Peer Analysis

Overview of Fossil Fuel Investment Policies of Peer Institutions

Produced by a Partnership of the Administrative Committee on Fossil Fuel Dissociation and the Undergraduate Student Government

(as of March 2022)

Scope of the Analysis

A range of colleges and universities have announced plans pertaining to climate change and their endowments. The chart below provides an overview, which compares the approaches of Princeton and its peer institutions. It is intended to help clarify the status of fossil fuel divestment at Princeton’s peer institutions and represents a good faith effort to accurately capture the current landscape.

For purposes of these comparisons, included as peer institutions are the fifteen private colleges and universities with the largest endowments as of June 30, 2021 with a couple of substitutions—Emory University (13th) and Vanderbilt University (14th) were replaced with Dartmouth College (17th) and Brown University (20th) so as to include the entire Ivy League.

The chart notes the size of each endowment, the scope of each institution’s policy, and whether or not the university has committed to eventually bringing its investment portfolio to a net-zero stance. Where available, the chart also includes excerpts from each institution’s statement (as well as links to the full text), in which the university articulates the rationale undergirding its fossil fuel investment policy. In most instances, it is not possible to determine, based on publicly available information, the details about specific institutional implementation processes or timelines. 

Key Terms & Information on Endowments’ Investment Approach

Within the chart, a distinction is made between direct and indirect investments. Some fossil fuel investment policies apply strictly to direct investments, some apply to direct investments and a subset of indirect investments, and still others (like Princeton’s) apply to direct and indirect investments in their entirety. Direct investments are ownership stakes in assets—either real assets like real estate and timber or financial assets like company securities and government bonds. By contrast, indirect investments are ownership stakes in investment funds (which buy and sell assets), but not the underlying assets of these funds. Princeton’s endowment is overwhelmingly skewed toward indirect investments: directly held, actively managed investments represent less than 1% of PRINCO’s assets. We believe the portfolios of Princeton’s closest peers are similarly composed almost entirely of indirect investments.

This extreme tilt toward indirect investments is a natural result of most endowments’ “manager of managers” model. Under this model, Princeton and its peers invest with external managers, primarily through commingled funds. The potential sources of an endowment’s fossil fuel exposure can be broken down into the following three categories, direct investments, fossil fuel-focused funds, and funds with broad investment mandates. Due to the relatively small size of their direct investment portfolios, Princeton and its peers hold the lion’s share of their fossil fuel investments indirectly. Historically, most of this indirect fossil fuel exposure was composed of investments in fossil fuel-focused funds. However, endowments may also have exposure to fossil fuel companies through investments in multi-sector funds, whose broad investment mandates allow them to acquire fossil fuel assets.

The chart below also distinguishes between those policies that apply just to a university’s future investments and those that apply both to its existing and future investments. Additionally, it includes links to the statements that institutions have made about their fossil fuel investment policies, as well as excerpts from these statements regarding the rationale for the policies. Some provide a moral or values-based rationale for the policy, while others cite economic factors; very few use the term “divestment” itself. The term “divestment” in the university context has typically been used to describe a decision to sell assets based on non-economic judgments, usually for moral, political, or values-based reasons.

Rank by Endow.
MV
Institution FY21 Endow.
(billions)
Policy Types of Fossil Fuels/Companies Addressed Portfolio Coverage Application to Existing and Future Investments Stated Rationale Net-Zero Portfolio Pledge Announcement
1 Harvard University $51.9 Does not intend to make direct investments in companies that explore for or develop further reserves of fossil fuels in the future

 

Has not made new commitments to private equity funds dedicated to making investments in the fossil fuel industry and has no intention of doing so moving forward
Companies that explore for or develop further reserves of fossil fuels Partial coverage (direct holdings and fossil-fuel focused private equity funds) Future Investments “Given the need to decarbonize the economy and our responsibility as fiduciaries to make long-term investment decisions that support our teaching and research mission, we do not believe such investments are prudent.” Yes Harvard Action (2021)
2 Yale University $42.9 Divestment from select fossil fuel companies Companies that violate Yale’s fossil fuel investment principles Full portfolio (direct and indirect holdings)

