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Peter Sims
Why should the University of Surrey Divest from
the Fossil Fuels Industry
The fossil fuels industry is a rogue industry, and one that the University should not wish to associate
with or to be seen to profit from.
The above is quite a bold, and some might say extreme, point of view; but from looking at the facts, it
is one that a group of students at the University of Surrey have come to believe is true (if you think
we are mistaken please explain why). This is because the fossil fuel industry’s current business plan
is incompatible with life on this planet as we know it and with the continuation of modern civilisation,
at least in its current form. This is again a serious allegation, but one you could argue is not a
problem. Many companies find themselves in a situation where their business plan is incompatible
with the world/society, often because the world has changed rather than their business plans never
being viable. Normally when this happens, whether with pubs, local bakers or canal companies, the
companies either restructure and change their business plan (e.g. Canal companies buying into
railways) or they close down. Under normal conditions there is little structural or systemic risk to a
sector becoming obsolete due to a changing world because the system self regulates, forcing
companies to adapt in order to survive.
Then why should we be worried about the fossil fuels industry? We would say ‘because the feedback
loop has been broken’. Fossil fuel companies have become so large and powerful and have gained
so much political weight (through years of lobbying) that they are postponing their own demise/
adaption. In the past the market/economy/society has adapted and changed within the limitation of
the earth, in order to address the demands of society, and corporations have had to adapt within the
market/economy/society as it changed. Currently the fossil fuels industry is perpetuating itself at
society/civilisation’s expense by opposing emission restrictions, international agreements, subsidy
reductions and by spreading misinformation. Certainly the fossil fuels industry aren’t the first and
won’t be the last industry to try to resist change for the purpose of self-preservation, the issue is that
they are actually succeeding in delaying action on climate change for decades. Therefore we have a
perfect storm situation, governments won’t regulate the fossil fuels industry because it’s too big and
powerful, and the fossil fuels industry won’t stop being too big and powerful until it is regulated.
So how is their business plan incompatible? This can be proven with the 3 numbers below.
The first number is the Globally agreed climate change limit. 565 Gigatons is the number of Tonnes of
CO₂ that the IPCC think can be emitted globally over the next 50 years if we want to stay below that
2 degree limit (~50% chance). The last number, 2,795 Gigatons, is the amount of CO₂ which would
be emitted if all of the proven reserves of companies listed on the stock market were burnt.
Now at this point you could say “but what about Carbon Capture & Storage” (CCS), or another
technology that’s currently being researched/developed. We don’t believe there are any as advanced
as CCS and it is believed that even with a very ambitious roll out of CCS it might only change that
budget by 12/14% which has little impact on overall conclusions.
Why should the University of Surrey Divest from the Fossil Fuels Industry!
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Peter Sims
So 60-80% of fossil fuel industries reserves are not burnable in the next 50 years which is likely to
mean that a large part of the fossil fuel industry’s business plan is not implementable in the next 50
years. Together this could mean:
- There is a bubble in fossil fuel asset prices
- Fossil fuel companies are much more risky investments than they’ve been historically.
- That investing in the fossil fuels industry implies you do not think we should keep climate
change below the 2 degrees limit that been internationally agreed.
UN climate chief Christiana Figueres said bankers would be “blatantly in breach of their fiduciary
duty” if they failed to accelerate the greening of their portfolios. “Investment decisions need to reflect
the clear scientific evidence, and fiduciary responsibility needs to grasp the intergenerational reality:
namely that unchecked climate change has the potential to impact and eventually devastate the lives,
livelihoods and savings of many, now and well into the future,” she said. Also see Report UK Law
Commission (2014)
So we would like to put it to the University Finance Board that it should accept our amendment to the
ethical investment policy in full because:
- Money is what drives society, the people with the power/responsibility to decide how money is
invested have to ability to change society.
- There a huge amount of investment in infrastructure needed if we’re going to avoid climate
change.
- Report after report has shown that investing in clean energy, efficiency and other sustainable
technologies can be even more profitable than fossil fuels (see Forbes, UK study, OZ study).
- The risks/impact on return on investments from divesting from fossil fuels have been shown to
be insignificant (Impax and Aperio)
- Currently the University is betting that we don’t stay below two degrees, this is arguably
hypocritical (given the Uni’s claim to care about student futures and be a 'green university’ . . . ).
- You as the finance board have more power the influence whether we (globally) stay below 2
degrees than almost anyone else in the university. The University could stop using fossil fuels
tomorrow and that would have less effect on whether globally we avoid climate change than the
University deciding to divest.
- The actual amounts currently invested aren’t that big relative to rest of Uni’s Endowment,
because the point of divesting is a matter of principle this doesn’t make it pointless but does
mean it’s not such a big step into the unknown.
- You’re not the first institutions to do this, lots of Universities, Councils, cities, churches have
already done so.
- If we already have 5x more coal, oil & gas reserve than we can burn, why invest in an industry
spending billions looking for more fossil fuels reserves?
- Responsibility to future generations (both of Uni students and in general).
- If it is wrong to wreck the climate (that we're all dependant on) then it is wrong to profit from that
wreckage.
- Students, the local area, renewable energy companies could benefit from the uni's investment
rather than foreign and or rogue corporations.
- It is hypocritical for universities to invest in fossil fuels, shouldn’t a government funded
organisation be investing in line with Government Policy and therefore not in companies who’s
business plans are incompatible with climate change targets.
~£156,000 - Invested directly invested in fossil fuel companies.
~£176,000 - Invested indirectly invested in fossil fuel industry.
Evidence to back up claims made in this document available on request, some has already been
passed to Uni’s finance department.
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