Fossil Fuel Divestment FAQ
How did the university come to make the decision to divest from fossil fuel companies?
As a Catholic and Jesuit university, Georgetown is committed to
environmental responsibility and sustainability. The University is carrying out
a comprehensive commitment to respond to Pope Francis’ call to care for
creation by promoting education, action
investment to advance the common good in responding to climate change.
Guided by Georgetown University’s Socially Responsible Investing Policy (SRI Policy) and in response to a proposal from GU Fossil Free, the University’s Board of Directors approved a recommendation from the Committee on Investments and Social Responsibility that called for an expansion of its impact investment strategy to increase investments in renewable energy and energy efficiency and prudently divest from fossil fuel companies.
What is Georgetown’s Socially Responsible Investing Policy?
Georgetown University’s Socially Responsible Investing Policy (SRI Policy) outlines the university’s approach to socially responsible investing and demonstrates its intention to integrate its commitment to social justice, protection of human life and dignity, stewardship for the planet and promotion of the common good into its investment management practices.
Its mission statement: “Georgetown University (the “University”) is committed to exercising ethical management of the University’s endowment in the course of seeking to generate the highest level of returns commensurate with the goal of ensuring intergenerational equity. Recognizing that the endowment shall not be used as a tool to promote a political agenda, the University shall continue to integrate its commitment to social justice, protection of human life and dignity, stewardship for the planet, and promotion of the common good into its investment management practices.”
What is CISR?
Georgetown’s Committee on Investments and Social Responsibility (CISR), which comprises students, faculty and administrators, makes recommendations on issues related to socially responsible investing to the Committee on Finance and Administration of the University’s Board of Directors, which is responsible for fiduciary oversight for the endowment. As a part of this work, CISR often considers written proposals from members of the Georgetown community.
Hasn’t Georgetown already taken divestment actions?
Georgetown has demonstrated its commitment to socially responsible investing in recent years through several actions.
In 2015, CISR recommended divestment of “direct investments in companies whose principal business is the mining of coal for use in energy production.” The Board accepted that recommendation in 2015.
Since then, the Board has accepted additional recommendations from CISR to avoid investments in private prison companies (2017) and companies whose primary business is the extraction of tar sands for use in energy production (2018).
In 2017, the Board also approved the University’s Socially Responsible Investing Policy that outlines the university’s approach to socially responsible investing and demonstrates its intention to integrate its commitment to social justice, protection of human life and dignity, stewardship for the planet and promotion of the common good into its investment management practices.
What recommendations did CISR make and the Board endorse?
At its meeting on Friday, January 10, 2020, CISR unanimously approved the following recommendation to the Committee on Finance and Administration in response to GUFF’s proposal:
Georgetown University should expand its strategy to make investments in renewable energy and energy efficiency, and seek to avoid investments in fossil fuel companies. Fossil fuel companies are defined as any company whose primary business is the exploration or extraction of fossil fuels, including all forms of coal, oil, and natural gas.
It was endorsed by the Georgetown Board of Directors on Thursday, February 6, 2020.
How will Georgetown achieve its objectives?
To achieve these objectives, Georgetown will commit to take the following actions:
- Continue investment in advanced energy and efficiency technologies
- Cease new investments in fossil fuels
- Phase out investments in publicly traded assets over five years
- Phase out private investments over 10 years
- The University maintains flexibility with respect to commingled investment funds with exposure to fossil fuel companies and will evaluate the managers of those funds on an ongoing basis.
How is a fossil fuel company defined?
Fossil fuel companies are defined as any company whose primary
business is the exploration or extraction of fossil fuels, including all forms
of coal, oil
, and natural gas.
How will Georgetown monitor the effects of this policy?
In addition to threatening our planet, climate change is increasing the risk of investing in oil and gas companies, as we expect a more volatile range of financial outcomes. We will continue to evaluate the efforts of these companies, hopeful that many will move further towards contributing to a sustainable future.
How were students involved in the decision?
CISR has carefully considered a proposal from the student organization GU Fossil Free (GUFF) calling for Georgetown to divest from fossil fuel companies over five years. GUFF submitted its original proposal on January 17, 2019, and a revised proposal on March 28, 2019. The university has had an extensive collaboration with GUFF since its formation in 2012.
CISR met several times to discuss GUFF’s proposal, including meeting with representatives from GUFF, the Georgetown University Student Investment Fund, and the Graduate Investment Fund. We also consulted with leading experts in socially responsible investing. In addition, we researched actions taken by other higher education institutions regarding fossil fuel divestment.
What are commingled funds?
Commingled funds are vehicles managed by investment firms on behalf of a number of clients. These vehicles provide access to ownership of a pool of securities. Examples include mutual funds, index funds, and exchange traded funds. For these vehicles, the decision of which security is owned is exclusively at the discretion of the investment manager. Individual investors cannot compel the investment manager to buy or sell any specific securities in commingled funds.
What is the difference between publicly traded assets and private investments?
Public securities are freely tradeable on the open market, through a stock exchange such as the New York Stock Exchange or NASDAQ. Private investments are not tradeable in the open market and are generally available to institutional investors, including endowments. These are often private investment funds formed as limited partnerships.