November 11th, 2015

Address: Dr. Wendy Jepson, Department of Geography, College of

Geosciences, Texas A&M University

Subject: University Divestment in Oil and Gas

Key Themes and Concepts:

Executive Summary

Current Policy

Reasons for initiating change

Brief background

Major alternatives

Pro’s and con’s

Recommended course of action and justification

Authors:

Ethan Aschenbeck

Anthony Correale

Lance Lozano

University Divestment from Oil and Gas in Texas – Divestment 2

Executive Summary

Divesting from fossil fuels simply implies removing assets, investments and other funds

linked to these resources or industry. Texas universities are not currently employing divestment

projects from oil and gas in their endowments or financial contributions. Universities across the

globe are becoming involved in divestment campaigns to alleviate the social costs and

externalities from these investments and holdings. By the year 2100, Earth will be 2 degrees

Celsius warmer, causing less rainfall and crop production. Circumstances are too late to halt the

2° C shift from happening but there is still hope to stop any further degradation. Divestment has

played a role in significant events in the past and the methods used to gain traction and attention

can be applied today. When Stanford University divested from the South African Apartheid

system, many schools followed suit, causing the U.S. government to follow suit. Fossil fuel

divestment could also lead to government adoption. Alternative energy usage is increasing

around the globe and unlikely organizations and governments have taken steps into financially

boosting their productivity. Companies such as Google and Saudi Aramco have invested heavy

capital into cleaner energies to promote renewable resources, which can lead to better resource

productivity. The pro’s and con’s of university divestment from oil and gas companies is a

controversial topic. The pro side believes in maintaining control on the environment. The con

opinion argues that divesting will do nothing for the environment but it will induce risk for the

universities. The recommendation to either divest or keep investments was concluded by

evaluating different arguments given by representatives concerned about the issue at hand

whether it be ethically, economically, socially or politically based. The criteria analyzed showed

overall support for divesting in Texas universities from oil and gas.

Current Policy for University Oil and Gas Divestment

One cannot comprehend the debate of divestment without learning about how the funds

in question are being invested. Texas universities are divided into two separate groups in this

context – universities benefitting from the state-administered Permanent University Fund (PUF)

and those that are not assisted. The universities who are not able to draw from the Available

University Fund (the distributed sovereign wealth fund from University of Texas and Texas

A&M University’s system investments) are smaller colleges, private universities and even large

public universities such as Texas Tech University who have not gained access to these public

funds through petition and gain funds through higher tuition rates and generous alumni donations

(Smyrl, 2010). The Permanent University Fund was established in 1876 by Texas’s state

constitution, delivering land asset “proceeds through oil, gas, sulfur, and water royalties rentals

on mineral leases and gains on fiduciary (trust) investments (SWFI, 2015).” Figure A. below

shows the path of funds earned from different investments and resource payments received into

the PUF and how it is distributed to the applicable

universities (UTWatch, 2008). The PUF’s financial assets

are contracted to a Board of Directors who are appointed

from the UT/TAMU Systems’ Board of Regents for

investment management as the University of Texas

Investment Management Company, otherwise known as

UTIMCO (UTIMCO, 2012). During the early years of the

Figure A. (UTWatch, 2008).

Investment proceeds and mineral/surface dividends are paid into the Permanent University Fund which is then distributed to the UT and TAMU Systems, restructured through bonds and then distributed into the different universities.

PUF, marginally fewer dividends were produced compared to modern growth because funds

were primarily generated from grazing of surface lands and the majority of university lands were

retained for future land price surging (Smyrl, 2010). On May 28th, 1923, oil was first found on

university property and sparked a new resource market utilizing extraction and profit – oil and

gas leases on state-issued lands appropriated by UTIMCO issued permits to bidding industry

representatives (Smyrl, 2010). In recent history, the 1984 PUF had a 0.4% stake of its total

$2.082 billion dollars in the various streams of the oil and gas industry with companies such as

Phillips Petroleum, Halliburton, Mobil, Shell Oil, and Texas Oil & Gas (University of Texas