Existing and future investments

“The adoption of these ethical investment principles exemplifies the university’s deep commitment to promoting the development and use of clean, sustainable, and renewable energy.” No Yale Action (2021)
3 Stanford University $37.8

Divestment from thermal coal. No direct holdings in companies whose primary business is oil sands extraction

Will not invest in energy firms that operate in a manner inconsistent with established climate science
Thermal coal and tar sands companies and energy firms that operate in a manner inconsistent with established climate science  Partial coverage (direct holdings only)

Existing and future investments

“Previously, the Board of Trustees decided to divest from thermal coal because it is among the most carbon-intensive of the fossil fuels, and less carbon-intensive fossil fuels are broadly available; it also previously took the same view with respect to tar sand…. While the Board does not conclude that blanket divestment is currently warranted, the Board does find that the University’s commitment to the goals of the Paris Agreement should be reflected in both the university’s operations and its investments.” Yes

Stanford Action (2020)

 

Stanford Action (2014)
4 Princeton University $37.7 Dissociation (which includes and goes beyond divestment) from fossil fuel companies that spread disinformation and fossil fuel companies in the thermal coal and tar sands segments of the fossil fuel industry Fossil fuel companies that spread disinformation and fossil fuel companies in the thermal coal and tar sands segments of the fossil fuel industry Full portfolio (direct and indirect holdings)

Existing and future investments

“In keeping with its core truth-seeking mission and commitment to sustainability, Princeton University has established an administrative process for dissociating from companies engaged in climate disinformation campaigns or that are involved in the thermal coal and tar sands segments of the fossil fuel industry. The University also has committed to reducing the aggregate harmful climate impact of the entirety of the University’s direct and indirect endowment holdings.” Yes Princeton Action (2021)
5 Massachusetts Institute of Technology $27.5 N/A  N/A N/A  N/A “We believe that divestment—a dramatic public disengagement—is incompatible with the strategy of engagement with industry to solve problems that is at the heart of today’s plan. Combatting climate change will require intense collaboration across the research community, industry and government. Divestment would interfere with our ability to collaborate and to convene opposing groups to drive progress, at what may be a historic tipping point.” No MIT Statement (2015)
6 University of Pennsylvania $20.5

Will cease any new commitments to fossil-fuel production focused private equity funds

Will not make new direct investments in companies engaged in the production of fossil fuels

Companies engaged in the production of fossil fuels   Partial coverage (direct holdings and fossil fuel-focused private funds only)

Future investments

“Given Penn’s institutional goals related to combatting climate change, we are announcing today that we are ceasing any new commitments to private equity vehicles dedicated to investments in fossil fuel production. Similarly, we will continue our policy of not making direct investments in companies engaged in the production of fossil fuels. We also will continue to encourage and, in certain cases, support investment managers or companies that are actively and materially investing in the energy transition.” Yes Penn Action (2021)
Does not currently and will not in the future hold direct investments in companies focused on the production of thermal coal or tar sands Existing and future investments
7 University of Notre Dame $18.1 N/A  N/A  N/A  N/A “Our strategy does not include a divestment by our endowment of companies that extract and sell fossil fuels, as some within and outside our campus community have urged.….  I understand the principled commitment and sense of urgency from which the call for divestment arises, but I do not agree with this course of action. The withdrawal of the small portion of our endowment funds that are invested in such companies—roughly 4%—would have negligible if any practical impact on these companies. More relevant, though, is that nearly all acknowledge that there is no practical plan by which we could cease using fossil fuels in the immediate future and continue the work of the University. It seems to me at least a practical inconsistency to attempt to stigmatize an industry—as proponents of divestment hope—from which, we admit, we must purchase their product to do our work.” No Notre Dame Statement (2016)
8 Northwestern University $15.0 N/A  N/A N/A N/A N/A No N/A
9 Columbia University $14.4 Divestment from thermal coal  Thermal coal and companies deriving >35% of revenue from thermal coal production Full portfolio Existing and future investments “Columbia University will combine its formidable strengths in scientific research and policy development with the skills of its investment team to play a constructive role in a broader shift in the global economy to net zero emissions by 2050. To advance this essential cause, the University’s investment policy on fossil fuels will include the following elements…” No Columbia Action (2021)   
Does not currently and will not in the future have direct investments in publicly traded oil and gas companies. Will request that external managers not hold publicly traded oil and gas companies. Companies whose primary business is the exploration and production of fossil fuels, or integrated oil and gas companies whose business includes the exploration, production and refining and marketing of oil and gas (may make future exceptions to “publicly-traded oil and gas companies that are making significant strides toward net zero emissions.”) Partial coverage (direct holdings w/request to external managers re: indirect holdings)

