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30 July 2015
Ethical Investment Task Team Appointed by Council The University of Cape Town
Development of a fossil fuel divestment strategy for UCT
2015 is destined to be a year of historic global transformation. World leaders will be deciding within the next few months on new goals for sustainable development and on a new, legally-binding climate agreement. As the top academic institution in Africa, UCT should play a leading role in global transformation towards a climate-resilient, low-carbon society.1,2
Climate change is now widely regarded as the most pressing issue of our time.3,4 It is affecting human societies and ecological systems worldwide.5 In Africa and South Africa, there are already impacts on ecosystems; agriculture and fisheries; water availability; and on food, health and economic security.6,7,8
Although the situation is dire, there are a range of mitigation strategies that can reduce further risks and impacts of climate change.9,10,11 A substantial reduction in emissions caused primarily by the burning of fossil fuels12,13 is urgently required to remain within the globally-agreed but still potentially dangerous14 limit of 2°C warming above pre-industrial global temperatures.15
A growing number of universities, colleges, institutions, religious groups, foundations and individuals have therefore called on the world’s major fossil fuel companies to support the shift to low-carbon, climate-resilient development. Their failure to do so however, has resulted in a global movement to divest capital from these companies in order to undermine their economic power, legitimacy and ‘social license’ in the eyes of the public.
The global divestment movement has received an unprecedented level of support, with over 260 institutions representing over US $50bn in assets committing to divest thus far.1
We understand that in February 2015, the Council agreed to form a task team to adopt an ethical investment strategy and to consider fossil fuel divestment by the University. While we understand the concerns about divestment risks, we believe that the future financial and societal risks due to climate change are considerably greater.16,17
The more notable supporters of the fossil fuel divestment campaign include: the United Nations, the Rockefeller Brothers Fund, Stanford University, Glasgow University, Australia National University, the School of Oriental and African Studies, the World Council of Churches, the Church of England, the world’s largest sovereign wealth fund, the British Medical Association, Guardian Media Group, Germany’s biggest power company, and the cities of San Francisco, Seattle and Portland. In addition, distinguished scientists and prominent individuals such as Prince Charles, President Barack Obama, and Archbishop Desmond Tutu (who has called on UCT specifically to divest) have also given their support.
We therefore write to encourage the Council task team to prioritise the critical issue of ethical investments and accelerate the development of an ethical investment strategy that includes fossil fuel divestment. We believe that fossil fuel divestment is morally, financially and developmentally the right thing to do.
- Fossil fuel divestment is morally right because it will help sustain our planet for future generations.18 UCT Chancellor Graca Machel, during last year’s UN climate summit in New York, urged all to “have the courage to tell business that it is not only about profits but about our collective survival and wellbeing.” In addition, Pope Francis’ recent encyclical reinforces the moral argument for transformative action on climate change and environmental stewardship.
- Fossil fuel divestment is financially wise. Since approximately 80% of coal, 50% of oil and 30% of gas reserves need to remain in the ground19 to stay within the 2oC warming limit, global fossil fuel assets run the risk of losing their value and becoming ‘stranded’.20,21,22 Citi Bank, HSBC,23 the President of the World Bank,24 the Bank of England,25 the Bank of America26 and a group of 367 investors representing more than US $24 trillion in assets,27 have all acknowledged the risks posed by the ‘carbon bubble’.
- Fossil fuel divestment will help Africa’s development. Unlocking Africa’s green energy potential will drive economic growth and job creation, addressing many of the economic and social constraints on development. In its most recent report, Africa Progress Panel’s Kofi Annan asserts, “Africa can leapfrog over the damaging energy practices that have brought the world to the brink of catastrophe.”28
Global leaders are coming together at COP21 in December to reach a new, universal climate agreement. We feel the time is right for UCT to recognize this critical transformation in history, lend powerful support for addressing the most pressing issue of our time and become the first University in South Africa, Africa, and BRICS to divest from fossil fuels.
– Class of 2015 Masters in Climate Change & Sustainable Development University of Cape Town
– Class of 2015 Masters in Environment, Society and Sustainability University of Cape Town
– With “strong endorsement” from the Environmental and Geographical Sciences Department
Please also sign the original 2014 Fossil Free UCT petition.
1 United Nations Framework Convention on Climate Change. Paris 2015 COP21: Main Issues. Available: http://www.cop21.gouv.fr/en/cop21-cmp11/cop21-main-issues [2015, April 20].
2 National Planning Commission. 2012. Our Future – Make it Work: National Development Plan 2030, Executive Summary. Pretoria: The Presidency, Republic of South Africa. Available: http://www.gov.za/sites/www.gov.za/files/Executive%20Summary-NDP%202030%20-%20Our%20future%20- %20make%20it%20work.pdf [2015, April 25].
3 Pew Research Center. 2015. Climate Change Seen as Top Global Threat. Washington, DC: Pew Research Center. Available: http://www.pewglobal.org/files/2015/07/Pew-Research-Center-Global-Threats-Report- FINAL-July-14-2015.pdf [2015, July 20].
4 European Union Institute for Security Studies. 2015. A New Climate for Peace: Taking Action on Climate and Fragility Risks. An independent report commissioned by the G7 members. Germany: Adelphi, International Alert, The Wilson Center.
5 Intergovernmental Panel on Climate Change. 2014. Summary for Policymakers. In: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [C.B. Field, V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi et al. (Eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
6 Nlang, I., Ruppel, O.C., Abdrabo, M.A., Essel, A., Lennard, C., Padgham, J., Urquhart, P. 2014. Africa. In: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part B: Regional Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Integovernmental Panel on Climate Change. [V.R. Barros, C.B. Field, D.J. Dokken, M.D. Mastrandrea, K.J. Mach, T.E. Bilir, M. Chatterjee, K.L. Ebi et al. (Eds.)] Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 1199-1265.
