In the mid-1980s, resistance to apartheid in South
Africa reached critical mass, becoming one of the
most pressing international issues of the period. It
began when black South Africans protested the
1983 South African Constitution, which included
racially segregated Parliaments. In response, the
South African government, Apartheid, sent thou-
sands of troops to quell the protests, as millions
around the world watched on television.
The events in South Africa galvanized
college students across the United States to start
campaigns and pressure their universities to di-
vest from companies directly related to the South
African regime. The movement spread, with 55
campuses eventually divesting, and more than 80
cities, 19 counties, and 25 states taking some
form of binding economic action against compa-
nies connected to the Apartheid.
While this campaign did not single hand-
edly end Apartheid, South African Archbishop
Desmond Tutu noted, “it could not have been
achieved” without “the use of non-violent means,
such as boycotts and divestment” that “encouraged
their governments and other corporate actors to re-
verse decades-long support for the Apartheid re-
gime.”
The actions taken by the college students
against apartheid represented the first major divest-
ment campaign. Divestment, which simply means
getting rid of unethical or morally ambiguous
stocks, bonds or investments, has since grown to
become a prominent strategy in the fight against
climate change.
Large institutions such as the Rockefeller
Brothers Fund, more than 30 U.S cities, and a
growing number of American Universities and reli-
gious institutions have taken the steps to divest
from fossil fuels, but the movement requires more
participation to become an agent of social change.
To date, the nation’s largest university, Arizona
"Moral Cents: The Ethical and Financial Case for Fossil Fuel Divestment at Arizona
State University"
Nick Di Taranto
State University, has yet to divest its endowment from
fossil fuels.
Arizona State University takes climate change
seriously. The University has the nation’s first School
of Sustainability, established in 2006. Tens of millions
of dollars fund tremendous amounts of research and
practical solutions to sustainability challenges in Ari-
zona and around the world as part of President Crow’s
New American University vision, while educating a
new generation of sustainability scholars and practitio-
ners.
One would expect that a leader in sustainability
would take the lead in divestment, but after research
and multiple conversations with the ASU Foundation—
the organization that handles ASU’s endowment—I
found that to not be the case and took it upon myself to
understand and unwind the complexities that prevent
the Foundation from taking action against fossil fuel
companies.
Divestment: a grassroots campaign to combat the
climate crisis
For my Masters in History, I focus on environmental
policy, so naturally, a global grassroots campaign
peaked my interest. Three numbers stuck with me—2
degrees Celsius, 565 gigatons, and 2,795 gigatons.
These numbers form the foundation for the divest-
ment campaign and were first brought to prominence
by environmental activist Bill McKibben three years
ago.
The first number comes from the 2009 Copen-
hagen Conference, where 167 countries recognized
the “scientific view that the increase in global tem-
perature should be below two degrees Celsius.” To
keep temperatures below that threshold, global car-
bon emissions cannot exceed the second number, 565
gigatons. The problem lies with the third number,
2,797 gigatons, or the amount of carbon already con-
tained in proven fossil fuel—coal, oil, and gas—
reserves worldwide. In other words, the carbon we
plan to burn short of any action to curb either its
extraction or use.
Despite the overwhelming scientific evi-
dence supporting anthropogenic climate change,
few political solutions exist to curb carbon emis-
sions. Meanwhile, fossil fuel interests continue to
spend large sums of money to fund climate denial
research, lobby policymakers, and explore options
for extracting more oil, gas, and coal from the
ground. In 2013, fossil fuel companies spent $213
million dollars lobbying U.S. and European offi-
cials, an OxFam International study reported. The
study also concluded that fossil fuel companies
spent nearly $700 billion on exploration and de-
velopment projects in 2012.
To combat the influence of fossil fuel in-
terests, McKibben’s non-profit, 350.org, called
for a grassroots movement to break the power of
the top 200 fossil fuel companies—100 oil and
gas and 100 coal companies—by bankrupting
them, not financially, but morally, and, in doing
so, pressuring political officials and businesses to
take action that curbs emissions. Since 2012, pub-
lic, private, and individual investors with collec-
tive assets worth more than $50 billion have
pledged to drop their fossil fuel holdings.
My interest in divestment stems from McKibben’s
passion, energy, and earnest activism, but there was
something more than that. The political process of-
ten seems inaccessible and climate change is a
problem too “wicked” for individual action to have
a meaningful impact. The divestment campaign
seemed like something I could support and maybe
make a difference. I began following campaigns
around the nation and researching the arguments for
and against divestment to determine if it was a
worthwhile cause for Arizona State University to
pursue.
