Fossil Free Pitt Coalition Issues Demands Regarding the Environmental, Social, Governance (ESG) Report

On January 15, 2021, the Ad Hoc Committee on Fossil Fuels issued a report to the University of Pittsburgh’s Board of Trustees and the Chancellor. Despite 12 pages of findings that elucidate the community’s and the University investment team’s overwhelming support for divestment from fossil fuels and demonstrate how fossil fuels “continue to become less attractive on a risk-adjusted basis,” the committee recommends the Board forgo a negative screen to the Consolidated Endowment Fund with respect to fossil fuels. The committee instead recommended a passive strategy: waiting for private equity investments in fossil fuels to reach their planned liquidation dates and drop to 1% in 2035.

“The University has already reduced fossil fuel exposure in the endowment by 42% over the past 5 years,” the committee writes, “ — from 10% in 2015 to 5.8% currently.” If Pitt’s endowment is $4.3 billion, $249 million is still invested in exploration and production of fossil fuels. Despite thanking “all members of the University community …who contributed their time and energies,” the Committee, and the Board of Trustees that it reported to, failed their duty. The creation and dissolution of the Ad-hoc Committee for Fossil Fuels was, by design, a bureaucratic obstacle to immediate divestment from fossil fuels — a tactic we as the Fossil Free Pitt Coalition will not fall for.

The Fossil Free Pitt Coalition demands that the Board of Trustees and the Office of Finance uphold the commitment to transparency that the Environmental, Social, Governance Policy Statement promised. In this report, which was originally meant to be released by June 30th, 2021 at the latest, in the name of transparency, we demand that it address the questions the Ad-hoc Committee on Fossil Fuels failed to answer.

1. In our correspondence with the Office of Communications (in information not made public in the report), Christine Solie stated that the University would have to pay $65 to 100 million in fees in order to divest immediately from fossil fuels. How did the University calculate this range ($65 to 100 million)? Does the analysis include any consideration of externalities, such as lost tuition revenue and alumni donations due to poor community opinion of Pitt’s continuing fossil fuel investments? Is there any projection to how this financial loss would affect the long term health of the endowment? Does this analysis factor in the amount of money that may be lost if the already overvalued carbon bubble were to burst?
2. How is Pitt communicating its ESG Policy and community support for fossil fuel divestment to private equity entities and external fund managers? Do entities/managers have the agency to rebalance funds or replace fossil fuel investments within the constraints of current contracts? Can contracts be renegotiated? In the spirit of transparency, which the Ad-hoc committee recommended in their final report, how will the transparency process operate and what communication channels will be available for community members to provide feedback?
3. What, exactly, are the liquidation/expiration schedules for the private equity investments in fossil fuels? The Ad Hoc Committee’s report stated these investments “are expected to drop to zero by the end of 2035”? What is the university’s commitment to upholding even these schedules? What would happen if external fund managers do not liquidate fossil fuel holdings, as “expected”?
4. Who are the persons in the Office of Finance managing the endowment and how much are they paid to make decisions about Pitt’s investments? What are their declared conflicts of interest, if any?
5. The Ad-Hoc Committee’s key findings (pg. 11–12) all support making no new investments in fossil fuels. What went into the decision to forgo a negative screen going forward?

The Committee for Fossil Fuels and the Board of Trustees unilaterally decided to reject proactive divestment, neglecting to actively engage the public in this decision. The public forums that were held in 2020 merely paid lip-service to transparency. By failing to publicly disclose how the calculation of $65 to $100 million was made, Pitt shows its unwillingness to listen to public demands for divestment. We at Fossil Free Pitt are investigating the Board of Trustees and their continued ties to the fossil fuel industry and we are working directly with the community partners to imagine how Pitt’s endowment can be invested locally and responsibly.

“Fiduciary responsibility” is a phrase that gets thrown around a lot by the Board of Trustees and Pitt administrators, so often that it has been emptied of any meaning. Let us define it for the university: Pitt has a legal and ethical duty to act on the interests of its students, faculty, staff and the larger Pittsburgh community. Let us decide whether Pitt is fulfilling its fiduciary responsibility.

Fossil Free Pitt Coalition @fossilfreepitt