gas companies. We have been heartened by the responses of the student body, faculty, and broader Bay community — over the past 8 years and especially in recent weeks — yet we remain deeply concerned that the Board’s June 12 statement is the product of an unrepresentative divestment process. This process has excluded these necessary community voices and fails to hold the fossil fuel industry accountable for its legacy of human rights abuses and climate disinformation campaigns. While Fossil Free Stanford has provided a detailed response to the Board’s decision, we want to briefly highlight the flaws in the recent divestment process and outline a path forward.

Willful Misrepresentation

The Board of Trustees willfully excluded students and faculty from the recent divestment process. When Fossil Free Stanford submitted its divestment petition in April 2019, we expressed concern that the Board’s then-recently revised 2018 Statement of Investment Responsibility (SIR) would enable a divestment process that excluded student and faculty voices. The former process for assessing divestment requests (through the Advisory Panel on Investment Responsibility and Licensing) provided student voting representation. Under the present revision however, students were given no explicit representation. We feared that students would be more disempowered than ever — the past year’s divestment process has confirmed our fears.

In October 2019, the Board of Trustees formalized a process without student representation, when it announced that it had founded a Task Force composed solely of Trustees to “engage with students” in assessing Fossil Free Stanford’s divestment request. In November, Fossil Free Stanford called for student representation and two voting members both on the Task Force and on the Stanford Committee on Investment Responsibility. The Trustees ignored our request for representation for over six weeks. Then, they claimed they were procedurally unable to add student representation. Ultimately, in their June 12 statement, they decided that they had exercised their due representative diligence because they met themselves — absent student representation — “42 times.”

Yet the Task Force’s magical 42 meeting number obscures some important facts: the Task Force spent less than seven hours meeting with students, repeatedly refused to respond to written communications from Fossil Free Stanford and made no effort to hold a Climate Town Hall, which Fossil Stanford demanded. While the most recent divestment process nominally heard from students more than any other, so long as students continue to be deprived of voting representation, we remain more excluded from power than ever before.

Moreover, the Board obscured and continues not to disclose crucial investment information. Despite Fossil Free’s work over the past eight years to increase transparency, Gene Sykes, head of the Task Force, refused to disclose that Stanford has no direct investments in the top 200 companies in the Fossil Fuel industry until the Faculty Senate Meeting on May 28, 2020. Why did the Trustees fail to divulge this information for over 8 years, only to reveal it in the last two weeks of this divestment process? We believe the intention was twofold: first, to minimize Stanford’s apparent complicity in climate destruction and, second, to portray divestment (and by extension Fossil Free’s advocacy) as merely symbolic. On the Board’s account, if we no longer hold any direct investments in the fossil fuel industry, why even consider the question of divestment from our residual investments (which remain undisclosed) — divestment, on this account, is both an empty symbolic gesture and a disastrous eventuality, ruinous to the financial relationship between Stanford and the fossil fuel industry.

Yet the Board misrepresents its case. Approximately 1.5% of Stanford’s ~$28 billion endowment remains indirectly invested in the Fossil Fuel industry. In its recent announcement, the Board has decided both that its ethical investment framework does not apply to the endowment’s indirect investments and that it will not assess the fossil fuel industry’s behavior at the industry-level — instead, the Board says it would prefer to proceed with divestment requests on a “case-by-case evaluation.” While the first statement is ethically bankrupt, at best, the latter claim of a “case-by-case evaluation” is untenable without an established disclosure procedure. Fossil Free Stanford has been demanding such a disclosure procedure for more than eight years with no results to date.

No path forward exists if the Trustees willfully exclude students as empowered actors — anything else is willful misrepresentation.

The Path Forward

We commend the Board for the work it has begun, but we believe the Board has not yet fulfilled its ethical duty. In its decision, the Board called for a case-by-case assessment for divestment procedures, yet the Board, to date, has neither assessed nor acted in response to the ethical behavior of the 100 oil and gas companies that we submitted in this recent divestment request. In short, taking the Board’s claim call for rigorous individual assessment, they still have work to do. 

For eight years, Fossil Free Stanford has provided free labor to the Board in order to reform and reaffirm Stanford’s commitment to making ethical decisions with its $28 billion endowment. Yet the Board of Trustees has not honored this work or acted reciprocally in good faith. The Trustees, in this process as in others, have repeatedly excluded students, faculty and frontline communities’ voices from the divestment process. In order to ensure a more just process moving forward, we demand the following:

1. The Statement on Investment Responsibility must apply to all investments, direct and indirect. It is inexcusable for the Board to excuse responsibility from Stanford’s indirect investments so long as indirect investments comprise a significant portion of our endowment.

2. The Board of Trustees must make good on its claim and assess the 100 oil and natural gas companies from our divestment request with a “case-by-case evaluation.”

3. This “case-by-case evaluation” must align with the Board’s resolution that the SMC will not invest in companies “that operate in a manner inconsistent with established climate science.” We contend that the Board must therefore agree to divest from companies which A) Remain members of Industry Groups that promote climate disinformation such as API, WSPA, ALEC, NAM, etc., B) Lobby against national legislation and international agreements that would limit GHG emissions, or C) Don’t commit to keeping at least 80% of their reserves in the ground or who fail to build business models commensurate with the urgency suggested by the 2018 IPCC report.

4. Students and faculty must have at least 2 members of voting representation each on any Task Force or Ad Hoc Committee charged with assessing these companies, and the Board of Trustees must appoint 2 student representatives to the Stanford Committee on Investment Responsibility.

Justin Wilck ’20 on behalf of Fossil Free Stanford.

Contact Justin Wilck at justinwilck ‘at’ gmail.com.

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