College Donors Seen Opposing Oil, Gas Divestments

  • Study of 275 people commissioned by petroleum industry group
  • Donors say endowment values could be hurt, survey finds

A majority of college donors are opposed to schools divesting from oil and gas companies, according to a survey of people who have given at least $5,000 in the past five years.

The study, commissioned by a petroleum industry group and released Tuesday, found that most donors were familiar with anti-fossil fuel campaigns that have spread to more than 1,000 campuses and that 62 percent support rejecting those efforts. The survey of 275 people also found that about two-thirds wouldn’t give again if the school agreed to such endowment investing restrictions.

“They don’t necessarily buy into the argument that it will make a difference in terms of preventing climate change,” said Joseph McMahon, a senior director in strategy and research at FTI Consulting Inc., a global business advisory firm in Washington that conducted the survey. “They think that it could also have a negative impact on the value of the endowment.”

Met Resistance

Fossil fuel divestment has been resisted by most schools despite widespread support across higher education for more research and spending on combating climate change. Only about 30 schools in the U.S. have agreed to divest from 200 publicly-traded companies targeted because they have the largest reserves of oil, gas and coal, which when burned are blamed for global warming. Many of those commitments have been limited to coal.

The Independent Petroleum Association of America, which represents crude oil and natural gas explorers and producers, commissioned the survey. The Washington-based group has sought to counter the student campaigns by financing studies questioning the cost and effectiveness of blacklisting oil and gas companies.

The divestment campaign is being spearheaded by 350.org, which is also targeting other investors, from pension funds to churches. It said last week at the United Nations climate conference in Paris that more than 500 institutions with more than $3.4 trillion of assets have agreed to some form of divesting.

The donor survey found that most respondents were familiar with the size of the endowment at their alma mater and approved of the college’s investment policies. More than three-quarters said the school should only use donated money to increase financial returns, help finance campus programs and student aid. Of the 275 respondents, 57 percent were male and 67 percent were 55 or older.

Clean Energy

A growing number of universities are exploring how to better manage their endowments so their portfolios are more environmentally friendly, said David Richardson, a managing director at Impax Asset Management, which focuses on green investing. Schools, like other institutions, want to maintain their exposure to the sector so are seeking out more clean energy investments, he said.

The University of California, which has an $8.9 billion endowment, in November said it was the first institution to join a coalition led by Bill Gates that will invest in technology to solve “urgent energy and climate challenges facing the planet.”

“More mainstream universities are thinking about how sustainable investing might be an opportunity to capture returns,” said Richardson, whose company is based in London and oversees almost $5 billion of assets.

(Corrects spelling of name in third paragraph of story published Dec. 8.)
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