FAQ: Divesting University of Wisconsin

Wisconsin is a long way from South Africa, the US is a very different market in many ways, and this FAQ was written during the early stages of the divestment movement, but many of these arguments still hold.


  1. What is fossil fuel divestment?
  2. Why divest?
  3. How will fossil fuel divestment address climate change?
  4. Can divestment really build a movement?
  5. Is divestment from fossil fuel companies financially risky?
  6. What about shareholder activism? By divesting from fossil fuel companies, aren’t we giving up our say in how they operate?
  7. Shouldn’t campuses focus their efforts on putting up windmills and making their facilities more sustainable?
  8. If the goal of divestment is to pave the way for a political solution to the climate problem, isn’t it more effective to simply work on getting the right politicians elected?
  9. The fossil fuel divestment campaign is sometimes compared to the divestment campaign targeting apartheid in South Africa. What role—if any—did divestment have in ending apartheid in South Africa?
  10. If the University of Wisconsin divests from the fossil fuel industry, won’t it be pressured to divest from other industries too?
  11. Do we really need to stop burning fossil fuels? What about carbon sequestration and other technologies—if we employ them, can’t we continue to burn fossil fuels without affecting the climate?
  12. Fossil fuel divestment targets all fossil fuels, including natural gas. Don’t we need natural gas to help us transition to a lower carbon future?
  13. Is divestment from fossil fuels possible for an institution the size of the University of Wisconsin, given its reliance on mutual funds?
  14. ‘Fiduciary responsibility’ and donor wishes make divestment too legally and politically problematic.
  15. Are there case studies of successful fossil fuel divestment?
  16. Where can I learn more?
  1. What is fossil fuel divestment?

The fossil fuel divestment movement calls on students to ask their university administrations to immediately freeze any new investments in the top 200 fossil fuel companies and to divest their endowment from these companies within 5 years.

  1. Why divest?

There are many reasons why we are calling on the University of Wisconsin to divest its endowment from fossil fuel companies. Here are three of them:

  1. 1. Investments in fossil fuel companies are unethical. If fossil fuel companies are generating a profit for the University of Wisconsin, it means they are burning carbon reserves that scientists agree should not be burned. The University of Wisconsin can only receive positive returns on its investments in fossil fuel companies if atmospheric concentrations of CO2 are steadily rising.
  1. In the long run, investments in fossil fuel companies are unwise. International agreements have designated 2oC as the safe level of global warming.[i] In order to avoid warming the planet by more than 2oC, it is estimated that 80% of the world’s proven fossil fuel reserves must stay underground.[ii] This means that if international agreements to limit the extent of warming hold, fossil fuel companies will need to forfeit profits on the majority of their underground reserves and will lose substantial value, making them an unwise investment.
  1. The University of Wisconsin mission statement. The University of Wisconsin’s mission statement begins with “The primary purpose of the University of Wisconsin–Madison is to provide a learning environment in which faculty, staff and students can discover, examine critically, preserve and transmit the knowledge, wisdom and values that will help ensure the survival of this and future generations and improve the quality of life for all.”

Due to the severity of climate change, we find that an intolerable contradiction exists between the universities stated mission and the UW Foundation’s investments in the fossil fuel industry—a contradiction that threatens the future of today’s students and those who follow us. 

  1. How will fossil fuel divestment address climate change?

The divestment movement aims to create space for national policies that address climate change. In order to combat climate change, we need significant national policies aimed at cutting emissions. Currently, the fossil fuel industry has enormous influence on U.S. politics through political campaign contributions and the funding of lobbyists. In 2012, the fossil fuel industry spent more than $140 million on lobbyists, making it the fourth largest industry-lobbying group.[iii] Also in 2012, fossil fuel companies contributed almost $15 million to Political Action Committees (PACs), and climate change deniers in the Senate took an average of $699,000 from the fossil fuel industry.[iv]

To make space for national policies that address climate change, we need to lessen the political influence of the fossil fuel industry. The divestment campaign targets the industry’s reputation, making it a less enticing source of campaign funds. Divestment aims to change the way the public, governments, and investors view fossil fuel companies in order to create a political climate where large-scale action on climate change is feasible.

