Divestment from Fossil Fuels in University Foundations: ULaval’s Experience

Environmental causes make up a minimal portion of global philanthropic engagement of foundations. If we refer ourselves to Imagine Canada’s data, the support of environmental causes hardly collects 4% of the total value of donations coming from the largest Canadian grant-making foundations. This situation is problematic with the knowledge of the consequences linked to the current ecological crisis and the urgent necessity to commit more financial resources to it.

Notwithstanding the meagre implication of foundations towards this type of issue, the distribution of donations to environmental causes does not represent the only method at the disposal of foundations to show their support in the fight against climate change. As influential economic actors in financial markets, nothing is stopping them from taking an environmentalist stance with regards to financial ethics. By transforming their investment modalities as the trend for socially responsible investment proposes foundations have the possibility of contributing to ecological reflection while recognizing the importance of resorting to an economic development that is more conscious of its impact on the natural environment (Rubinstein, 2002, p.173). With this perspective, one possibility is to place philanthropic funds within financial markets that are respectful to ecological issues (Bourque, 2014). Acting in this way positions oneself against investments that privilege the exploitation of fossil fuels. Not investing in, or withdrawing one’s investments, constitutes a logical next step when we adhere to the principal of the energetic transition.

An emerging movement in university foundations

Divestment currently represents a true movement of protest that is being deployed on the transnational scale (Lajarte and Zaccai, 2017). Without resorting to bad puns, let’s just say that the appearance of numerous campaigns along the lines of “Leave it in the ground” are greatly contributing to “fueling the movement”[i]. To advance the cause, these campaigns incite institutional investors to get rid of their fossil assets. Despite the quick rise of the movement, the philanthropic world seems quite timid to join in. Such is indicated in the recent research by the Centre for Effective Philanthropy, conducted among private American foundations. The researchers discovered that only 17% of surveyed organizations resorted to financial exclusion (Buchanan, Glickman and Buteau, 2015, p.8). Moreover, the main industrial sector targeted by the exclusion was not the extraction sector, but the tobacco industry. This data suggests that fossil fuel divestment is not yet a priority issue on the radar of large foundations (Idem, p.8). In any case, the issue is beginning to touch certain philanthropic organizations, including university foundations that find themselves targeted by student campaigns that are fighting for the decarbonization of their university’s portfolio.

Recently, an important breakthrough occurred in the Quebec university environment following the efforts of the ULaval sans fossiles (ULaval without Fossils) campaign, making Laval University the first Canadian university to announce the withdrawal of their investments in fossil energies. In order to better understand the victory of ULaval sans fossils against the university’s upper management, we interviewed Mrs. Alice-Ann Simard, founder and co-spokesperson of the campaign. This student mobilization brought the issue to the campus and forced the university to reorient the investments of their investment fund.[ii]In order to determine how she achieved this, we distinguish two big steps of the campaign and will put the recommended strategic approaches in the epigraph.

Making the university community aware

As elsewhere, the management of the investment fund of the university is done unbeknown to the university community, without prior consultation on the investments that would better represent it from an ideological-political point of view. The first step of the divestment movement consists of raising popular awareness so that the students are informed on the investments of their university’s foundation. This spreading of awareness step is even more difficult since ignorance is maintained by the inaccessibility to the financial data. In contrast with the pension plan of UL’s employees, data which can be consulted directly online, the investments of the global fund where the foundation’s money can be found are not made public. Better transparency in the financial selection process was in fact one of the important demands formulated by the members of the committee. This being said, not having this data on hand, the divestment committee was forced to produce an estimation. Those responsible for ULaval sans fossils thus referred themselves to the Canadian average to evaluate that 5 to 15% of the university’s portfolio was surely invested in the fossil fuel industry.

In the case of Laval University, the discretion with regards to the composition of their investment portfolio in financial markets had rendered the issue of divestment completely absent on campus. The launching of ULaval sans fossils was not simply an accelerator of the divestment process, but its catalyst. This is why the initial objective of the campaign was to generate awareness about the issue so that a public debate could ensue within the university environment, as the student leader indicates: “In the beginning, we started with awareness campaigns because people didn’t even know that their university was investing in fossil fuels. We had to let them know first, and then let them know that it was possible to divest. […] So, we started talking about it: we made stickers, posters, pins, a Facebook page, etc. […] Next, we organized a launching event for the committee. There was an invited speaker and several people attended. We were even mentioned in the ‘Impact Campus’, LU’s student paper, about the event”.The beginning of the campaign was marked by a communication strategy aimed at making the hidden aspects of the university’s economic impact public; all the while promoting divestment as the appropriate solution to this deplorable situation.