Existing and future investments

Will not make new commitments to fossil fuel-focused private funds    Partial coverage (fossil fuel-focused private funds)

Future investments

10 Washington University in St. Louis $13.5 N/A  N/A  N/A  N/A “the university does not require its investment partners to maintain any particular social or policy agenda.  The university welcomes and encourages robust debate on these topics, but we cannot risk jeopardizing the financial support of the university’s mission by restricting its universe of investments to a subset of managers. Furthermore, we firmly believe our best contribution to the advancement of the greater social good is through the financial support of the university’s mission. In return, that mission’s impact on the students, faculty, and staff is what will ultimately improve the world. As such, the university maintains a strong presumption against using its financial resources to express any particular social or policy agenda through exclusionary practices.”  No Washington University Statement (2020)
11 Duke University $12.7 N/A  N/A  N/A  N/A N/A No N/A
12 University of Chicago $11.6 N/A  N/A  N/A  N/A N/A No N/A
15 Cornell University $10.0

No direct investments in individual equity securities, including those of fossil fuel companies

 

Will not make new commitments to fossil fuel-focused private funds

Unspecified, but implies private fossil fuel companies (extraction, pipeline, etc.)

Partial coverage (direct holdings, fossil fuel-focused private equity, and bond funds only)

Future investments

“There’s a growing recognition that we’re transitioning away from fossil fuels globally, and the economic competitiveness of renewable energy sources is rising… We’re doing the right thing from an investment perspective, particularly for an endowment with a perpetual time horizon.” No Cornell Action (2020)
17 Dartmouth College $8.5 No direct public holdings in fossil fuel companies Public fossil fuel companies   Partial coverage (direct public investments)

Existing and future investments

“The Dartmouth Investment Office believes the energy transition and a subsequent zero-carbon future are important and are influential themes in the economy…We also believe the changes underway will create opportunities for aligned investment. As stewards of the endowment, our team is committed to understanding these themes and will make suitable investments, including renewables, the broad energy transition and other innovative technologies, that support a timely global path to net zero emissions.” No Dartmouth Action (2021)  
Will not make new investments in fossil fuel-focused private funds Companies engaged in fossil fuel extraction, exploration, and production Partial coverage (fossil fuel-focused private equity funds only

Future investments

20 Brown University $6.5 Sold 90% of fossil fuel investments, liquidating remainder, and will halt new investments in fossil fuel extraction companies Fossil fuel extraction companies Partial coverage (direct holdings and fossil fuel-focused funds)

Existing and future investments

Nearly two years ago, the Investment Office decided to sell its entire exposure to fossil fuels, a process that takes time due to the illiquid nature of some investments. To date, 90% of investments in companies that extract fossil fuels have been sold, and the remainder is being liquidated as it becomes possible to do so. In the meantime, the Investment Office has made no new investments in this area. The decision to halt investments in fossil fuel extraction companies reflects the view that, as the world shifts to sustainable energy sources, investments in fossil fuels carry too much long-term financial risk. We do not plan to make new investments in fossil fuel companies unless and until they make significant progress in converting themselves into providers of sustainable energy.” No Brown Action (2020)