  1. Can divestment really build a movement?

Although the divestment movement is little more than a year old, more than 26,000 students and alumni have signed petitions calling on their colleges and universities to divest from fossil fuels. Students have launched divestment campaigns on more than 300 campuses across the U.S.—from Berkeley to NYU and from Tulane to the University of Alaska. Nine schools have already committed to divest from fossil fuels, including one state school. The movement has expanded beyond U.S. borders to Canada, the United Kingdom, the Netherlands, Australia and Bangladesh.[v]

The divestment movement is so large that the President of the United States mentioned it in his address on climate change on June 25th, 2013. In his speech, Obama said, “Push your own communities to adopt smarter practices. Invest. Divest.”[vi] He recognized divestment as a tactic with the potential to have a significant impact on national policy.

Major media outlets that have covered divestment include: The New York Times, Rolling Stone, The Guardian, The Economist, Forbes, TIME Magazine, The Wall Street Journal, National Public Radio, The Washington Post, The Minneapolis Star Tribune, The Los Angeles Times, The Denver Post, The Houston Chronicle, The Chicago Sun-Times, The Boston Globe, ABC News, NBC News, CBS News, and more.

  1. Is divestment from fossil fuel companies financially risky?

While there is an element of risk with any investment, studies have shown that the additional risk incurred to divest from fossil fuel companies is negligible. According to a study conducted by the Aperio Group, complete divestment from the fossil fuel industry increases risk by only 0.0034%.[vii] Out of 20 studies published in academic literature comparing sustainable indexes to traditional indexes, 10 studies found that sustainable investment had a positive impact on returns and only 3 found a negative impact; the remaining 7 found negligible impacts.[viii]

Other studies have found that environmentally sustainable investment portfolios outperform traditional portfolios that include fossil fuel companies. A study by S& P Capital IQ found that if colleges had divested from fossil fuel companies 10 years ago, they would have earned an additional $119 million per $1 billion invested.[ix]

  1. What about shareholder activism? By divesting from fossil fuel companies, aren’t we giving up our say in how they operate?

The top 200 fossil fuel companies combined are worth $7.42 trillion.[x] Collectively, U.S. college and university endowments are worth $406 billion and account for less than 0.1% of direct fossil fuel investments worldwide.[xi] College and university endowments are simply too small to matter much to fossil fuel giants like Exxon and BP.

Even if colleges and universities could surmount this limitation and put pressure on fossil fuel companies through shareholder activism, a shareholder resolution asking fossil fuel companies to keep fossil fuel reserves underground would work against the financial interest of each shareholder. Fossil fuel companies would be far less profitable if they agreed to keep 80% of the world’s carbon in the ground, so shareholders would be working against their own profits. Divestment removes this conflict of interest and allows for advocacy consistent with what science tells us is necessary to mitigate climate change. Additionally, The University of Wisconsin has never actually attended a fossil fuel shareholder meeting in the first place. We do not anticipate that they will start.

  1. Shouldn’t colleges focus their efforts on putting up windmills and making their facilities more sustainable?

We applaud the effort of schools like the University of Wisconsin that have launched major sustainability initiatives and have committed to reducing their carbon footprint. However, because university campuses comprise a very small fraction of the nation’s buildings, these actions alone will not stop climate change, nor do they have the potential to change the national conversation on climate change in a way that will allow congress to pass policies to address it. A singular focus on reducing institutional carbon footprints does not reflect the reality that national policies are essential for a successful response to climate change. Although personal and institutional responsibility is critical to a functional society, we need to work toward broad, system-wide changes that will incorporate the true cost of carbon emissions into the price of fossil fuels.

  1. If the goal of divestment is to pave the way for a political solution to the climate problem, isn’t it more effective to simply work on getting the right politicians elected?

