A committee advising Duke’s president on socially responsible university investments has recommended steps to support investments that promote non-fossil fuel energy and reduction in carbon emissions. Because of the worth of the strategies recommended, the committee opposed a request from a student group to divest from fossil fuel companies.
The Advisory Committee on Investment Responsibility (ACIR) praised Divest Duke, the student group that presented data considered by the committee in its recommendations.
But it concluded, "We are not persuaded that divestment is an effective strategy to hasten the processes by which we will become less dependent on fossil fuels in the near term, and because of our concern that divestment could polarize discussions surrounding strategies that could accelerate development and use of non-fossil fuel energy, we do not support the divestment option."
The report also commented the university is taking other actions that have a greater real and symbolic value than divestiture. ACIR is chaired by law professor James Cox, an internationally known scholar on investment ethics and responsibility.
The university has made reducing carbon emissions and mitigating the effects of climate change part of its mission and policies. It has pledged to become carbon-neutral by 2024, decommissioned its coal plant and replaced it with a more energy-efficient steam plant, added electric buses and vehicles and purchased carbon offsets, most notably at a state hog farm.
In forwarding the ACIR report to Duke Divest, President Richard Brodhead wrote that he and the executive committee of the Board of Trustees endorsed the report's recommendations. He said the university shared the group’s “deep concern regarding human-induced climate change,” adding: “Duke Divest has done this university a significant service in raising the question of how our investments should be governed by ethical values regarding climate change.”
While not favoring divestment, ACIR made several suggestions about the way the investment of the endowment could promote environmental values. Brodhead embraced these suggestions and recommended them to the trustees’ executive committee:
- DUMAC will continue to make available to ACIR a list of its direct holdings every year. As part of this process, it will compile annually a list of its direct holdings in fossil fuel energy and clean energy/technology companies.
- As the body that oversees DUMAC, the trustees’ executive committee will, consistent with its fiduciary obligations, engage in periodic discussions with the DUMAC leadership about its investments in clean sources of energy.
- The co-chairs of the campus’ Sustainability Committee will continue to monitor energy companies and engage with them as appropriate, given Duke’s commitment to sustainability.
- In coordination with DUMAC, the university treasurer will vote any proxy that supports well-crafted and reasonable proposals that appear consistent with the objective of encouraging a firm’s managers to report on, or take action with regard to, efforts to reduce carbon emissions.
ACIR was reconstituted under a new charge in 2013 that established a process and guidelines for considering divestment requests. After extensive discussion, ACIR thought the fossil fuel divestment proposal failed to meet the divestment guidelines set for the committee, Cox said.
He said the committee found there was no consensus within the university in support of fossil fuel divestment and no clarity "that divestment will have the desired impact" in reducing the world's dependence and use of fossil fuels.
The report noted actions such as divestment can "make an important symbolic statement," but concluded that Duke is able to make similar statements through a variety of other more effective steps, such as the carbon neutral pledge, purchase of carbon offsets and "behavioral changes by our community," including promoting alternative modes of daily transportation and reducing travel.
Per the ACIR guidelines from the Board of Trustees, divestment was always intended to be an action of last resort, Cox said, with ACIR guidelines stating a company is to be first "afforded reasonable opportunity to alter its activities."
Cox said there was strong interest in ACIR, which includes four students, tackling the issue of climate change, and he hoped the report, and Divest Duke's efforts, would focus more attention on the issue. "Although it is beyond [ACIR's] scope of deliberations, we believe that the university can do more to foster debate and discussion on our campus and beyond."