On Feb. 16, Fossil Free Stanford (FFS) filed a complaint with the California Attorney General alleging that Stanford’s continued investment in the fossil fuel industry violates California state law. Divestment is Stanford’s ethical imperative. The scientific reality of climate change is undeniable, and Stanford’s continued oil and gas investments financially and symbolically condone the industry’s continued release of greenhouse gasses and efforts to delay the green transition. Additionally, through its investments in several exchange-traded funds and investment banks, Stanford continues to support companies such as ExxonMobil that have attacked and discredited members of Stanford’s faculty. Given the growing urgency of the climate crisis, FFS will take whatever actions are necessary to compel Stanford’s Board of Trustees to divest.
While Stanford’s endowment remains invested in the past, peer institutions such as Harvard University have decided to stop funding corporations which are already responsible for multiple tragedies. Harvard’s Board did not make this choice on its own; rather, they were pushed to divest in large part because of the concerted efforts of student activists, and in particular the organization Divest Harvard. While activists had been pushing Harvard to divest for years, success only came in Sept. 2021, after these activists filed a legal complaint with the Massachusetts Attorney General alleging that Harvard’s oil and gas investments violated state law. Now, in the face of Stanford’s complete administrative inaction, FFS has chosen to file a similar complaint with California Attorney General Rob Bonta. As the complaint alleges, Stanford’s oil and gas investments are not only environmentally and socially unjust — they are also illegal.
Stanford’s investment in the oil and gas industry violates California law. Stanford’s endowment is regulated by the California Uniform Prudent Management of Institutional Funds Act (CUPMIFA), which stipulates that universities must consider “charitable purposes” when managing their endowments. Given the fossil fuel industry’s role in causing environmental degradation and social harm, including in the area around Stanford, Stanford’s continued investments in oil and gas are a dereliction of this duty.
CUPMIFA also requires universities to invest their endowments “in good faith” and with “the care an ordinarily prudent person in a like position would exercise;” Stanford’s fossil fuel investments violate these requirements as well. In funding oil and gas companies, Stanford has failed to act in good faith, because these investments violate its other commitments to the Stanford community.
Fossil fuel investments are risky, meaning they violate the University’s duty under CUPMIFA to make “prudent,” non-fraudulent investments. As I noted in an earlier piece on divestment, due to energy price shocks, regulatory pressure and declining profit margins, “credit rating agency S&P informed thirteen oil and gas companies in January 2021 that it might downgrade their credit score, a sign that fossil fuel investments are becoming riskier.” Especially now that peer institutions such as Harvard have chosen to divest, Stanford’s increasingly high-risk funding of the oil and gas industry infringes on its duty to invest with “the care an ordinarily prudent person in a like position would exercise.”
Stanford has made several other commitments regarding the University’s social and ecological impact that its fossil fuel investments directly subvert. Among the most important are Stanford’s Founding Grant, written in 1885, which commits the University to “promote the public welfare by exercising an influence in behalf of humanity and civilization,” and its Long-Range Vision, which states that Stanford needs “a new way of working that enables us to tackle long-standing issues facing our society and our planet.” Yet by funding fossil fuels, Stanford is promoting the destruction of the future of humanity, civilization and the planet — a far cry from its ostensible commitment to “a new way of working.”
More directly, the University has a duty to its students, a duty that Stanford flouts by funding companies which are destroying the planet’s future. Absent a livable planet, every other investment Stanford makes in its students is meaningless. And we do not need to wait 50-100 years to witness climate change’s effects; climate change is already endangering Stanford’s student body. Santa Clara county, where Stanford is located, is already at higher risk of wildfires and flooding, as well as heat-related illnesses, mental health conditions and socioeconomic disruptions, and this risk will only increase. Stanford’s investments are not just endangering the world at large; they are also directly impacting its student body’s safety. By failing to divest, Stanford is violating its duty of care and good faith to all of its students.
FFS joins student organizations at four other universities — MIT, Yale, Princeton and Vanderbilt — in filing legal complaints with their respective state attorneys general. FFS firmly believes that sustained student pressure is the most powerful driver of the divestment movement. At universities around the country, student activists have successfully pressured their administrations to cease their support of the oil & gas industry. Now, with this complaint filed, FFS is hopeful that Stanford will finally accede to student and faculty pressure and divest.
Will Halverson is a member of FFS.