While we believe that electing more pro-environment politicians is a critical step on the path to comprehensive national climate legislation, an individual’s ability to affect the outcome of an election is currently restricted by the outsize influence of corporate money in U.S. politics. The 2010 federal court decision commonly referred to as “Citizens United” worsened the problem of “big money” influence in politics by granting corporations the right to unlimited spending on elections. Oil, coal & gas companies are the wealthiest companies in the world. As such, their influence in elections far outweighs that of opposing, less wealthy entities such as environmental groups and corporate accountability advocates.

To illustrate the size of the problem, in the current election cycle (since January 2011), the oil, coal and gas industries have spent at least $43.5 million to influence federal elections in the United States.[xii] Fossil fuel industry money has helped countless candidates defeat opponents who favor greater regulation of fossil fuel extraction and use. The divestment campaign directly addresses the problem of fossil fuel industry influence in elections by damaging the reputation of fossil fuel companies and making it politically disadvantageous for candidates to accept large campaign contributions from these companies. Supporting pro-environment political candidates must be part of the strategy to enact climate legislation, but it will not work alone.

Finally, shifting the make-up of the United States Congress through direct work on election campaigns is a long, slow, and uncertain process. The need for national action to address climate change is urgent if we are to avert the worst consequences of global warming.[xiii] Divestment aims to hasten the transition to a climate-friendly U.S. Congress by changing the way citizens view the political activity of fossil fuel companies and moving Americans toward a better understanding of the urgent need to act on climate.

  1. The fossil fuel divestment campaign is sometimes compared to the divestment campaign targeting apartheid in South Africa. What role—if any—did divestment have in ending apartheid in South Africa?

The role of divestment in ending apartheid has been fiercely debated. Harvard University’s Institute of Politics sums up the evidence this way: “The true impact of divestment from South Africa is unclear. [However,] …divestment greatly increased public visibility surrounding the injustices of South Africa’s apartheid government. It is almost certain that worldwide popular opposition in the 1980’s contributed to the decline of apartheid, and divestment was an important piece of this puzzle.”[xiv] The University of Wisconsin was the second university to divest from Apartheid in 1978. We were leaders in the movement to divest from apartheid, and we can help lead the way again by divesting from fossil fuel companies.

Regardless of the degree to which divestment helped end apartheid in South Africa, a handful of insights can be drawn from comparisons between the apartheid divestment movement and fossil fuel divestment. In fact, when direct comparisons are made, the case for fossil fuel divestment is in many ways stronger than the case for divestment during apartheid. First, during apartheid it was not always clear which companies should be the target of divestment, as companies had varying degrees of involvement in South Africa. In the case of fossil fuel divestment, the target is clear—the top 200 fossil fuel companies that together control the majority of the world’s coal, oil and natural gas reserves. Second, companies doing business in South Africa were not profiting directly from apartheid; in contrast, fossil fuel companies are profiting directly from the exploitation of natural resources that are jeopardizing our climate and our future. Third, in the case of apartheid, divestment impacted companies, which affected the South African economy, which put pressure on the government to change. In the case of fossil fuel divestment, we are asking the companies themselves to change. Thus, the line of reasoning behind divestment from fossil fuel companies is even clearer than it was during apartheid. Taken together, these comparisons make a compelling case for divestment as a modern day iteration of the divestment movement during apartheid South Africa.

  1. If the University of Wisconsin divests from the fossil fuel industry, won’t it be pressured to divest from other industries too?

Many college and university administrators worry that divestment from fossil fuel companies would set a destructive precedent for divestment: that student groups would then demand divestment from other industries, putting the University in economic jeopardy and undermining the integrity of the University’s decision making process. In response, it is important to remember that the University of Wisconsin has already set a precedent for divestment. In 1978, the UW divested from companies doing business in apartheid South Africa. This action did not lead to widespread campus divestment campaigns, and it demonstrates that divestment, as part of a national movement, can be an appropriate, effective response to injustice. Divestment from the fossil fuel industry would reinforce this precedent, but it would not make it easier to gain approval from the University of Wisconsin for other divestment campaigns. Fossil Free UW, like the groups pushing for divestment during apartheid, is working through the UW’s decision-making process and so acting to strengthen that process rather than undermine it. Any student group advocating divestment will have to harness the same passion and rally the same student, faculty, staff, and alumni support that we will. Finally, many people understand climate change to be an unprecedented threat to human flourishing that calls for an immediate, powerful response. Divestment from the fossil fuel industry would only reinforce the University of Wisconsin’s precedent of being a leader in this response.