7 Department of Environmental Affairs. 2011. South Africa’s Second National Communication under the United Nations Framework Convention on Climate Change. Pretoria: Department of Environmental Affairs, Republic of South Africa.
8 Ziervogel, G., New, M., van Garderen, E.A., Midgley, G., Taylor, A., Hamann, R., Stuart-Hill, S., Myers, J. et al. 2014. Climate change impacts and adaptation in South Africa. WIREs Climate Change. 5:605-620. DOI: 10.1002/wcc.295
9 Sustainable Development Solutions Network. 2014. Pathways to Deep Decarbonization 2014 Report: South Africa Chapter. Sustainable Development Solutions Network and Institute for Sustainable Development and International Relations. [E. Guérin, C. Mas & H. Waisman (Eds.)]. Available: http://unsdsn.org/wp- content/uploads/2014/09/DDPP_ExecutiveSummary_digit.pdf [2015, April 25].
10 Rogeli, J., Luderer, G., Pietzcker, R.C., Kriegler, E., Schaeffer, M., Krey, V., & Riahi, K. 2015. Energy system transformations for limiting end-of-century warming to below 1.5C. Nature Climate Change. 5:519-528. DOI: 10.1038/NCLIMATE2572
11 Global Commission on the Economy and Climate. 2014. Better Growth, Better Climate: The New Climate Economy Report. Washington, DC: World Resources Institute. Available: http://www.newclimateeconomy.report [2015, April 10].
12 Intergovernmental Panel on Climate Change (IPCC). 2014. Summary for Policymakers. In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. [O. Edenhofer, R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum et al. (Eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
13 Intergovernmental Panel on Climate Change. 2011. Summary for Policymakers and Technical Summary. In: IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation. [O. Edenhofer, R. Pichs- Madruga, Y. Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel, P. Eickemeier, G. Hansen, S. Schlömer, C. von Stechow (Eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
14 Hansen, J., Sato, M., Hearty, P., Ruedy, R., Kelley, M., Masson-Delmotte, V., Russel, G., Tselioudis, G., et al. 2015. Ice melt, sea level rise and superstorms: evidence from paleoclimate data, climate modeling and modern observations that 2°C global warming is highly dangerous. Atmospheric Chemistry and Physics. DOI:10.5194/acpd-15-20059-2015.
15 United Nations Framework Convention on Climate Change. 2011. Report of the Conference of the Parties on its sixteenth session, held in Cancun from 29 November to 10 December 2010.
16 Stern, N. 2006. Stern Review Report on the Economics of Climate Change. Cambridge, UK: Cambridge University Press. Available: http://webarchive.nationalarchives.gov.uk/+/http:/www.hm- treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/stern_review_report.cfm [2015, January 10].
17 Intergovernmental Panel on Climate Change. 2014. Summary for Policymakers. In: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [C.B. Field, V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi et al. (Eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. 18Steffen,W.,Richardson,K.,Rockström,J.,Cornell,S.R.,Fetzer,I.,Bennett,E.M.,Biggs, R.,Carpenter, S.R., et al. 2015b. Planetary boundaries: guiding human development on a changing planet. Science. 347(6223):736. DOI: 10.1126/science.1299855.
19 McGlade, C. & Ekins, P. 2015. The geographical distribution of fossil fuels unused when limiting global warming to 2C. Nature. 517:187-190. DOI:10.1038/nature14016.
20 HSBC. 2015. Stranded assets: what next? HSBC Global Research. Available: http://www.businessgreen.com/digital_assets/8779/hsbc_Stranded_assets_what_next.pdf [2015, April 17].
21 Bank of England. 2014. Letter from Governor Mark Carney to Joan Walley MP. 20 October. Available: http://www.parliament.uk/documents/commons-committees/environmental-audit/Letter-from-Mark-Carney-on- Stranded-Assets.pdf [2015, April 10].
22 Carbon Tracker. 2012. Unburnable Carbon – Are the world’s financial markets carrying a carbon bubble? London, UK: Carbon Tracker Initiative. Available: http://www.carbontracker.org/wp- content/uploads/2014/09/Unburnable-Carbon-Full-rev2-1.pdf [2015, January 10].
23 Hurst, L. 2015. HSBC Warns Clients of Fossil Fuel Investment Risks. Newsweek. 21 April. Available: http://europe.newsweek.com/hsbc-warns-clients-fossil-fuel-investment-risks-323886 [2015, May 1].
24 Kim, J.Y. 2014. World Bank Group President Jim Yong Kim Remarks at Davos Press Conference. The World Bank. 23 January. Available: http://www.worldbank.org/en/news/speech/2014/01/23/world-bank-group- president-jim-yong-kim-remarks-at-davos-press-conference [2015, March 1].
25 Carrington, D. 2015. Bank of England warns of huge financial risk from fossil fuel investments. The Guardian. 3 March. Available: http://www.theguardian.com/environment/2015/mar/03/bank-of-england-warns-of- financial-risk-from-fossil-fuel-investments [2015, March 3].
26 Volcovici, V. 2015. Bank of America’s New Policy to Limit Credit Exposure to Coal. Reuters. 6 May. Available: http://uk.reuters.com/article/2015/05/06/banking-coal-climatechange-idUKL1N0XX3SQ20150506 [2015, May 7].
27 Global Investor Statement on Climate Change. Available: http://investorsonclimatechange.org/ [2015, January 10].
28 Africa Progress Panel. 2015. Power, People, Planet: Seizing Africa’s Energy and Climate Opportunities. Available: http://www.africaprogresspanel.org/publications/policy-papers/2015-africa-progress-report/ [2015, June 25].