NEW BRUNSWICK, NJ—Rutgers University’s fiduciary oversight body, the Joint Committee on Investment (JCOI), announced on March 9 that they will divest $80 million of Rutgers’ $1.6 billion endowment from the fossil fuel industry in a move celebrated by climate activists.
Aside from state funds and tuition, Rutgers’ primary source of income is its endowment, a permanent cache financed through charitable donations used to support student aid, research, senior faculty, and physical infrastructure.
While most of the endowment is untapped to accrue returns on investment, the JCOI has a spending policy of 4% each year and the return provides 2% of Rutgers’ total revenues.
Since Rutgers’ investment profile is embodied by the endowment, activists have used it as a powerful financial and symbolic tool to urge the University to acknowledge its unethical behavior and uphold its moral obligations.
The University can do this mainly through divestment, or the selling of financial assets to make a fiduciary, political, or social statement, from the fossil fuel industry, which is a major goal of climate activists.
Rutgers has a long history of divestment; in the 1970s, activists succeeded in getting Rutgers to divest from South African organizations involved in apartheid.
Prior to the JCOI’s motion, Rutgers was investing nearly 6% of the endowment in the fossil fuel industry, approximately 60% of which was in fossil fuel exploration and extraction funds.
The remaining 40% was in public equity or fixed income accounts including Merit Energy and EnCap Energy Capital Funds.
A report from the Rutgers Climate Task Force, which was created by former University President Robert Barchi with the responsibility of developing a comprehensive Climate Action Plan for the University, found that the endowment’s fossil fuel assets represent about 240,000 tons of Rutgers’ annual greenhouse gas emissions.
Although divesting from fossil fuels is outside the scope of the Climate Task Force, it is still a major victory for student, faculty, and New Brunswick community climate activists.
“We, at Rutgers AAUP-AFT, applaud the Administration for taking this action – one that comes after more than seven years of student, faculty, staff, and community activism,” said David Hughes, Climate Justice Chair of the Rutgers AAUP-AFT Graduate Student and Faculty Union. “[As a long-time] leader in climate scholarship, Rutgers now has the opportunity to become a leader in climate practice as well.”
The divestment decision was a direct result of a recommendation submitted by the ad hoc Committee on Divestment led by Brian Ballentine, Senior Vice President for Strategy and Senior Advisor to the President and Co-chair of the Climate Task Force Governance and Financing working group.
The committee found that investing in fossil fuels is in opposition of the fiduciary and ethical responsibilities of the Rutgers Investment Office and concluded the JCOI should divest in accordance with the University’s Investment Policy.
Rutgers officially divesting from the oil and gas industry is a public affirmation of the University’s stance on climate change and the culmination of the collaboration between administrators and climate activists.
For years, student and community activists have fought for Rutgers to divest from fossil fuels.
In February 2020 when the Endowment Justice Collective (EJC), a coalition of students promoting ethical investments, submitted a formal request – which was later denied – to the JCOI to divest from fossil fuels and other industries deemed unethical.
In response, the JCOI agreed to form an ad hoc Committee on Divestment specifically focused on fossil fuels.
Climate activism movements initiated by student organizations like EJC and Students for Environmental Awareness (SEA) have been crucial to spreading the word about divestment.
“Only about a year and a half ago my throat was raw from chanting lines like ‘Divest, Divest, put fossil fuels to rest’ and now Rutgers has actually made the commitment!” said Nolan Fehon, President of SEA and Climate Task Force New Brunswick Undergraduate Representative.
The ad hoc committee convened in the fall of 2020 and spent three months researching Rutgers’ holdings in the fossil fuel industry.
The goal of the Committee was to advise the JCOI’s fossil fuel divestment decision based on the Investment Policy’s areas of assessment:
- A clear consensus around the issue across the University
- Evidence that the University has taken steps to move away from a certain industry
- Evidence that there is social injustice or harm connected to the industry
Based on these criteria, the Committee ultimately suggested the JCOI follow the divestment request: “The committee carefully considered the concerns of Rutgers community members along with the ethical and fiduciary responsibilities of the investment committee and the boards as we unanimously reached our recommendations,” said Ballentine.
According to the resolution adopted by the Board of Governors, Rutgers will:
- Cease all new investments in funds whose strategy is focused on fossil fuel investments;
- Divest from passive index funds with exposure to fossil fuel investments within one year and reinvest in environmentally friendly versions of those indices. In addition, actively seek new investment opportunities in renewable energy and energy efficiency categories provided they deliver competitive rates of return;
- Exit all currently held private fossil fuel investments within 10 years, or as soon as practicable;
- Because some commingled funds may hold minimal exposure to fossil fuels, emphasize the University’s stance on this topic to investment partners, urging them to review their own processes and decisions regarding the inclusion of such assets in client portfolios.
Tilak Lal, JCOI Chair and Rutgers Board of Trustees Co-vice Chair, stated that the Investment Office will report on the progress of the divestment annually.
Climate activists intend to continue holding the JCOI accountable. “Past delay means that we have to catch up and do more,” said Hughes. “We urge the Administration to make good on plans now emerging from the Climate Task Force.”
Rutgers may have financially divested from fossil fuels, but there is still much to be done to reduce the University’s carbon footprint and environmental impact.
“Put solar panels on all the University buildings and parking lots,” Hughes enjoins the University. “Let’s set up resilient micro-grids for our neighbors in Camden, Newark, and New Brunswick. Through this kind of energy justice, Rutgers can now extend its beloved community beyond the boundaries of its three campuses.”
Although climate activists are reveling in their success, they are already looking toward the future.
“It definitely feels like we’re approaching a new era of Rutgers where sustainability is at the forefront, and that’s a really great feeling,” said Fehon. “It’s taken a long time to get Rutgers to budge on fossil fuel divestment, and we’ve got to remember how we got it done as we focus on other priorities like creating an Office of Sustainability—consistent pressure from educated and passionate members of our big Rutgers community of students, faculty, staff, and our community members working together.”
Editors Note: The authors of this article are part of the Rutgers-based group, Students for Environmental Awareness, one of the members of the coalition advocating for Rutgers to divest from the fossil fuel industry.
Nechama is a senior at Rutgers University. She is passionate about environmental justice, reducing waste, and conscious consumerism.
Morgan is a junior at Rutgers majoring in Bioenvironmental Engineering. She is passionate about conservation biology, engineering and sustainability.