  1. Do we really need to stop burning fossil fuels? What about carbon sequestration and other technologies—if we employ them, can’t we continue to burn fossil fuels without affecting the climate?

Scientific bodies, including the Intergovernmental Panel on Climate Change (IPCC), have conducted extensive research on technologies that would allow us to continue burning fossil fuels without further contributing to the greenhouse gas effect and climate change. These so-called Carbon Dioxide Capture and Storage (CCS) technologies do exist. However, for many reasons discussed by the IPCC and other researchers, CCS alone cannot deter the climate crisis. Most generally, no single technology or approach is sufficient to deter the crisis; an appropriate response to climate change must include reduced emissions and reduced extraction.[xv]

Currently, CCS technologies are primarily experimental and have not yet been demonstrated on a commercial scale. Consequently, there is little evidence that they alone would be sufficient to address the urgent need to reduce carbon emissions. Researchers and industry representatives both conclude that there are currently weak economic incentives and poor regulatory frameworks in place for the large-scale deployment of CCS.[xvi],[xvii] CCS implementation would require a national climate policy, the formulation of which is currently blocked by the influence of the fossil fuel industry. Moreover, even if CCS technology were sufficient to address the climate crisis, carbon sequestration carries the risk of future spills or re-equilibration, which would precipitate crises of their own. CCS delays, but does not eliminate, the impacts of fossil fuel use. CCS may be part of our response to climate change, but it does not preclude the need to dramatically reduce fossil fuel consumption and extraction. Ultimately, among the technologies currently available for transitioning to a carbon-neutral energy system, energy efficiency and renewables like wind and solar are far better established than CCS.

  1. Fossil fuel divestment targets all fossil fuels, including natural gas. Don’t we need natural gas to help us transition to a lower carbon future?

Natural gas has been proposed as a transition or “bridge” fuel, as part of a response to climate change. It is true that natural gas, while still a fossil fuel, is less carbon-intensive than coal or oil. However, uncertainties abound over the severity of methane leaks associated with natural gas extraction procedures like hydraulic fracturing or “fracking.” Because methane is a much more potent greenhouse gas than carbon dioxide, the ultimate climate impact of natural gas is uncertain.[xviii] Moreover, transitioning to natural gas evades the underlying problem that the external damages of carbon dioxide emissions are not properly accounted for in our current economic system, due to the lack of a coherent national response to global warming.  Investing in a short-term fix like natural gas is a weaker response to the climate crisis than investing in long-term solutions like energy efficiency and renewables such as wind and solar.

  1. Is divestment from fossil fuels possible for an institution the size of the University of Wisconsin, given its reliance on mutual funds?

A variety of mutual funds are currently available that are completely divested from the 200 largest fossil fuel companies.[xix] Furthermore, as colleges, universities, cities, and other institutions worldwide recognize the urgency of action on climate and commit to fossil fuel divestment, investors will respond with expanded fossil fuel-free investment options. In fact, this process has already begun, and the responsible investing sector is experiencing increased interest and growth related directly to the fossil fuel divestment movement. Fossil Free Wisconsin does not request immediate divestment, but rather full divestment within five years. It is likely that within this five-year time frame, the investment community will create investment options that will make the transition to fossil fuel-free investments relatively easy.

The availability of fossil fuel-free mutual funds reflects market-based demand and response. By committing to divest from fossil fuels, the UW will help spur demand for additional investment tools that will let it achieve this goal quickly and easily.

