Report finds coal divestment is a costly endeavor for universities

Despite a recent report suggesting divestment from fossil fuels will cause universities to lose money, UNC remains firm in its ambitions to explore alternatives to coal.

The report, funded by the Independent Petroleum Association of America, was published by University of Chicago law professor emeritus Daniel Fischel.

“UNC Management Company ... has begun to actively research potential investments in the alternative energy space that allow the shift to be made from fossil fuel based energy sources,” said Janine Vanzetta, director of investor relations and communications for UNC’s investing body, in an email.

Alex Rinaudo, senior vice president of the economic consulting firm Compass Lexecon, worked with Fischel to compile the report. He said, in short, divestment comes with a financial burden.

Rinaudo said determining what needs to be divested and selling those investments are some of the costs of divestment.

“From a financial perspective, the idea of precluding yourself from investing in a particular asset class comes at a cost,” he said.

Despite this report, organizations at UNC believe divestment is a good idea — both morally and as a good business practice.

In September 2014, the Board of Trustees approved a resolution sponsored by the UNC Sierra Student Coalition asking UNC Management Company to target clean energy in future investments.  

Vanzetta said the company is moving forward on the board’s request, but it was already seeking environmentally friendly investments before the trustees’ resolution.

“The UNC Investment Fund had investments in clean tech, primarily through investment managers investing in the private markets as opposed to public equities,” she said.

Many of the companies that the UNC Management Company invests in sign non-disclosure agreements, prohibiting the company from sharing their information.

UNC Sierra Student Coalition member Jasmine Ruddy said she fully supports divestment on moral and economic grounds.

“We believe that climate change is one of the greatest threats of this century, and the coal industry is directly contributing to that threat,” Ruddy said.

“UNC has a responsibility to divest to take a moral stance against companies that are fueling climate change and jeopardizing our futures.”

Ruddy said this is not the first time UNC has taken a financial stand for a cause. In the 1980s, UNC divested from companies that supported apartheid in South Africa after lengthy student protests on campus.

Ruddy said UNC is hurting North Carolina by investing in fossil fuel, hitting the picturesque Appalachian Mountains especially hard.

“The coal companies that we are invested in contribute to major public health problems through air and water pollution,” she said.

In contrast to the Fischel report, Ruddy said divestment provides many opportunities for UNC.

Ruddy said one of divestment’s advantages is avoiding having UNC’s name associated with costly mistakes that fossil fuel companies have made in the past.

The Environmental Protection Agency estimates that Duke Energy spilled nearly 39,000 tons of coal ash into the Dan River in a February 2014 spill.

Duke Energy was fined almost $100 million but promised that customers will not pay for the cleanup. Instead, the company will pay with the money it receives from investments.

“This is just another example of the risk that UNC faces by continuing to be invested in coal,” she said. “If anything, divestment reduces this risk.”

university@dailytarheel.com

CORRECTION: Due to a reporting error, a previous version of this story mischaracterized the actions of the UNC Board of Trustees with regard to coal divestment. In September, the board approved a resolution to invest in clean energy in future investments. The board did not approve divestment from the University’s current coal investments. The story has been updated to reflect this change. The Daily Tar Heel apologizes for the error.