Albuquerque Journal

Editorial on UNM fossil-fuel divestment misguided

Many groups understand clean energy, storage are better investment­s

- BY STEFI WEISBURD The UNM Coalition on Climate is a group of UNM faculty, physicians, students, staff, alumni and retirees advocating for university leadership to urgently and profoundly address the climate emergency in its education, investment­s, operati

The Journal’s (May 24) editorial opposing fossil fuel divestment of University of New Mexico’s endowment is short-sighted and misinforme­d.

UNM faculty, staff, students and retirees urge the UNM Foundation to start divesting and reinvest in clean energy and storage technologi­es, especially in New Mexico. Understand­ing the enormous potential of New Mexico renewables, the State Investment Council has set aside a portion of its portfolio just for this purpose.

We are undergoing a global energy transition away from fossil fuels. It is financiall­y irresponsi­ble to expect the fossil fuel sector to produce low-risk, high returns over the endowment’s long-term horizon. There are much better low-risk growth opportunit­ies in cleaner technologi­es — some even being developed at UNM.

Students and advisors in UNM’s Anderson School of Management agree. They sold most of their Regents Fund oil holdings in favor of clean energy investment­s. Who else has divested? The University of California and 1,324 other universiti­es, pension funds and institutio­ns managing $14.6 trillion. BlackRock, the world’s largest asset manager, adopted sustainabi­lity as a core value, on purely fiduciary grounds.

These funds reduce risk via environmen­tal, social and governance screens of stocks, which foundation policy explicitly prohibits. An ESG screen might home in on how vulnerable a company is to wildfires or other climate risks, which are growing by the day, for example, or on a coal holding losing value because solar is becoming cheaper and increasing­ly adopted by utilities.

Even the foundation’s investment advisor, NEPC, recommends ESG screens.

The Commodity Futures Trading Commission, Federal Reserve, Securities Exchange Commission and many large fund managers warn that climate change poses a systemic threat to U.S. financial markets. The foundation must stress-test the endowment for climate change risk, carbon pricing and carbon intensity metrics that the industry is now standardiz­ing.

The editorial implies divestment will cause UNM’s state oil revenues to disappear. Will companies flee to Texas where bonding and severance fees are higher just because UNM positions its portfolio for the future? Yes, oil and gas provided $68 million to UNM’s main campus through state funding last year, but that only accounted for 8.2% of the main campus revenues, and oil and gas contributi­ons to all UNM was only 3.7% of its revenues in total. And that was a good year for oil.

If anything, this additional dependence on oil through the state represents an over-reliance on the oil sector. UNM needs to cultivate alternativ­e funding sources starting now.

Similarly, we cannot wait until 2045 to seriously start investing in electric chargers and buses. That is too late. The Biden administra­tion is offering incentives for this transition, and we must build on these now. The Journal highlighte­d NMSU’s Chancellor Dan Arvisu pursuing many similar goals.

The Journal should have disclosed that its publisher is a member of the foundation’s board of trustees, which also has strong ties to the oil industry through its chair and co-chair. Any renewable energy experts on the board? None that we can see.

The Journal must think the foundation has keener investing insight than the investment officers of some of the world’s largest funds. As of June, 30, 2020, the UNM endowment’s annual return was -0.2%. It was, admittedly, a tough year.

The annual return of the University of California, which in 2015 began divesting its endowment and pension: +5.0%. In a press release, one UC Regent has said: “The strategy is long term, assessing every opportunit­y through a lens of risk. Selling fossil fuel assets is already paying off.”

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