Stanford to divest from coal companies

Acting on a recommendation of Stanford's Advisory Panel on Investment Responsibility and Licensing, the Board of Trustees announced that Stanford will not make direct investments in coal mining companies. The move reflects the availability of alternate energy sources with lower greenhouse gas emissions than coal.

David J. Philip/AP The Stanford University Board of Trustees has decided to not make direct investments of endowment funds in coal-mining companies.

Stanford University will not make direct investments of endowment funds in publicly traded companies whose principal business is the mining of coal for use in energy generation, the Stanford Board of Trustees decided today.

In taking the action, the trustees endorsed the recommendation of the university's Advisory Panel on Investment Responsibility and Licensing (APIRL). This panel, which includes representatives of students, faculty, staff and alumni, conducted an extensive review over the last several months of the social and environmental implications of investment in fossil fuel companies.

Stanford's Statement on Investment Responsibility, originally adopted in 1971, states that the trustees' primary obligation in investing endowment assets is to maximize the financial return of those assets to support the university. In addition, it states that when the trustees judge that "corporate policies or practices create substantial social injury," they may include this factor in their investment decisions.

The analysis of investment in coal was undertaken through this policy lens. In particular, the Board of Trustees concurred with the university's advisory panel that divesting from coal is consistent with this policy given the current availability of alternatives to coal that have less harmful environmental impacts.

"Stanford has a responsibility as a global citizen to promote sustainability for our planet, and we work intensively to do so through our research, our educational programs and our campus operations," said Stanford President John Hennessy. "The university's review has concluded that coal is one of the most carbon-intensive methods of energy generation and that other sources can be readily substituted for it. 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."

The resolution means that Stanford will not directly invest in approximately 100 publicly traded companies for which coal extraction is the primary business, and will divest of any current direct holdings in such companies. Stanford also will recommend to its external investment managers, who invest in wide ranges of securities on behalf of the university, that they avoid investments in these public companies as well.

A student-led organization known as Fossil Free Stanford petitioned the university last year to divest from 200 fossil-fuel extraction companies as part of a national divestment campaign. The request by Fossil Free Stanford was reviewed over the last several months by APIRL's Environmental Sustainability Subcommittee, which met with the group, conducted its own extensive research and took input from other constituencies.

The subcommittee's recommendation was subsequently approved by the full APIRL, the Trustees' Special Committee on Investment Responsibility and the Board of Trustees.

"Fossil Free Stanford catalyzed an important discussion, and the university has pursued a careful, research-based evaluation of the issues," said Steven A. Denning, chairman of the Stanford Board of Trustees. "We believe this action provides leadership on a critical matter facing our world and is an appropriate application of the university's investment responsibility policy."

"We are proud that our university is responding to student calls for action on climate by demonstrating leadership," the Fossil Free Stanford group said in a statement. "Stanford's commitment to coal divestment is a major victory for the climate movement and for our generation."

In its review, the APIRL acknowledged the findings of the U.N. Intergovernmental Panel on Climate Change regarding the role of fossil fuels in contributing to changes in the global climate system. The APIRL also noted that the use of coal for electricity production generates higher greenhouse gas emissions per unit of energy generated than other fossil fuels, such as natural gas, and that alternatives to coal are sufficiently available.

Replacing other fossil fuels with renewable energy sources also is a desirable goal, the APIRL said, but fewer alternatives are readily available for these other energy sources on the massive scale that will be required to replace them broadly in the global economy.

"The Board of Trustees greatly appreciates the thoughtful work of the students and of the Advisory Panel on Investment Responsibility and Licensing," said Deborah DeCotis, chair of the Trustees' Special Committee on Investment Responsibility. "This is a considered approach that is consistent with our institutional values and acknowledges the critical sustainability challenges facing our planet."

Stanford does not disclose specific investments in its portfolio nor their individual value, though it provides information on endowment holdings and performance by broad asset category. The total value of the endowment was $18.7 billion as of Aug. 31, 2013, the close of the 2012-13 fiscal year.



Stanford is active on many fronts in addressing the challenges of global climate change. The university conducts an extensive array of research focused on sustainability and energy efficiency, including work at the School of Earth Sciences, the Stanford Woods Institute for the Environment, the Precourt Institute for Energy and elsewhere. Stanford faculty members have played a key role in the U.N. Intergovernmental Panel on Climate Change process.

The university currently is implementing the Stanford Energy System Innovations (SESI), a new energy system that will reduce campus carbon emissions by 50 percent and reduce water use by about 15 percent above the 21 percent reduction Stanford has already achieved over the last 15 years.

Stanford also has reduced employee drive-alone rates from 72 percent in 2002 to 47 percent today; developed campus facilities with state-of-the-art energy features, such as the Knight Management Center and the Jerry Yang and Akiko Yamazaki Environment and Energy Building; and launched an effort to accelerate water-recovery technologies at the William and Cloy Codiga Resource Recovery Center to be built on campus.

In the investment context, in addition to the action on coal, Stanford's existing proxy voting guidelines adopted earlier by the Board of Trustees mandate that the university vote "yes" on proxy resolutions asking companies to adopt sustainability principles, reduce greenhouse gas emissions and increase the energy efficiency of their operations.

Media Contact

Lisa Lapin, University Communications: (650) 725-8396, [email protected]