  1. ‘Fiduciary responsibility’ and donor wishes make divestment too legally and politically problematic.

Fiduciary responsibility, or fiduciary duty, is a legal term meaning that trustees must act in the best interest of the institution.[xx] At many schools, this is interpreted to mean maximizing short-term returns at the expense of all other factors. Many administrators justify this policy by stating that any other course of action would be breaking their legal responsibility. Fortunately, this interpretation of fiduciary duty is a fallacy, as evidenced by the steps that many administrators and other institutional investors have taken to align investment and values, whether it be in low-carbon index funds, engaging in shareholder activism, community investing, and more.[xxi]

The Fiduciary responsibility to act in the interests of stakeholders, for example, makes little sense without a commitment to inter-generational equity, a cornerstone of sustainable investment. Our institution has both the opportunity and the obligation to recognize that responsibility means looking beyond immediate, short-term, unsustainable and morally untenable ways of generating profits and returns.

Furthermore, Donors do not, and should not dictate institutional investment policy, especially given that the University of Wisconsin is a public institution—their main goal is to support the mission of the university or college. Since Fossil free investment fits the institution’s mission, it should pose no problem for them.

  1. Are there case studies of successful fossil fuel divestment?

Since the launch of the fossil fuel divestment campaign in late 2012, nine colleges, twenty three cities (Madison included), two counties (Dane County included), twenty three religious institutions, nineteen foundations, and several other institutions have committed to divesting from fossil fuel companies. [xxii] Both large and small institutions have made these commitments. The most relevant cases are the commitments made by institutes of higher education to divest from fossil fuels; we outline a few examples below.

In June 2013, San Francisco State University committed to divest its endowment from coal and tar sands, and to set up a committee to explore full divestment. SFSU manages an endowment worth $51 million. Leslie Wong, the President of San Francisco State University, said with regard to the decision, “Our campus holds social justice and socially responsible behavior as core values.” The University manages a complicated endowment, and while accounts managed exclusively by the University will be easy to divest, divestment of their comingled funds presents a challenge. They have established a committee to investigate this issue and report back in the spring.[xxiii]

Unity College in Maine committed to fossil fuel divestment in November 2012.  The President of Unity College stated, “If we are to honor our commitment to the future, divestment is not optional.” Furthermore he said, “Our estimates show that divesting is consistent with maintaining a return that will continue to beat the market averages under current prices.”[xxiv] Additionally, Unity College has reported an increase in donor contributions following their divestment from fossil fuels.[xxv]

Following a unanimous vote by Naropa University’s endowment committee, the liberal arts college in Boulder, Colorado has fully divested their holdings in the top 200 fossil fuel companies. Naropa’s board of trustees concluded that engaging in shareholder activism was not likely to lead to significant changes in the behavior of these companies, and that the divestment would not threaten the stability of their stock portfolio.[xxvi]

These examples of leadership show that divestment is possible and that in many cases, fiduciary and ecological responsibilities can be congruous.

  1. Where can I learn more?

Check out http://gofossilfree.org/ , http://350.org/, or The Fossil Free UW Student Coalition Facebook page at www.facebook.com/fossilfreeuw 


[i] Copenhagen Accord. United Nations Framework Convention on Climate Change. December 18 2009. http://unfccc.int/resource/docs/2009/cop15/eng/l07.pdf

[ii] Bill McKibben. 2012. Global Warming’s Terrifying New Math. http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719

[iii] Center for Responsive Politics. 2013. Lobbying: Oil & Gas Industry Profile, 2012. http://www.opensecrets.org/lobby/indusclient.php?id=E01&year=2012

[iv] Andrew Breiner. 2013. New Infographic: The Anti-Science Climate Denier Caucus. ThinkProgress. http://thinkprogress.org/climate/2013/07/11/2289051/new-infographic-the-anti-science-climate-denier-caucus/

[v] Fossil Free. 2013. Campaigns. http://campaigns.gofossilfree.org/

[vi] The White House. 2013. Remarks by the President on Climate Change. http://www.whitehouse.gov/the-press-office/2013/06/25/remarks-president-climate-change

