In recent years, universities around the country have faced an increasing amount of pressure from students to divest from companies in the fossil fuel energy sector. Organizations like, which has been a leader in the divestment charge after launching its “Go Fossil Free: Divest from Fossil Fuels!” campaign in 2012, have helped coordinate student actions and protests. Today, the fossil fuel divestment movement is active in more than 300 universities across the United States, and is still gaining momentum.

Universities such as Pitzer and Stanford have pledged divestment as a result of student pressure. The University of California pledged in 2015 to sell about $200 million of its holdings in oil sands and coal. Later that year, Syracuse University and the University of Hawaii both vowed to divest from companies whose primary business is fossil fuel-related, and the University of Maryland announced that it would divest its $1 billion endowment from fossil fuels. In May 2016, the Board of Trustees of the University of Massachusetts endorsed its decision to divest and described climate change as “a serious threat to the planet.” Globally, 641 institutions with a combined $3.4 trillion in investment holdings have pledged to divest.

Divesting involves selling shares from certain types of companies because of ethical, moral, or environmental concerns. Determining whether a company is truly implicated in objectionable lines of business is not always straightforward, leaving the creation of a divestment strategy largely up to a university's own judgement. For instance, Stanford University chose to divest only from coal-affiliated companies contained in its portfolio. Meanwhile, Pitzer College divested from all of its fossil fuel holdings and established a proactive sustainability fund to encourage environmentally responsible investments in the future.

This is not the first time universities have been called upon to alter their business practices to exert social change. In the latter half of the 20th century, Americans protested companies doing business in South Africa in order to rally against apartheid and apply outside pressure to the South African government. This early form of divestment also stemmed from coalitions based in academic institutions across the United States and is credited with ramping up pressure against oppressive policies abroad.

When considering whether to divest, a university must weigh the financial, legal, and social implications of such a decision. Endowments, large pools of funds comprised of individual donations from private donors, are a key financial resource for many universities. Given how closely a university's capabilities and successes are tied to its endowment, decisions involving it are bound to be controversial. Universities are generally free to invest or spend their endowments to the extent allowed by their donors, and many place these funds in the stock market (including in the fossil fuel sector), to maximize returns.

A major point of contention is whether students have any standing with regard to where their university deploys its endowment money, since endowments do not come from student tuitions. But proponents of divestment argue that a university’s position inherently reflects the voices of its students and that, through their attendance at the institution, students should have some say in their institution's direction.

Another key concern is whether divestment is actually effective: some argue it is counterproductive, as universities lose economic clout when they remove themselves from a company's orbit. When stockholders divest from a company, they effectively preclude themselves from having an influence on what that company does. “By petulantly selling your shares, you have not hurt the company at all. You’ve just transferred ownership of shares to some other party who cares much less about the issue than you do,” says Christine Wood, a Vassar College trustee with 30 years of experience in the investment management field. Moreover, stocks in coal comprise only 1-5 percent of a university’s endowment total, on average. With this in mind, opponents of divestment reason that the financial blow to these massive fossil fuel conglomerates would be nominal, calling into question divestment's ultimate impact.

A university’s divestment may have a powerful symbolic impact, however. Academic institutions hold a significant amount of sway over the attitudes and practices of future generations, causing them to grapple with questions of accountability that other entities may not be subject to. University divestments can cast a pall across an industry, leading to ripple effects that result in further investment losses for companies in that sector. Proponents of divestment are clearly looking to higher-education institutions as instruments of change with the power to influence policy trends. Meanwhile, those who do not view climate change as a real problem or hold skeptical views of climate science take issue with what they see as universities bending to social pressures and divesting from fossil fuel companies. Universities themselves are sometimes reluctant to make any drastic changes to their current practices on the basis of climate activism and potentially fickle external pressures.

Whatever a divestment’s economic and symbolic impact, it might very well be the financially savvy thing to do. Some reports indicate universities are already losing money through their stock holdings in fossil fuels. Market projections for the fossil fuel sector are grim, with HSBC Bank recently issuing a warning to its customers to pull out of their fossil fuel stocks, while offering a variety of divestment strategies. Additionally, a study by Trillium Asset Management, an investment firm that offers investors fossil fuel-free funds, found that Harvard University's coal, oil and gas stocks have lost approximately $21 million over a recent three-year period.

For more information on universities that have pledged to divest, visit


Author: Sasha Galbreath