

Two Stanford University students walk in front of Stanford Chapel on the Stanford University campus in Palo Alto, Calif., Wednesday, Feb. 15, 2012. The latest annual college fundraising figures out Wednesday show donations to colleges and universities rose 8.2 percent in fiscal 2011, crossing back over the $30 billion mark for just the second time ever, and improving many schools' financial footing after several lean years due to the economic downturn. Stanford University, which recently broke an all-time record by completing a 5-year, $6.2 billion fundraising campaign, led with $709.4 million collected in fiscal 2011. (AP Photo/Paul Sakuma)

Stanford University has announced that its rich endowment will not make any direct investment in coal companies, becoming the twelfth and most prestigious university to divest under pressure from foes of fossil fuels.

“Moving away from coal in the investment context is a small but constructive step while work continues at Stanford and elsewhere to develop broadly viable sustainable energy solutions for the future,” Stanford’s president John Hennessy said in a statement. Stanford doesn't disclose its holdings; as of Aug. 31, 2013, its endowment was worth $18.7 billion.

Stanford's move comes after protests last week by climate activists at other leading universities, part of a campaign that has gone on for two years now. Seven students at Washington University in St. Louis were arrested demanding Peabody Energy chief executive Gregory H. Boyce resign from the university's board of trustees, and a student was arrested at Harvard University for trying along with half a dozen other students to blockade the office of Harvard president Drew Faust. More than 100 faculty members have signed a letter to Faust urging the university to divest.

"Stanford, on the edge of Silicon Valley, is at the forefront of the 21st century economy; it's very fitting, then, that they've chosen to cut their ties to the 18th century technology of digging up black rocks and burning them," Middlebury College professor and founder of 350.org Bill McKibben said in a statement.

Stanford has also been pressed from within; its board of trustees includes Tom Steyer, a wealthy former hedge fund head who has devoted himself to promoting policies that might slow climate change.

But while divesting from coal companies may please students and other activists pressing cities, states, foundations and universities to sell off shares of fossil fuel-producing firms, selling coal companies might not be a bad investment decision either. So far this year, even after bouncing back from lows, Peabody Energy stock is down 5 percent, Alpha Natural Resources is down 38 percent, and Arch Coal has been flat; CONSOL, however, is up 15 percent. Coal burning utilities also face the prospect of new tougher regulations from the Environmental Protection Agency on carbon dioxide emissions.

The divestment movement has convinced Seattle, San Francisco, Portland and other cities to shed fossil fuel firms. Stanford is now the twelfth college to commit to divesting. The others schools are: College of the Atlantic, Foothill-De Anza Community College, Green Mountain College, Hampshire College, Naropa University, Peralta Community College District, Pitzer College, Prescott College, San Francisco State University, Sterling College and Unity College.

The movement is borrowing tactics from the 1980s anti-apartheid campaign that pressured universities to divest from companies with ties to South Africa. So far, the campaign against coal investments has not picked up quite the same level of fervor or commitment from schools.

In fact, most colleges have not gone along. Harvard, Brown and McKibben's Middlebury have all rejected the calls to divest. Last fall, Middlebury's president Ronald D. Liebowitz wrote that the trustees believed that divestment might be a symbolic gesture without impact on the companies and that it might lead to calls to divest from a variety of other companies deemed objectionable.

Harvard’s president, Drew Faust, said in an open letter that if Harvard divested, its shares would “find other willing buyers,” have “negligible impact” on the companies and “diminish the influence or voice we might have.”

“I also find a troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies’ products and services for so much of what we do every day,” Faust wrote.

A difference between the anti-apartheid and fossil-fuel movements is that the former had guidelines, the Sullivan Principles, to which U.S. companies operating in South Africa could adhere and be removed from the divestment list.

Stanford's resolution means that the university will not directly invest in approximately 100 publicly traded companies for which coal extraction is the primary business, the university said, adding that it will divest of any current direct holdings in such companies. Stanford also will recommend that its external investment managers "avoid investments" in these companies as well.

A student-led group known as Fossil Free Stanford petitioned the university last year to divest from 200 fossil-fuel extraction companies as part of the nationwide divestment campaign. The 100 companies that the university decided to keep in its portfolio include leading oil and gas companies, such as Russia's gas monopoly Gazprom, and others with large stakes in Canada's oil sands.