The University of Toronto is the latest institution committing to the divestment movement, saying Wednesday it will sell off all fossil fuel investments in its $4 billion endowment fund by the end of 2030 to help fight climate change.
The commitment by its investment manager, the University of Toronto Asset Management Corp., includes divesting from all direct investments in fossil fuels companies within the next year, divesting from indirect exposure to fossil fuels through things like pooled investments by 2030 and reaching a net-zero portfolio by 2050.
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“At UTAM, we continue to intensify our focus on responsible investing,” said Chuck O’Reilly, UTAM’s president and chief investment officer, in a statement. “Divestment from fossil fuel companies and net-zero carbon emissions for the endowment are the next steps in the journey that we began in earnest in 2016 when we became a signatory to the [United Nations’] principles for responsible [investing] on behalf of the university’s endowment and pension portfolios.
“Responsible investing is integral to our mission and we hope that our commitment to divestment and net zero inspires other institutional investors to support the transition to a lower-carbon economy.”
The announcement by University of Toronto President Meric Gertler comes after he rejected a call in 2016 for the university to divest, saying at the time that the university would focus on pushing for better carbon disclosure and encouraging companies to reduce emissions. In a letter to the university community, he said it’s time to do more. “The growing severity of the climate crisis now demands bold actions that have both substantive and symbolic impact.”
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The university’s decision to go beyond investor activism toward an outright sell-off of fossil fuel assets comes amid a wave of divestment commitments globally.
On Tuesday, Dutch pension giant ABP said it would sell off all of its fossil fuel assets, worth some €15 billion, because it didn’t see enough opportunity to push those companies toward sustainable practices fast enough. The pension fund said it would instead work to influence companies that use fossil fuels such as utilities, the automotive industry and aviation. The Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund manager, made a similar commitment last month.
In September, Harvard University also committed to divesting fossil fuels from its US$42 billion portfolio, while a smattering of Canadian universities, including the University of British Columbia, University of Guelph and Concordia University have already made commitments.
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Overall, about 1,485 institutions representing US$39.2 trillion in assets under management have committed to some form of fossil fuel divestment, according to a report out Tuesday by a coalition of advocacy groups.
Critics of the movement say energy producers need capital to transition toward more sustainable practices, that divestment will do little to impact global demand for fossil fuels and that it will push production toward countries and producers with lower environmental standards.
The University of Toronto’s decision to sell off fossil fuel companies affects about 1.6 per cent of its endowment, as the university has already been working to reduce its exposure to the sector.