[vii] Aperio Group. 2012. Do the Investment Math: Building a Carbon-Free Portfolio. http://www.aperiogroup.com/system/files/documents/building_a_carbon_free_portfolio.pdf

[viii] The Asset Management Working Group of the United Nations Environment Programme Finance Initiative. 2007. Demystifying Responsible Investment Performance: A Review of Key Academic and Broker Research on ESG Factors. http://www.unepfi.org/fileadmin/documents/Demystifying_Responsible_Investment_Performance_01.pdf

[ix] Associated Press. 2013. College Fossil Fuel Divestment Movement Builds. http://news.yahoo.com/college-fossil-fuel-divestment-movement-builds-173849305.html

[x] Carbon Tracker Initiative. 2012. Unburnable Carbon: Are the World’s Financial Markets Carrying a Carbon Bubble? http://www.carbontracker.org/wp-content/uploads/downloads/2012/08/Unburnable-Carbon-Full1.pdf

[xi] Robert J. Shapiro & Nam D. Pham. 2011. Who Owns America’s Oil and Natural Gas Companies. Sonecon. http://www.api.org/statistics/earnings/upload/shapiro-pham-study_10_24_11.pdf

[xii] Oil Change International. 2013. http://priceofoil.org/campaigns/separate-oil-and-state/ending-us-fossil-fuel-subsidies/

[xiii] IPCC. 2013. Working Group I Contribution to the IPCC Fifth Assessment Report: Climate Change 2013: The Physical Science Basis. http://www.climatechange2013.org/images/uploads/WGIAR5-SPM_Approved27Sep2013.pdf

[xiv] Hendey, Eric. 2013. Does divestment work? Harvard Political Review. Accessed Nov 6, 2013 at http://www.iop.harvard.edu/does-divestment-work.

[xv]IPCC. 2007. Climate Change 2007: Working Group III: Mitigation of Climate Change 4.3.6 Carbon dioxide capture and storage (CCS). http://www.ipcc.ch/publications_and_data/ar4/wg3/en/contents.html.

[xvi] Chikkatur, AP; Chaudhary, A; Sagar, AD. 2011. Coal Power Impacts, Technology, and Policy: Connecting the Dots. Annual Review of Environment and Resources. 36: 101-138. http://www.annualreviews.org/doi/abs/10.1146/annurev.environ.020508.142152.

[xvii] Meader, R. 2013. What will new climate plan mean in Minnesota? Three experts read the tea leaves. MinnPost. http://www.minnpost.com/earth-journal/2013/06/what-will-new-climate-plan-mean-minnesota-three-experts-read-tea-leaves

[xviii] Howarth, R; Santoro, R; Ingraffea, A. 2011. Methane and the greenhouse-gas footprint of natural gas from shale formations. Climatic Change. 106(4):679-690.

[xix] Green America. 2013. http://www.greenamerica.org/fossilfree/

[xx] http://www.law.cornell.edu/wex/fiduciary_duty

[xxi] http://www.endowmentethics.org/faq

[xxii] Go Fossil Free. 2013. http://gofossilfree.org/commitments/

[xxiii] SFSU. 2013. http://www.acenet.edu/the-presidency/columns-and-features/Pages/Striking-a-Balance.aspx

[xxiv] Unity College Sustainability Monitor. 2013. http://sustainabilitymonitor.wordpress.com/2012/11/05/unity-college-board-of-trustees-votes-to-divest-from-fossil-fuels/

[xxv] http://trentarthur.ca/fossil-fuel-divestment-makes-financial-sense/

[xxvi] Go Fossil Free. 2013. http://gofossilfree.org/commitments/

Leave a Reply

Hi there, sorry, we know popups are a pain, but we're working for a just, low-carbon, happy future for all, and we'd love to have your support. Please sign up and look out for our occasional news.

(If you'd like to give us a little more detail about yourself, click here.)