System, 1984). This $9.3 million dollars indentifies stock value in different companies, which

disregards revenue additionally gained from drilling and processing of oil derived from

university lands. In 2008, UTIMCO moved forward on the sale of over $1 billion dollars of fossil

fuel reserves in land leases, causing an 8.5% increase in the entire fund to $13 billion from oil

and gas alone (Williamson, 2008). In a more recent figure from 2012, the Endowment Funds

Policy Asset Allocation of UTIMCO reported that only 5% of total PUF investments were

allocated in private real estate and commodities, which includes oil/natural gas returns and any

private land holdings containing these natural resources, exhibited in Figure B. (UTIMCO,

2012). The PUF has been decreasing reliance on oil and gas dividends in modern times. During

the recent decline of oil and gas prices of 2015, the Moody’s Investors Service rated the

endowment overall successful due to a well diversified mixed bag of resources and investments

in its large portfolio (Williamson, 2015). The Permanent University Fund steadily attains higher

return yields from its investments rather than mineral incomes and will continue to do so with the

current economic state of elastic fossil fuel investments and insulation from asset diversity to

earn revenue (Williamson, 2015).

       

Divestment is currently in defunct state in Texas universities and nationwide. Most

Divestment is currently in a defunct state in Texas universities and nationwide. Most

divestment campaigns are taking place in Northeastern campuses or campuses with a stronger

liberal foothold. Over 300 universities worldwide have been targeted for fossil fuel divestment,

but only a small amount of campaigns have succeeded in the U.S. compared to the entire amount

of national higher education institutions (Marklein, 2015). Targeting academic endowment for

controversial social or political inequities from fossil fuel externalities is the central frame of

reference used in divestment campaigns (Marklein, 2015; McSorley, 2014). DivestFund.org

shows that even with these 26 institutions and 8 other endowment funds backing divestment, as a

whole the public is either not aware of the issue or not interested enough to participate

(DivestFund, 2015). Even with the support that has been generated for divestment so far, it has

Figure B. (UTIMCO, 2012)

Investors at UTIMCO have holdings in many different areas of fiduciary interests and other capital. This pie chart shows what the PUF endowment is invested in during the fiscal year of 2012.

become combated by industry representatives and skeptics. Divesting from vested interests in

university endowments can cause risk that is either predicted or unexpected, harming the

endowment in the long run and posing an issue for institutional decision makers (Grady-Benson,

2014). Polled Texas voters have indicated their support in clean energy and belief in

environmental protection, so political support for divestment is prevalent among the Texan

populace but Texans overall tend to participate less civically and concede control to the

politically engaged few (Marston, 2015; UTNews, 2013). Citizens and students who are

supportive of divestment and an overall shift in the energy market can use the power of

consumer choice to campaign for a change in action (Marston, 2015; Gross, 2014). Focus on

university divestment is resourceful because student populations have a sense of idealism and

political fervor compared to public norms, but this can also roll over into university spending as

institutions are simply large consumers as well (Grady-Benson, 2014; McSorley, 2014). There is

still a conflict of interest for many Texans for an earnest move for divestment of oil and gas. The

oil and gas field is heavily ingrained in Texas’ economy. This connection has shifted since the

last oil bust, but prices and production still help Texas’ average citizen income and most of the

secondary support structures and businesses of the fossil fuel industry so a general stigma against

divestment in any form exists (Thies, 2011). Current campaigns in Texas universities for

divestment are few and far between. The only direct campaign held by students in Texas is a

signed petition by University of Texas at San Antonio students citing human rights, sustainability

and economics for reasons to divest but there is vocalized support from students at other

institutions (Garcia-Giddens, 2014; Zighelboim, 2015).

Reasons for Initiating Change in University Investment Behavior

Divestment has become a particular focus in recent debates because of scientific

uncertainty of what the future entails from modern energy usage. Looking into Earth’s future

with current increasing fossil fuel use, it is unknown exactly what will happen with the planet’s

environmental processes. Some scientists believe we are already experiencing a warmer world.