Where does the New American University stand?:
weighing divestment at ASU
Choosing to divest requires navigating an
institutional bureaucracy. Endowments consist of
money or other financial assets donated to a univer-
sity or organization. Most often, donors gifts’ come
with strings attached, meaning the university must
use the donation to achieve an end goal designated
by a donor. According to its 2014 Financial Audit,
the ASU Foundation manages $626 million in the
New American University’s endowment. The Foun-
dation consists of six voting board members, who
steer the overall strategies of the organization’s
investment policies. Approximately, fifty different
firms make the actual investment decisions,
though, each of whom invest in about 300 to 500
companies based on their own investing strategies.
Initial attempts to learn how the Founda-
tion invests the University’s endowment through
financial reports provided vague answers: 40 per-
cent goes into global equities, 10 percent in global
fixed incomes, 20 percent in private capital and so
forth. Moreover, due to its status as an independent
and private organization, the Foundation has no
legal obligation to make more information avail-
able. So, I started contacting people at the Founda-
tion. I sent multiple e-mails that eventually led to a
meeting with Virginia DeSanto—known in the of-
fice as “Ginny”—the Foundation’s vice president
of finance, CFO, secretary and treasurer and Lisa
Jacobson, the assistant treasurer.
Ginny sat with a note-filled legal pad in
front of her, which signaled she took me seriously,
and she started things off by introducing herself
and explaining that the Foundation is “an inde-
pendent tax-exempt organization from ASU that
exists solely to support ASU.” Then, after intro-
ducing myself, I proceeded with my questions.
Ginny and Lisa explained that divestment could
result in financial losses that prohibit the Univer-
sity from meeting its fiduciary obligation to do-
nors. Moreover, the Foundation focuses on achiev-
ing the best possible return on investment for do-
nors. Ginny noted that large oil and gas companies
have the finances and ability to make large-scale
changes in energy infrastructure, so divesting from
those companies may actually undermine divest-
ment campaigns’ goal of reducing carbon emis-
sions. For instance, ASU collaborates with Shell in
its “Gamechanger Program.” Yet, the theme this
year implores students to come up with innovative
ways to take oil out of the ground more efficiently;
meanwhile Shell and other oil and gas companies
are abandoning their renewable energy investment
projects.
Well, OK, I thought, but how much of the
endowment is tied into fossil fuel companies? Nei-
ther Ginny nor Lisa knew. They cited the difficulty
of tracking hundreds of investments that that any
one of the fifty investment managers may trade on
a given day. They explained the Foundation
would not likely disclose individual stock invest-
ment information because some managers con-
tractually forbid that type of disclosure since it
could risk weakening the investment manager’s
competitive edge in investing.
When asked how the New American Uni-
versity values such as being socially embedded,
globally engaged, and aspiring to transform soci-
ety influenced investment strategies, Ginny ex-
plained that the Foundation has no policies in the
investment strategy that specifically includes or
excludes any particular environmental, social or
governance concept. She mentioned, however,
that the Foundation was considering setting up a
separate sustainable investment fund for inter-
ested donors to invest. The Foundation, also, re-
cently held a sustainable investing conference that
included 30 to 40 universities from across the
U.S.
She transitioned into explaining that the
New American University values guided some of
the ways the Foundation spent its revenue,
through public outreach, scholarships and by re-
ducing its carbon footprint from operations. Still
though, the Foundation had no clear or well-
defined sustainable investment strategy and it cer-
tainly was not seriously considering divestment. It
remained unclear if, or how, those values guided
investment strategies.
The meeting lasted roughly 45 minutes.
Ginny wished me luck on finishing school, told me
to e-mail her if I had any other questions, and
showed me out. On the walk home, I plugged in my
earphones and began digesting the conversation.
Ginny and Lisa answered my questions to the best
of their ability and provided important context to
how the ASU Foundation operates. Still, the lack of
specific answers nagged at me.
A few days later, I flew home to Philadelphia for
Spring Break where I mulled over my next steps. I
decided to look into some of the barriers to divest-
ment mentioned by Ginny to see if I could find po-
tential solutions. Google proved to hold a wealth of
information. To Ginny’s first point about financial
loss, I found some studies that supported her
claim—albeit funded by fossil fuel interests—but
most put forth evidence that demonstrated that di-
vestment makes financial sense.
