Letter to the Board of Regents

Regarding "Resolution to Divest from Direct Holdings in Fossil-Fuel Companies" 9/6/2022

Institutional Climate Action

Dear Tyler and the Board of Regents,

Last Friday when the "Resolution to Divest from Direct Holdings in Fossil-Fuel Companies" was

released as an agenda item⁠

to be voted on this Thursday, ICA recognized this as an exciting step in the fight for the University of Washington to divest its Consolidated Endowment Fund from the fossil fuel industry. Despite this historic document and the years of work behind it which demonstrate the activism and the compromise which led up to it, we have serious grievances with the first numbered resolution item in the resolution. It reads: "Begin exiting all direct investments in fossil-fuel companies with the goal of complete divestiture by Fiscal Year 2027, with appropriate allowances for firms contributing to the sustainable energy transition;"

Since the start we have demanded a divestment date of 2025. The ACSRI concurred (consider, as well that they released their

recommendations⁠

in 2022 meaning they understood the 3 year timeline it would leave), and UWINCO in their

June presentation⁠

indicated it was possible. We are asking: why the delay of an additional 2 years? Moreover, where did the 2027 date come from?

We are even more concerned with the following exception in that clause. This is a broad, undefined and dangerous precedent to set. Currently, fossil fuel companies such as Exxon

spend less than 5% on renewables⁠

—yet that does mean they are financing some renewable energy projects.

https://www.ren21.net/oil-and-gas-companies-renewable-energy-transition/⁠

Because of the vague wording, Regents would be authorizing UWINCO to continue to invest in the Oil Majors because of the minuscule greenwashed cards they strategically place in their decks to manipulate investors such as UW. We demand that prior to voting to adopt the resolution Regents amend the wording to read:

"Begin exiting all direct investments in fossil-fuel companies with the goal of complete divestiture by Fiscal Year 2025, with appropriate allowances for projects contributing to the sustainable energy transition off fossil fuels"

These wording changes authorize UWINCO to invest in renewable energy projects such as a solar farm or offshore wind facility—even if lamentably the company behind it is a company

such as BP⁠

which makes most of its revenue from fossil fuels. It does not, however, authorize UWINCO to invest in BP or other fossil fuel majors broadly: whether through their publicly traded stocks sneaking into mutual funds etc. or through direct partnerships. For example, a fossil fuel company might be developing a natural gas pipeline which UWINCO wishes to enter into a master limited partnership with. In the past, UWINCO has argued that these natural gas pipelines are part of the "sustainable energy transition", serving as a "bridge fuel" from dirty forms such as coal or oil to (ostensibly) renewables. Additionally, grey hydrogen—

hydrogen ⁠

that is made via the energy generated by combusting natural gas—has been peddled as "part of the transition." These industry denial tactics are false attempts to feign compliance. By amending the wording in part one of the resolution, Regents would remove the loophole which would essentially have left no change in the status quo, and authorize finance of fossil fuel projects.

Part four also contains sections with loopholes which must be addressed. Similar to part one, “off fossil fuels” should be added to the end of part four, for the purpose of avoiding false solutions such as LNG which are

unrenewable ⁠

and

unsustainable⁠

, bypassing the carbon budget our planet has remaining. To address the problem of greenwashing by the Fossil Fuel industry, we demand that firms “whose primary focus” is a sustainable transition (off fossil fuels) should be the only firms provided an exception, not just firms who are providing proportionally minuscule contributions for primarily PR purposes.

Part four should after adoption read:

“Decline to renew indirect investments in funds primarily focusing on fossil-fuel extraction or reserves, with appropriate allowance for firms whose primary focus is contributing to the sustainable energy transition off fossil fuels"

Finally, we believe that for this resolution to actually serve as an effective tool towards contributing to "a successful global transition to sustainable energy sources" despite the "present geopolitical situation" and "absence of regulation around greenhouse gas emissions disclosure and reduction," the Regents must add a 14th line item. We recommend an instruction for the President or relevant party to announce the decision publicly. This helps encourage other peer educational institutions to join the transition off fossil fuel finance as well: if you will remember, the ACSRI and UWINCO were able to rely on studies and

affirmations offered by peer institutions⁠

which had already divested in formulating their recommendations. Adding UW to the list of public universities which have divested would perhaps have a greater positive impact on transitioning off fossil fuel finance than the mere hundred some odd million which will be divested. Effective action requires UW to join peers in taking a stand.

While we are thrilled by the arrival of this vote after years of work, we are profoundly concerned by the lack of effective wording in this resolution. If you fail to amend the resolution as presented we will end up after two years of bureaucracy, delay, negotiation, stakeholder consultation, and professional evaluation exactly where we started: a group of dedicated and well-meaning financial managers naively

financing infrastructure that will lock us into a fossil fuel dystopia⁠

. The ACSRI outlined clearly the recommendations it had. This resolution ignores that, seemingly a violation of the entire impetus behind the ACSRI process. The ACSRI was not, or at least should not merely be an excuse used to delay, distract, and disguise a vote which has already been decided by administrators against true divestment.

To move forward without amendment is to leave us back where we started but having wasted 9 months of faculty and students' time. It is to grant discretion without disclosure, and to make a mockery of the UW bylaws.

In 2016 when this process was created⁠

it was to thoroughly and objectively evaluate shareholder actions such as divestment using the Advisory Committee. ICA chose to comply with this process out of a belief that it would yield a just outcome. We played by the rules. Now we are asking you to play by the rules as well. Heed the recommendations of the experts of the ACSRI. Amend the decision prior to vote. See you Thursday.

Peter Fink and the members of Institutional Climate Action

⁠