Climate change is an existential threat to society that demands immediate and transformative action. On this page, we argue that Vanderbilt’s continued investment in fossil fuels threatens our university’s
Reputation, People, and Endowment
"Vanderbilt and other universities ought to kiss goodbye to fossil fuel energy stocks. Money talks."
Dr. Cecelia Tichi Professor, VU English Department
"I am a supporter of divestment on moral ground and think that universities should do so as they should lead on following a path to higher moral ground."
Dr. Curtis Baysinger Professor, VU Medical School
"Vanderbilt can support engineering for the future and profit from it, and for this reason, the time has come to begin investing in sustainable technologies"
Dr. Lori Troxel Professor, VU Engineering
"The climate policies that Vanderbilt has put into place are very respectable… but not where divestment is concerned. People who’ve stayed in fossil fuels because they’re ‘standing on principle’ to defend the endowment have lost their shirts on it."
Vice President Al Gore Former VU Student
"Divesting in fossil fuels is not only an ethically sound strategy for Vanderbilt, it is an economically sound strategy in the long view."
Dr. Amanda Little Professor, VU English Department
"As a former Vandy professor, I’m so, so happy to see the students there fighting the good fight against fossil fuels"
Dr. Joyce Chaplin Professor, Harvard University
"The climate crisis is very much here and divestment is a pressing issue that needs to be addressed now."
Hannah Bruns VU Student Body President
"The Rockefeller’s Brothers Fund, who built their fortune on whale oil and then fossil fuels, announced that its $860 million philanthropic organization was joining the divestment movement. Vanderbilt should follow suit."
Ita Hardesty-Mason Climate Nashville Activist
As a institution dedicated to research and public service, Vanderbilt’s reputation would be stronger if we divested from fossil fuels:
Continued fossil fuel investment puts the well-being of the Vanderbilt community at risk:
Fidiciary Responsibility suggests divestment would be prudent for Vanderbilt:
The university endowment’s role is to provide a permanent, long-term source of capital to financially support all the amazing things the Vanderbilt community does.
Currently, Vanderbilt’s endowment sits at around $11 billion.
Around 4% of the endowment is currently invested in a category called “natural resources”, which includes oil & gas production assets.
Although only 4% of our portfolio, the natural resources category is still a staggering 500 million dollars. Because it represents primary investment, it’s this part of the endowment that we especially would love to see divested.
Now, some of you may have seen the large returns from this year and may be wondering “Why should we change anything?”. Let’s break it down.
It turns out that nearly all top universities, including divesting peer institutions, had extremely strong returns last year due to favorable market conditions.
In addition, this year’s returns may appear higher due to the disappointing losses from the year before. Nevertheless, of various asset classes in Vanderbilt’s endowment, how did the natural resources category perform?
It turns out- of the $4 billion in value added, only 4.9% of those gains came from the natural resource asset class. This clearly shows that Vanderbilt’s strong performance was not due to the natural resource category. So now that we discussed Vanderbilt’s endowment, let’s dive further into fossil fuels as an asset class.
Regardless of the reputational risks and the risks to our community, we point to the significant evidence that show that fossil fuels are objectively bad investments.
Starting with private equity, oil & gas funds have been among the lowest yielding asset classes in the past decade and have underperformed comparable buyout firms.
Similarly, on the public equity side, the S&P energy sector has been a drag on the broader market and is one of the only sectors to have negative annual returns in a historically amazing market. So what about portfolio diversification?
Multiple research studies have shown the divestment does not negatively impact a portfolio’s diversification or flexibility, and research from large asset managers like BlackRock have shown that divested funds performance either match or outperform non-divested funds.
Therefore, divestment does not violate fiduciary responsibility in any meaningful way nor suggest that our endowment would be conceding any aspect of investment performance that is mandated by the university.
We’re not going to claim we know how the future of fossil fuel investments will play out, but there are significant signs that suggest that it’s not looking good. First, countless institutions are divesting from fossil fuels and have already significantly reduced the amount of capital in the industry.
According to the Global Fossil Fuel Divestment Database, approximately $39.2 trillion in AUM have publicly committed to at least some form of divestment. Even if we estimate that 5% was previously invested in fossil fuels, the total amount of capital commitment to divesting is significant and a serious threat to the future of the industry.
In addition, both governments and large institutional asset managers are ramping up their policies to accelerate the energy transition and pathway towards net-zero, which will only continue to increase the pressure and risk for fossil fuel companies. Once again, we can ask the fundamental question of why we should stay in fossil fuels?