Investment is about managing risk and the
concept of “stranded assets” makes investment in
fossil fuel investments dangerous. An Oxford Uni-
versity study defined stranded assets as “assets that
have suffered from unanticipated or premature
write-downs, devaluations or conversion to liabili-
ties.” Coal, oil, and gas risk becoming stranded
assets due to potential regulatory policies that limit
carbon emissions through a carbon tax, emissions
trading program, or some other regulatory mecha-
nism that internalize the cost of carbon pollution.
Carbon pricing schemes cover more than one-fifth
of global emissions, with the European Union and
23 U.S. states under some form of carbon regula-
tion policy. A larger proportion of emissions will
likely come under regulation after the U.N climate
talks in Paris this December.
Mainstream financial institutions provide
some of the most compelling evidence in favor of
divestment because it can result in financial gain.
For instance, a research team from Standard and
Poor (S&P) modeled the performance over the
past decade of the S&P 500 index stripped of its
fossil-fuel stocks. A $1 billion endowment in-
vested in carbon-free S&P 500 companies would
have yielded an additional $119 million in profit
through 2013. Studies from other investment firms
yielded similar results.
I also discovered that on average, U.S. uni-
versities have only two to three percent of their
endowment invested in fossil fuel companies.
Based on the average, ASU has between $12.52
million and $18.78 million invested in fossil fuels.
While that seems like a lot of money, it represents
only a drop in the bucket of the $12 trillion total
market capitalization of fossil fuel companies.
Last, I looked at divestment commitments at other
universities and found a wide range of options.
Pitzer College, for example, committed to divest-
ing 99% of its endowment from fossil fuels, while
the University of Sydney created a plan to reduce
investments in fossil fuel companies by 20% over
the next three years and then reassess its situation.
Armed with this information I decided to
take Ginny’s offer for follow up questions and af-
ter a few e-mail exchanges I headed back to the
ASU Foundation to meet Ginny, as well as Rick
Shangraw, CEO of the Foundation.
Prior to his appointment as CEO in 2011,
Shangraw served as the director of the Global In-
stitute of Sustainability. He demonstrated both
knowledge of and engagement with sustainability
issues as he went through my questions in a
power point presentation he made for the meet-
ing, taking care to stop when I asked for further
clarification, and expressing personal frustration
with the political apathy toward the climate crisis.
I found that we shared an admiration for McKib-
ben and his public outreach on climate change,
although he was less enthusiastic about the target-
ing of University endowments. He seemed on my
side, and even if he disagreed, I liked him because
he listened patiently to my perspective and took
care and consideration in explaining his.
Shangraw agreed that getting to a carbon
free investment portfolio was a desirable goal, but
also a journey, one ASU had just begun. He gid-
dily described a new investment opportunity or
tool that tracks companies’ behavior for socially
responsible indicators
such as human rights,
treatment of labor, and,
yes, carbon emissions.
Shangraw explained that
this tool could help move
the Foundation toward sustainable investing. He
emphasized that the Foundation planned to provide
new options for donors, such as a sustainable in-
vestment fund, which—along with a sustainable
investment statement—will be voted on at the next
Investment Committee meeting.
Additionally, Shangraw mentioned the need
for groups like 350.org to reach out to donors to
encourage them to push for sustainable options as
an important step for moving this topic forward
with similar investment organizations. Yet most of
the discussion focused very little on the endow-
ment. In Shangraw’s opinion, the endowment repre-
sented only one of the University’s and the Founda-
tion’s “sustainability levers” and he expressed the
need for a more holistic approach to moving the
needle on sustainable investing. While I never got
the impression the Foundation was seriously con-
sidering divestment, they made it clear that they
were pursuing other sustainable investment strate-
gies.
Conclusion
The facts are simple and clear: humans are
changing the climate by releasing carbon dioxide
and other greenhouse gases into the atmosphere
and the main source of those emissions come from
burning fossil fuels. To prevent the most catastro-
phic impacts of climate change, we need to keep
fossil fuels in the ground. Divestment campaigns
aim to pressure businesses, institutions, and or-
ganizations into stopping the flow of finance to
these companies, not to inflict financial harm, but
as a value statement: it is wrong to ruin the earth’s
climate and therefore wrong to profit from it.
