Since 2013, students at Mount Allison University have been trying to convince their administration to stop investing in the top 200 publicly traded fossil fuel companies over five years.
It’s part of a larger fossil fuel divestment movement which started in the United States about six years ago and made its way into Canada with the help of organizations like 350.org and Fossil Free Canada, which have given some support to local campaigns within the universities and other institutions. It’s how Divest MTA got its start.
Though their mission and asks have been clear, the Divest MTA group doesn’t know which or how many fossil fuel companies the university is investing in, but it’s not for lack of trying to find out.
“It’s been very hard for the campaign getting that information out of the university. Specifically, the question too was how much of the endowment was in fact in fossil fuels,” says Tino Oh, a third-year Mount Allison student, co-organizer at Divest MTA and escalation representative with 350.org. “It wasn’t until about a month ago that we realized that number is about five to seven per cent, but it literally could have been anywhere from one to 99 per cent.”
Though they don’t know which specific companies the university has holdings in, they do know how Mount Allison’s investments are set up. The university has several buckets of investments, but two big ones. One is the endowment fund, which is made up mostly of donations made to help support “the university’s academic mission” that is valued at around $170 million. The second is the pension plan, worth about $40 million, for university staff.
The university doesn’t buy or sell stocks directly. Instead, they use investment managers who invest in “pools of funds.”
“We don’t own any companies or any stocks. We hire investment managers and use pool funds, similar to almost every university is Canada,” says Mount Allison University’s vice-president of finance and administration Robert Inglis. “And those pooled funds hold bonds, stocks, other things. And some pooled funds may hold hundred and hundreds of individual companies.”
Inglis says the majority of Canadian universities handle their investments this way because it brings diversification, meaning good and more stable returns.
“Almost every university in Canada uses that approach because it provides diversification that you wouldn’t be able to achieve in economies of scale if you were going to pick individual companies,” says Inglis.
“Those investment managers are third-party companies. So you might hire a manager who’s really good at Canadian markets and they have a fund in which the university and other universities go into … and that creates a big fund and that’s invested in Canadian companies.”
It may be common practice, but that doesn’t mean it’s a good one according to Divest MTA. Though they are lacking specific company names, Oh says the fact that five to seven per cent of the university’s endowment fund is invested in fossil fuels is disturbing enough.
“The fact that it took us four years to get that number when we attend the public institution is really troublesome because this endowment is quite literally students’ money,” Oh says. “So we don’t actually know the specific corporations and organizations that the university is invested within, but of course it kind of tells that story with how difficult it is to get that information and how the university tried to cover up that information up.”
Oh says both the Mount Allison Students’ Union and the university’s faculty have passed motions in support of fossil fuel divestment. This past year Divest MTA also hosted several events including a “die-in” and an Occupy Wall Street-style campout. Oh argues the way the university has been handling discussions have been very “undemocratic,” saying most of the group’s events and demonstrations sparked very little response from university officials. The group did manage to finally meet with the university’s Board of Regents, which makes investment decisions. Oh says not much has come from that either.
“[It] shouldn’t be hard for students to engage in university governance, but the fact that it’s taken us four years to even a spot on the agenda for a Board of Regents meeting illustrates that,” she says.
Inglis says it’s not that the university doesn’t believe climate change is an issue. He says the university has taken measures to reduce its carbon footprint through changes in its operations and academic programs. But when it comes to divesting, Inglis cites several issues. One being the logistics surrounding how their investments are set up.
“How do you do that when you don’t own stocks of those 200 [top fossil fuel] companies? If you have two or three of those in one fund that owns 500 companies and we don’t decide what those 500 companies are because the manager does,” Inglis says. “That creates a challenge because you’d have to get rid of an entire fund.”
Inglis says the other issue is that the money they’re investing has a specific purpose and needs to make the best returns to fulfil their purpose. It shouldn’t be used as a tool to make any kind of statement or to support a cause.
“We have a fiduciary duty to make sure that the resources have been used for the purpose for which they had been received. So either for the pension plan to support pensions and for the endowment to support the purposes of the endowment, scholarships and all the other things an endowment supports,” he says.
“So the Board [of Regents], which at Mount Allison is the trustee of those funds, has responsibilities to make sure those funds are used for returns and to manage risks.”
Instead of divesting, Inglis says the university recently decided to established a Responsible Investment Committee.
“Responsible investment is a broad term that encapsulates either divesting, such as ‘I don’t like company A. I don’t want to own company A for a non-financial reason.’ It also considers impact investing, which is ‘I really like company A and we will always have company A for some non-financial reason,’” says Ingles.
“The third thing is integrating environmental social and governance practices within your investment policies, and that’s more of a process and provides an ongoing toolkit for evaluating different issues related to environment, social and governance, as opposed to a one-step action like selling stock or divesting.”
Ingles says the university will also be making all the companies it invests in through the pooled funds public. He says they are working on getting a full list together and expect to release it by fall. Dalhousie University is the only other university in Atlantic Canada to openly do this.
“What we’re trying to do is get a list of the underlying holdings, the hundreds and hundreds of companies. It’s a list that may be thousands long,” says Inglis.
But this is far from enough for Divest MTA.
“It doesn’t make a difference in terms of the list of corporations they’ve invested in unless the university commits to divesting from them,” says Tina Oh.
Though most Canadian universities are taking similar stances as Mount Allison, that could change. Laval University in Quebec recently committed to divest from fossil fuel companies, the first university in Canada to do so. But exactly how they plan to do that is still in the works. When or if the divestment finally comes in effect, Tina Oh says pressure will be on other universities to follow suit.
“When we saw the dominos fall in the United States and the first university divested, the type of arguments the administration has been making … become inaccurate, because of course, a university has divested,” Oh says,
“Once the first [Canadian] university divests, it’s unfortunate that it looks like Mount Allison won’t be the first and in that sense forfeits that leadership in divesting. I think you’ll see universities start to commit to divesting and then begin the process for that. Because at that point, there aren’t any arguments to say no.”
Inglis says the university will be watching what happens with Laval, but Mount Allison will be following the majority for now.
“We are looking at this in terms of what we can do with what we understand are the responsibilities with these funds and what we can implement … Certainly, much of what we’ve learned in the last year is based on similar work at all the universities in Canada. Laval is somewhat unique,” he says. “But of course we will watch Laval as we do all with universities in Canada towards their approaches on any number of topics, including climate change, and we learn from each other. Things change over time and that’s how universities and other organizations work.”
As for the future of Divest MTA, Oh says the group won’t be going anywhere.
“We won’t be stopping anytime soon, unless the university commits to divesting and then starts the process of divesting,” Oh says. “Then, of course, that process is meaningless unless students are involved.”