After almost seven years of pushing by the student advocacy group Fossil Free Guelph, the majority of the Board of Governors at the University of Guelph voted Wednesday to divest the institution’s endowment from companies that hold fossil fuel reserves. After a debate, and a few amendments, all but three board members followed the lead of Vice-President of Finance Don O’Leary, and voted to divest over the next five years.
“I’ll conclude noting that this is one step on what is going to be a much larger journey,” said Board chair Shauneen Bruder after the vote. “I think that’s what makes it so difficult for us because we understand we need to be doing more, we want to be doing more, and this is a real commitment of the university to continue advancement in this area of sustainability.”
The motion included in the Board package would set the University of Guelph the goal of divesting their endowment portfolio from fossil fuel companies by April 2025, and give the investment subcommittee of the Board’s financial committee the flexibility to manage the transition in a fiscally prudent way. The motion would also require the Board to receive annual reporting on divestment efforts.
This 2020 motion hit a far different tone from the one that came to the Board of Governors meeting in January 2019. An ad-hoc committee proposed establishing a baseline ESG (environment, social and governance) score for the endowment, and decrease its carbon footprint by 10 per cent over two years. It wasn’t the outcome that hundreds of students wanted, but one of the architects of that decision said that it’s already shown results.
“We have made changes with our carbon reduction strategy, our committee has already been moving forward, and you can see that in our management,” O’Leary explained. “It has had an impact, and now we’re looking at about seven per cent of the endowment that is invested in fossil fuel reserve companies, and those are the ones that we’re targeting at this point in time.”
According to the 2019 annual report, the U of G’s endowment is worth $408 million, which means that if only seven per cent of the endowment is invested in fossil fuels that portion is worth just $28.56 million.
“I would certainly emphasize that this has not been a hasty decision,” said Nancy Brown Andison, the chair of the finance committee. “Over the past six months there has been a lot of detailed profiling that has been undertaken with respect to our overall portfolio for the endowment fund, and the impact on the portfolio of making this type of change is unlikely to be negative.”
Three members of the student advocacy group Fossil Free Guelph were allowed to take part in the meeting, make statements in support of the motion, and answer board member questions. For the group, if not its current members, Wednesday’s vote was the culmination of seven years of advocacy.
“As a group, we are looking forward to a new chapter in this campaign: moving from ideas to implementation; a chapter that entails all of us working together to bring a new era of innovation to the University of Guelph,” said Megan Peres.
“We understand that as a Board you have a fiduciary responsibility to donors and the University community,” added Gabrielle McPolin. “Divesting from fossil fuels creates new opportunities for reinvestment that align with that fiduciary duty, such as sustainable agriculture innovations, new technologies to reduce carbon emissions, or even in Our Energy Guelph, which mobilizes investments to make community emission-reduction projects happen.”
Board member Gerrit Bos said that he had concerns about the motion because the scope of it felt too narrow. He was also not a fan of some of the actions of student activists, and while he appreciated the “thoughtfulness and meticulousness” of most of the students, he also didn’t like “negative posters” at past meetings directed at members of the board.
“When I put all those things together, I feel compelled to to vote against this even though I’m very supportive of this broader direction of responsible investing, sustainability and supportive of the process,” said Bos.
The U of G’s Chancellor Martha Billes, who is the controlling shareholder of Canadian Tire and is the daughter of the retailer’s founder, agreed that the motion treated Canada’s oil and gas sector rather rudely, especially in these difficult economic times.
“If it weren’t for Canadian oil development, many, many of the advantages across this country would never have happened,” Billes said. “Eastern Canada has not necessarily been loyal to the west, but the west has been loyal to Canada. I believe in sustainability, and I believe in gradually moving away from our huge dependence on oil and oil byproducts, but to make such a solid statement against an industry that has been paying the bills for many, many years, I find untenable.”
Still, the university’s outgoing president Franco Vaccarino was confident that this was the right choice going forward for the U of G. He explained that this decision connects the passions of the student community, and the forward thinking business leaders and community partners that the University works with.
“This is about more than just carbon reduction, and in many ways it’s about a statement of values as well,” Vaccarino said. “We’ve done our due diligence, and we believe that by making this move we can achieve our sustainability goals while maintaining our fiduciary responsibilities.”
There were two amendments to the original motion, including a preamble referring back to the 2019 motion to evaluate all of the University’s investments on the basis of ESG. Board member Prashant Pathak expressed concern about casting the light exclusively on oil and gas, when there are other industries like cement and textiles that also use fossil fuels.
Another amendment added a clause that would allow the subcommittee flexibility to make investments like transitions bonds, which are supposed to help companies raise funds to move towards more environmentally-friendly practices. One board member didn’t want the university to lose out on an opportunity to help companies that want to be forward thinking.
“Many of these companies are leaders in some way, and I’m very concerned about having complete divestment without having it stated that there are opportunities to take advantage of transition or green bonds to truly shift the economy away from oil and gas,” said Elanor Fritz.
The motion eventually passed with only three opposition votes, including Deb Stark, a member of the finance committee who felt that the amendments watered down the bold move to divest. “I just find this whole motion quite confusing at this time. and I don’t like it,” she said.
Last month, an impromptu sit-in by climate activists in the offices of the University administration led to the even more impromptu announcement that the Board of Governors was going to take another look at divestment at their April meeting. Given the COVID-19 pandemic, this meeting was held by teleconference with members of the community, and the media, being allow to listen along by request.