It didn’t take very long for the campaign’s message to be heard. Following the preliminary awareness effort, three months went by before the administration asked to meet the spokespeople of ULaval sans fossils. According to Mrs. Simard, it was preoccupations around the public image of the business that explains the speed at which the administration decided to hear the demands of the movement and decided on an agreement: “Our message was well received. It is true that we put a lot of pressure from the get-go. We showed them that we could damage their public image with regards to sustainable development. We could stain their reputation quickly. There’s a reason why it was so fast”. The campaign also exploited the apparent contradiction between the University’s objectives of carbon-neutralityand its investments in a highly polluting industry. It was then easy to mobilize the students in requiring that the university’s investments conform to the values it promotes on its campus; which the petition that was launched demonstrates, receiving numerous signatures. “As soon as people were aware of the issue, the majority agreed with us wholeheartedly, because they are surrounded by the LU environment and know at what point the administration preaches a discourse on the importance of sustainable development. So, as soon as people knew that there were investments in fossil fuels, they thought it made absolutely no sense. […] Showing this incoherence was very decisive in mobilizing the community”.

Negotiations with the administration

Once the discussion was established with the administration, two aspects held weight in the negotiations. First, to demonstrate that the initiative benefited from a large collective support, ULaval sans fossilswas smart in getting the support of student associations. For Mrs. Simard, showing up for the meeting with a student consensus certainly weighed in the balance: “The CADEUL and AELIÉSalso participated in the meeting and supported our measures. The CADEUL ended up voting their support for ULaval sans fossiles’ measures in assembly, which gave an official support of first cycle associations. AELIES didn’t have to vote since they already had positions against hydrocarbons and global warming, so they had to support us. We finally had the support of all the associations that represented the students of LU. By bringing this to the meeting, it definitely put a lot of weight in our corner. I think it is something that is very important. In addition to communications, we must go get the support of the university community”. The campaign even received the external support of the David Suzuki foundation.

Second, the pitch deployed by the spokespeople was very persuasive to the administration. From the onset, the student representatives did not make aggressive demands that required an immediate change of direction of the financial orientations: “We asked for five years actually, because these are things that take time to accomplish and we are aware of it. In the beginning, there were certain people who said it was impossible to do it quickly, but we are not asking for it to be done quickly either, we’re asking for 5 years; this is what is asked of many other divestment committees across the globe”. By asking for a gradual retraction, the spokespeople opted for a diplomatic position aimed at calming the administration’s worries.

Next, interesting fact, the spokespeople brought up economic reasons. This type of financial argument is well-known in recognizing the economic pertinence of divestment (Lajarthe and Zaccai, 2017). Not that the environmental issues were neglected or secondary, but they were seen as attained. From that moment on, in addition to reminding them that all support of fossil fuel exploitation comes back to denying the warnings of the scientific community and going against the Paris Agreement of 2015, ULaval sans fossils also argued that these investments would become financially risky: “Yes there is the environmental aspect, but it is an aspect that is relatively well-known, that people understand. But, they will defend themselves by saying they don’t have a choice in order to reach better yields. We succeeded in showing them – by presenting several studies that were done around the world – that there really is a risk with regards to the returns on the portfolio due to the carbon bubble. In fact, the way it works, especially with the Paris Agreement, a soon as the United States start to truly fight against climate change, because they have committed themselves to doing so in the Paris Agreement, as soon as they will put in place measures, policies, law to succeed in fighting efficiently, the value of the fossil fuel assets will plummet in an incredible way. […] In any case, with the bursting of the carbon bubble, the value of the shares will fail completely. Thus, in 10, 15 or 20 years, those who will still be invested in fossil fuels will have returns that are very, very horrible”.

Conclusion

The story of this campaign reveals an interesting fact: the divestment process initiated towards the LU foundation is strongly linked to its social structure. This type of foundation is pervious to divestment due to the proximity of the relationships it upholds with a student community that is sensitive to this type of political issues. A community that is ready to pressure the university’s administration into shaking things up. The strategies put in place by UL sans fossiles to spread awareness to its student population and negotiate with the administration succeeded in bringing about the desired changes. Of course, by being exposed to the pressures of student activism, university foundations have a particular situation that predisposes them to the launching of divestment. Notwithstanding that no foundation is sheltered from the influences coming from pressure groups that confront them to what Toepler and Heydemann call “legitimacy challenges” (2006, p.16). As the LU mobilization demonstrates, the activation of such challenges can provoke the institutional changes desired.[iii]Ultimately, since the critique seems to be exercising a key role in triggering several divestment initiatives, we bet that their eventual expansion in philanthropic organizations will be tributary to the growing influence of the protesting movements that are emerging from civil society.