February 18, 2022 Is It Illegal for Colleges to Invest in Fossil Fuels?

For years, students have been arguing that their universities have a moral obligation to slow global warming. After all, they ask, isn’t the point of college to give them a brighter future—and isn’t staving off the worst consequences of the climate crisis by the end of the century part of that? Now a coalition of students from some of the nation’s most prestigious universities have filed complaints in their states, arguing that their colleges have a legal obligation to fight climate change, too. 

The complaints, filed Wednesday by students from Yale, Princeton, MIT, Stanford and Vanderbilt, ask  their respective attorneys general to investigate whether the colleges are in violation of the Uniform Prudent Management of Institutional Funds Act. The law, adopted by nearly every state decades ago, requires charitable institutions to invest their endowments in ways that align with their “charitable purpose”—that’s essentially the public good that charities, nonprofits and other organizations provide that grant them their tax-exempt status.

By funding the fossil fuel industry, whose products are the main driver of global warming and are subsequently causing major ecological damage, human health problems and exacerbating social inequities, the universities are in direct conflict with their educational purposes and individual missions, the complaints allege. The complaints estimate that altogether the schools have hundreds of millions of dollars currently invested in coal, oil and natural gas companies.

“Our universities’ persistent and deliberate greenwashing and silence on divestment has left us no other choice,” Aaditi Lele, a freshman at Vanderbilt, told Inside Climate News. “They have failed to listen to their moral imperative, and so we’ve turned to hold them to their legal imperative.”

That legal imperative includes “a duty to promote the public interest in exchange for their tax-exempt charitable status,” Alex Marquardt, an attorney with the Climate Defense Project, a climate-focused legal firm that helped the students file their complaints, said in a statement. “That duty is incompatible with fossil fuel investments,” he added.

It’s a novel legal approach from the growing divestment movement, largely led by youth and young college students who say they have grown increasingly frustrated with a lack of urgent action being taken to address climate change from public officials, including those running their schools. Already, some schools have caved to the pressure.

A handful of major universities, including Havard, Cornell, Boston University and the University of Minnesota, have all said in recent years that they would divest—to varying degrees—from companies and holdings that largely promote fossil fuel use. In fact, more than 200 schools worldwide have agreed to make similar divestments, according to the Global Divestment Commitments Database, a roster maintained by advocacy groups 350.org and Stand.earth.

Young climate campaigners also argue that investing in fossil fuels is financially irresponsible, an opinion shared by many of the world’s top financial experts. Climate change, and the consequences associated with it, remains the top financial fear among global investors and financial experts in 2022, according to the World Economic Forum’s annual risk survey.

If climate change isn’t more urgently addressed, the financial projections are also pretty dire. A report released last year by Swiss Re, one of the world’s largest insurance providers, found that by 2050, the effects of climate change could shave as much as $23 trillion off global economic output when compared with growth levels without climate change. And last month, financial firm Deloitte released a report that said the United States could lose $14.5 trillion over the next 50 years if it continues to delay transitioning its economy to net-zero emissions.

That’s it this week for Today’s Climate. Thanks for reading and I’ll be back in your inbox on Tuesday.

Today’s Indicator

28 gigawatts

That’s how much renewable energy capacity the U.S. installed last year, which analysts say is less than half of what’s needed to reach President Biden’s goal of a carbon-free grid by 2035.