If the ASU Foundation for A New Ameri-
can University’s sole purpose is benefitting the
University, then it should be held to the same val-
ues and standards. Climate change is a social, eco-
nomic, cultural, and political problem, pervasive at
the local, national, and international level, that is
largely attributable to burning fossil fuels. Divest-
ment from fossil fuels and the message it sends
could not fit more perfectly with the University’s
aspirations to become a force for societal transfor-
mation, embedded socially and connected with
communities, to encourage innovation, and to ad-
vance global engagement.
ASU and the Foundation should commit to
combating climate change through all its sustain-
ability levers. While the University has a Carbon
Neutral Plan that covers many “sustainable lev-
ers,” investment strategies are notably missing.
Still, ASU and the Foundation do not operate in an
ideal world and as with other climate-related chal-
lenges and any large institution, solutions are often
more difficult to implement in the real world and
change will likely occur slower than one might
hope. The Foundation is indeed moving in the
right direction, but it can do more.
To fully realize its goals and mission,
ASU should divest from fossil fuels. First, the
Foundation should assess the greenhouse gas emis-
sions embedded in its investment portfolio. Many
companies already disclose emission information
due to EPA greenhouse gas reporting regulations
and the push for corporate social responsibility.
Next, ASU and the Foundation can discuss to what
extent they want to divest from fossil fuels. Again,
options abound as many universities and other in-
stitutions have already divested or partially divested from fossil fuels. Last, ASU and the Foundation can work
together with their current investment managers, or seek out new ones, to develop a low carbon investing strat-
egy that does not jeopardize the University’s fiduciary obligations. For instance, Morgan Stanley Capital and
other investment firms offer sustainable or low carbon investment strategies. Fossil fuel companies comprise
only 11 percent of the S&P 500 so divestment hardly restricts investment strategies.
The University’s endowment is one quiver in the arrow, but when our society is dealing with a chal-
lenge as pervasive as climate change, it needs all the arrows available. When considering divestment, Univer-
sity and Foundation officials should reflect not on my words, but ASU President and Foundation board mem-
ber Michael Crow’s: “Do you replicate what exists, or do you design what you really need?” ASU has already
changed the university model through its interdisciplinary approach and it is time that kind of reevaluation take
place concerning the University’s endowment, to create what Mr. Crow calls the “maximum societal impact.”
End Notes
“What is Fossil Fuel Divestment,” Fossil Free, http://
gofossilfree.org/what-is-fossil-fuel-divestment/ (accessed Febru-
ary 1 2015). For a full list of commitments, see ibid, “Divestment
Commitments.” For Tutu quote, see “Divesting From Injustice,”
Guardian 13 June 2010. http://www.huffingtonpost.com/
desmond-tutu/divesting-from-injustice_b_534994.html
(accessed April 1 2015).
See the School of Sustainability website at https://
schoolofsustainability.asu.edu/about/school-of-sustainability/
The numbers come from Carbon Tracker Initiative, a project of
the non-profit Investor Watch. It’s report has been utilized by
several large investment firms and banks, including Standard &
Poor and HSBC, to calculate risk to carbon exposure. The total
reserves do not include shale gas. See, Bill McKibben, “Global
Warming’s Terrifying New Math,” Rolling Stone August 2 2012.
http://www.rollingstone.com/politics/news/global-warmings-
terrifying-new-math-20120719?page=2 (accessed March 3
2015).
See OxFam International, Food, Fossil Fuels, and Filthy Finance
(October 17 2014, 4. The Figure adapted from European Climate
Foundation http://www.europeanclimate.org/documents/
nocoal2c.pdf
See OxFam International, Food, Fossil Fuels, and Filthy Finance, 2
-3.
For the board of directors, see http://www.asufoundation.org/
about-us/board-of-directors.
Personal Correspondence with Virginia DeSanto, February 18,
2015. For figures on ASU’s endowment, see Arizona State Uni-
versity Foundation for a New American University and Affiliates,
Consolidated Financial Statements and Additional Information
(July 30, 2014), 5.
For the Gamechanger Program., see http://
www.asushellchallenge.com. For more information on Shell and
other oil and gas companies withdrawal from renewable energy
sources, see Tom Bergin. “Shell goes cold on wind, solar, hydro-
gen energy,” Reuters 17 March 2009. http://www.reuters.com/
article/2009/03/17/us-shell-renewables-
idUSTRE52G4SU20090317 (accessed March 28 2015); Terry Mac-
alister, “Shell accused of abandoning solar power buyers in the
developing world,” Guardian 2 January 2010. http://
www.theguardian.com/business/2010/jan/03/shell-sri-lanka-
solar-warranty-row (accessed Mach 28 2015); and Antonia Ju-
hasz, “Big Oil’s Big Lies About Alternative Energy,” Rolling Stone
25 June 2013. http://www.rollingstone.com/politics/news/big-
oils-big-lies-about-alternative-energy-20130625 (accessed
March 28 2015).
