Earlier this week, Boston University’s Board of Trustees announced that they had decided to divest its endowment from fossil fuels.
According to an open letter dated Sept. 23 and posted on the school’s website, President Robert Brown said the board made its decision earlier that week.
As of Sept. 22, the school will no longer commit direct investments in companies that extract fossil fuels. It will also divest from current, direct investments in fossil fuel extractors and will not commit to any new investments in dedicated fossil-fuel focused products in any asset class.
However, the school has private fossil fuel investments that will likely take more than a decade to wind down per reporting from Justin Mitchell.
The release also indicated that the endowment will seek out investment managers that can provide opportunities in renewable energy sources and “fossil-fuel-free products.”
Brown’s letter also stated that only “a very small fraction” of the university’s endowment is invested in “fossil fuel producers and extractors,” rendering the move to divest “economically inconsequential.”
According to Mr. Mitchell, the endowment is valued at more than $3 billion, according to Boston University’s website and it had approximately $2.4 billion at the end of the 2020 fiscal year, according to an annual report from the National Association of College and University Business Officers.
Boston University is the latest prominent university endowment to announce a divestment from fossil fuels, joining the University of California, Brown University, Cornell University, Georgetown University and Harvard University, in committing to this type of divestiture program.
Triple Bottom Line – BU has joined the growing chorus of major institutions that have begun divesting their endowments of fossil fuel investments. While BU’s announcement is not individually overly statistically significant numerically, the number of major higher educational institutions is continuing to grow and gain momentum. As more institutions of higher education join this chorus, it is likely that fossil fuel divestiture will become more than a few one offs and has the potential to become a trend in the ESG space.
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