In pursuit of a greener future at Simon Fraser University, Sustainable SFU has joined the the Fossil Free Canada campaign in an effort to convince the university to divest from oil, gas, and fossil fuel companies. The group is arguing that the plans of the fossil fuel industry are incongruous with a safe global carbon budget.
In accordance with the campaign, which was launched earlier this year by the Canadian Youth Climate Coalition, Sustainable SFU is pressuring the university to freeze all new investments in fossil fuels and to divest completely over the next 5 years.
“We think the university has a moral obligation to divest from fossil fuel companies.” said Mike Soron, Executive Director of Sustainable SFU. “We also think that it’s irresponsible. There’s more and more information coming out about how this translates into a carbon risk, and that’s essentially a liability embedded in the portfolio of our investments. These companies won’t be able to deliver the returns needed over the coming decades.”
Despite this criticism, SFU insists that they are matching fiscal prudence with awareness of current challenges. In an interview with Pat Hibbitts, Vice-President Finance and Administration at SFU, she said that SFU has consciously tried to find green investments and is working to implement the UN Principles for Responsible Investment as a keystone of its investment practices.
When planning investment strategies, SFU administration searches for investment houses and value managers whose priorities match those of the university: namely, investments with a low risk profile and potential for long-term, stable growth. However, that’s where the intervention ends.
“You don’t give [investment houses] specific direction on a stock,” said Hibbitts. “You don’t say I want to own GM or I want to own Coca Cola or McDonald’s. That’s not how it works . . . Companies that have too much risk or bad behaviour aren’t going to be a part of our investments anyway, so that’s the filter we use.”
Even though this filter may not be direct enough to please Sustainable SFU, the university insists that it must consider more than just the carbon budget when investing.
“We support research and scholarship with our investments, and we are required to earn four per cent. That’s our responsibility,” said Hibbitts. “If you can do it by moving away from a principle where you’re looking at a balance between value and growth, then yes [we would consider divestment] at some future date, but right now I don’t know how else you do it.”
Despite these considerations, Soron believes that there is economic evidence to support fossil fuel divestment.
Canada’s Carbon Liabilities report, published by the Canadian Centre for Policy Alternatives and written by SFU alumnus Brock Ellis, warns of an impending “carbon bubble” which researchers feel could be more harmful than the 2008 housing bubble that shook the global financial system.
Currently, Canada’s carbon budget — the maximum amount of CO2 that can be emitted in the future — is just under nine GT based on its share of world GDP (or 2.4 Gt based on share of world population). However, if one were to add up all possible reserves in Canada, they are equivalent to 1,192 GT — more than double the world’s carbon budget.
In order to keep global temperature increase to 2°C or less, 78 per cent of Canada’s proven reserves, and 89 per cent of proven-plus-probable reserves, would need to remain underground.
When these statistics are added to the fact that the remaining global carbon budget — 565 GTCO2 — is significantly smaller than the proven reserves owned by private and public companies and governments — 2,795 GTCO2 — they reveal the potential threat to SFU’s investments.
To combat this crisis, the report suggests that responsibility rests with pension funds and institutional investors to deflate the “carbon bubble.” It is this “managed retreat” from fossil fuel investments that Sustainable SFU believes SFU must be a part of.
“The university is responsible for delivering a return on the investments, not just today, but over time. They have fiduciary responsibility to future students and to employees who will be retiring 50 years from now,” said Soron. “You can’t just look at the economic environment today; you have to look at what a world two degrees warmer will require.”
Sustainable SFU is looking to bring their campaign before the Board of Directors in November, after building a bigger coalition on campus and collecting more signatures.