For the second time in 6 years, the University of Maryland has once again announced a major revision to its investment policies in the midst of adversity. The changes come as a direct result of student pressure to end the college’s financial affiliations with companies that produce energy by using coal, oil, and natural gas out of environmental concerns. Under the new proposal, the University of Maryland hopes to continuing protecting its lucrative private investments while forging new financial allegiances to the clean energy industry.
For years, the University of Maryland’s investment policies have been the topic of scorching on-campus debate. It all in 2013 started after a group of environmentally progressive students started questioning the University System of Maryland Foundation’s decision to invest in fossil fuels (the University System of Maryland Foundation is in charge of the state university’s $1 billion endowment fund – money that’s used for scholarships, grants, and other expenses). That year, a petition calling for an end to fossil fuel investments was passed around from the University of Maryland, Towson University, Bounty County and others. 600 signatures were collected in total.
As a direct response, the University System of Maryland Foundation was instructed to invest in clean energy companies over fossil fuels whenever possible. Though it was not a complete reversal of policies, it was largely seen as a commendable win.
In the years since this decision, however, a renewed student interest in the University System of Maryland Foundation has again caused the university to reexamine its policies once more. On Tuesday, June 28th, the foundation announced that it will cease all direct investment ties with 200 coal, oil, and natural gas companies, and, in addition, would sign a United Nations pact supporting clean energy companies. Citing a need to pay closer attention to climate change, Leonard Raley, President and CEO of the University System of Maryland Foundation, credits the student population for bringing this morally-charged financial dilemma to his attention.
While Raley plans on focusing more on financially investing in clean energy sectors in the future, he warns that the changes will not be instantaneous. Many of the current investments with fossil fuel companies include stipulations that would penalize the university for withdrawing support before an expressed deadline. The foundation, whose mission statement is “to advocate and support the advancement of public higher education in Maryland through visionary leadership in philanthropy, asset management, and stewardship”, has a secondary obligation to maintain a certain level of profits. If not, the foundation members could actually be sued by the institution.
Some students, however, are not fully pleased with the foundation’s change in policies. While the foundation pledges to no longer directly invest in fossil fuel companies, opponents point out that the university will still continue to financially support larger portfolios (such as the S & P 500), which would include stock shares from some companies that have direct involvements in oil and coal trade. Therefore, fossil fuels are still being supported with some tuition money.
In total, $70 million (7 percent) of the foundation’s $1 billion endowment fund is invested in the energy sector, which includes clean energy companies and fossil fuel companies alike. This amount includes other projects however, which do not involve energy companies at all. The university was unable to provide an exact figure as to how much was specifically invested in fossil fuel companies.
The university’s decision may be part of a nationwide trend. A spokeswoman for 350.org, an organization dedicated to raising climate awareness, states that since 2012, more than 500 colleges have changed their fossil fuel investments due to similar pressures. Whether the University of Maryland will fully yield to further demands from student pressure groups calling for additional divestment from fossil fuel, however, remains to be seen.