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Ad Hoc Committee Report Highlights Reduced Investments in Fossil Fuels

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The Ad Hoc Committee on Fossil Fuels has publicly posted a report that presents the University of Pittsburgh’s Board of Trustees with an array of findings and options to consider at its next public meeting on Feb. 26, 2021. The report represents six months of work by the Ad Hoc Committee—an effort that included a month-long public comment period, two open forums, 12 committee meetings and 11 interviews with internal and external experts examining the investment landscape and Pitt’s investment strategies and performance.

The report’s options stem from the committee’s findings that global concerns about greenhouse gas emissions have made fossil fuel investments less financially attractive in recent years. This reality has already influenced the University’s investment strategy to the extent that, over the past five years, Pitt’s investment exposure to fossil fuels has decreased by more than 42%—from 10% of the endowment’s funds in fiscal year 2015 to 5.8% at the end of fiscal year 2020. Furthermore, current expectations have the endowment’s private investments in fossil fuels running to zero by 2035.

Steps toward sustainability

Pitt is taking steps large and small toward becoming a more sustainable institution. Among the most notable: a commitment to become carbon neutral by 2037, the University’s 250th anniversary. Other important commitments and achievements include:

A new Marshall Plan: Leslie Marshall in Pitt’s Center for Sustainable Business has created a roadmap for climate-friendly industrial growth over the next decade to add jobs and economic prospects across the Ohio Valley.

Last summer, the University announced a solar power purchase agreement that will supply 13% of the Pittsburgh campus’ annual electricity usage. In 2018, Pitt was also the first institution in the region to partner with Rye Development LLC to harness the flow of Pittsburgh’s rivers through a low-impact hydroelectric plant. Earlier this year, Allegheny County followed suit with its own partnership with Rye, citing Pitt’s leadership.

In partnership with Enterprise, Pitt is updating its fleet with alternative energy vehicles.

Associate Vice Chancellor for Facilities Management Scott Bernotas was recently named a global leader in environment and energy. His team’s work, from updating lighting and utility infrastructure to cutting water consumption, has saved money and energy across the 130 buildings on the Pittsburgh campus.

Students can now earn a Sustainability Distinction on their transcript, signaling their academic, community service and professional commitment to a better world.

But that’s not all. See more sustainability stories in the Pittwire archives.

Prior to its Feb. 26 meeting, the board has invited members of the Pitt community and public to read the full report (PDF) and provide comments on it through Feb. 23.

Intensive investigation

At its February 2020 meeting, the board initiated a process for considering socially responsible investing concerns, including those that may result in applying non-financial constraints on the endowment. As mandated by the board’s statement of governance, the Board of Trustees is responsible for maintaining the endowment to support Pitt’s mission in perpetuity. As stated in the committee’s report, “Only the full board can apply any non-financial exclusions,” also known as a “negative screen,” to investments in Pitt’s endowment.

In establishing the Ad Hoc Committee, the full board acknowledged that the concerns of the University community regarding investments in fossil fuels had crossed a significant threshold and had been raised by multiple stakeholders over a sustained period of time. Board Chair Thomas Richards appointed Trustee Dawne S. Hickton to chair the Ad Hoc Committee. The committee’s full charge, delivered by Richards at its first meeting in August 2020, directed its members to examine “whether, to what extent and via what methods” the University should consider divestment from fossil fuels for both existing and future investments.

Over the past six months, the Ad Hoc Committee worked to solicit public comments from the Pitt community, interview numerous external subject matter experts, examine current and future endowment investment strategy information and review copious background information, including other institutions’ commitments relating to fossil fuel investments.

Ongoing reduction in fossil fuel investment

Among the committee’s findings was the widely held expert view that the risk-return profile of fossil fuel investments has become increasingly less attractive in recent years. As a result, the University’s investment managers had already reduced the endowment’s fossil fuel holdings.

The Ad Hoc Committee also reviewed the University’s Environmental, Social, and Governance (ESG) policy instituted in the spring of last year. The report notes that, “This policy is designed to document certain considerations that have been essential to the University’s investment strategy and could include factors such as: energy efficiency, hazardous materials management, climate change, water and land management, data protection and privacy, human rights, labor standards, product safety, accounting and audit standards, bribery and corruption, business ethics and regulatory compliance.”

The Ad Hoc Committee’s report fully outlines its key findings on fossil fuel investments, the University’s endowment, and the University community. In outlining options for the board to consider, the report includes the option of forgoing applying a negative screen to fossil fuel investments in the endowment fund, while laying out additional potential steps for the board’s consideration, including:

  • Supporting the endowment’s expected trajectory to minimize fossil fuel exposure as part of a sound and advantageous investing strategy.
  • Creating transparency with regular updates and education to the Pitt community about the endowment’s fossil fuel exposure along with annual reporting on how the ESG process is impacting investments.
  • Directing the University’s Investment Committee to oversee development of a long-term strategy focused on seeking attractive investments that help reduce, avoid and eliminate greenhouse gas emissions.

The Board of Trustees has invited public comments on the report (PDF). Comments submitted by end of business on Tuesday, Feb. 23, 2021, will be shared with board members in advance of the Feb. 26 winter meeting.