For an example of a often cited study purporting the finan-
cial risk involved with divestment see Daniel Fischel, Fossil
Fuel Divestment: A Costly and Ineffective Investment Strat-
egy. The study was funded by the Independent Petroleum
Association of America.
http://www.smithschool.ox.ac.uk/research-programmes/
stranded-assets/ (accessed March 20, 2015).
Sheila M Olmstead, “Applying Market Principles,” 220-221
and Henrik Selin and Stacey D. VanDeveer, “Global Climate
Change: Beyond Kyoto,” in Kraft and Vig, Environmental
Policy, 287-292. As of 2013, there are three regional cap and
trade programs. For example, ten Northeastern states cre-
ated the Regional Green House Gas Initiative and in 2009,
and California launched a cap-and-trade program. See, Barry
Rabe, “Racing to the Top, the Bottom, or the Middle of the
Pack? The Evolving State Government Role in Environmental
Protection,” in Kraft and Vig, 32-49 and Ken Portney,
“Sustainability in American Cities: A comprehensive look at
what cities are doing and why,” in Daniel Mazmanian and
Michael Kraft, Toward Sustainable Communities, 232-236.
For carbon pricing scheme statistic, see Fabian, “Support
low-carbon investment,” 28.
For other examples, see MSCI ESG Research Team, Respond-
ing to the Call for Fossil-fuel Free Portfolios, December 2013
and IMPAX Asset Management, Beyond Fossil Fuels: The
Investment Case for Fossil Fuel Divestment, 2013. See Car-
bon Tracker’s website for a multitude of reports on the mat-
ter of unburnable carbon.
The S & P study was commissioned by the Associated Press.
See Tom Zeller Jr., “Fossil Fuel Divestment: Smart Bet or
Losing Strategy,” Forbes February 10 2015. (accessed March
24, 2015).
Atif Ansar , Ben Caldecott, James Tilbury, Stranded assets
and the fossil fuel divestment campaign: what does divest-
ment mean for the valuation of fossil fuel assets?, Oxford
University Stranded Assets Programme at the University of
Oxford’s Smith School of Enterprise and the Environment
(2013), 53-57, 66-67.
For Pitzer College divestment see Pat Morrison, “Why Pitzer
College decided to quit carbon,” Los Angeles Times October
21, 2014. http://www.latimes.com/opinion/op-ed/la-oe-
morrison-gould-20141021-column.html#page=1 (accessed
March 9 2015). For the University of Sydney, see “Sydney
University announces plan to reduce fossil fuel invest-
ments,” Australian Broadcasting Corporation.. February 8
2015.
http://www.abc.net.au/news/2015-02-09/sydney-university
-announces-plan-to-reduce-fossil-fuel-investme/6080802
(accessed March 9 2015).
Bill McKibben wrote the first book about climate change for
a general audience in 1989, The End of Nature.
Personal Correspondence with Rick Shangrew on March 24
2015.
Ibid.
This was taken with permission from the power point pres-
entation made by Mr Shangrew for our meeting on March
24, 2015.
For examples, see MSCI ESG Research Team, Responding to
the Call for Fossil-fuel Free Portfolios, December 2013 and
IMPAX Asset Management, Beyond Fossil Fuels: The Invest-
ment Case for Fossil Fuel Divestment, 2013. Also, see Car-
bon Tracker’s website for a multitude of reports on the mat-
ter of unburnable carbon as well as the US Forum for Sus-
tainable and Responsible Investing website.
Tim Dickinson, “The Logic of Divestment: Why We Have to
Kiss Off Big Carbon Now,” Rolling Stone 14 January 2015.
http://www.rollingstone.com/politics/news/the-logic-of-
divestment-why-we-have-to-kiss-off-big-carbon-20150114
(accessed March 14 2015).
Collin Macilwain, “The Arizona Experiment,” Nature Volume
446 No 26 (April 2007), 968.
President Crow uses this phrase often and is a core value of
the New American University. For examples, see Michael M.
Crow. Ed. A New American University Reader: Selected Writ-
ings On University Design And Related Topics (2011). The
Phrase appears in numerous articles within this text and
within other cited by Crow in the forward.