While most people would think with a warming climate storm frequency would increase, this is

quite the contrary. Scientists show storms will become far and few between, while drought will

take hold of most parts of the Earth and storms will intensify. A 2010 report by the National

Research Council, says each one degree increase could mean up to 10 percent less rainfall, 10

percent less stream flow in some river basins, and 15 percent reduction in the corn crop (Sundt,

2010). Each degree of warming could also bring threats from wildfires, projected to be up to a

400 percent increase in some areas (Sundt, 2010). Unfortunately, the 2 degrees Celsius of

warming may already be surpassed according to the United Nations Environment Program

(UNEP). The UNEP theorize a potential range up to 4 degrees Celsius of warming (Parry, 2010).

“The continued rise in greenhouse gas emissions in the past decade and the delays in a

comprehensive global emissions reduction agreement have made achieving this target extremely

difficult, arguably impossible,” says researchers at the University of Oxford in the United

Kingdom (Parry, 2010).

Scientists at NASA have researched climate history and discovered evidence of seven

cycles of glacial advance and retreat in the past 650,000 years, the last ending about 7,000 years

ago (ESCT, 2015). Most people perceive climate change as a historical process Earth has been

cycling through for 650,000 years. Since 1950, evidence shows there is a peak in the cyclical

carbon dioxide levels out of the stability range of the past, and this peak is currently still

climbing (ESCT, 2015). From Figure C. below, the carbon dioxide levels have continued to

increase since the Industrial Revolution, implicating anthropogenic processes as a source of this

increase.

From empirical studies of declining Arctic sea ice, glacial retreat, warming oceans, ocean

acidification, and more extreme weather events occurring every year, a problem must be

occurring within the environmental processes and services of Earth. Divestment from oil and gas

holdings that help produce most of this harmful carbon dioxide could mean a start to a cultural

movement to slow down our reliance on oil and to move toward clean energy faster. Without a

shift in the energy grid soon, it may be too late for a change to occur.

Figure C. (ESCT, 2015)

NASA specialists show in the above graph how data trends in the carbon dioxide levels present from the past 650,000 years. Most of the past levels have been within a reasonable stability range, with 1950 levels finally going out of this range into current levels.

Divestment: Emerging Awareness and Success in the Past

The roots of fossil fuel divestment can be traced to a moral perspective many believe in

with the ethical stewardship of the Earth by humans. Individuals have taken notice of this

dilemma and have begun acting by pulling the plug on connections with carbon emitting

corporations. This has slowly become a trend for some institutions like Stanford University. A

group of students from the school put together a report titled The Case for Fossil Fuel

Divestment (2015), which dives into how the university successfully divested from coal in May

2014 after the student body was lectured by Bill McKibben back in 2012 about the escalation of

global warming trends (Stanford, 2015). The report states that a portion of the student body

spurred into action by forming ‘Fossil Free Stanford’, an organization gaining support from not

only students but faculty and alumni and successfully triumphed (Stanford, 2015). After coal was

divested, the organization has gained traction in the next step of divesting from other CO2

emitting energy sources like oil and natural gas. The report states that more than three fourths of

the student body has signed a divestment petition along with tremendous support from

elsewhere: “hundreds of Stanford alumni have written letters to President Hennessy in support of

divestment. Our core team of organizers has tripled in size, and more and more students turn out

for rallies and advocate for divestment” (Stanford, 2015, P. 13). Stanford’s goal of fossil fuel

divestment has inspired other institutions to follow suit.

Fossil fuel divestment in university endowments and assets are not the first form of

divestment appearing with universities. Decades prior in 1977, Stanford University and

Michigan State University initiated a divestment from Apartheid South Africa which was a

system that enforced racial segregation (African, 2015; D., 1977). The students who wrote The

Case for Fossil Fuel Divestment relayed some credible information about this and why it was

significant. They explain that when both institutions divested from the Apartheid movement,

more than one hundred fifty other universities across the nation followed their lead. These

actions eventually caught the attention of the U.S. government which issued sanctions against the

African country. These actions didn’t cause any real financial damage to South Africa but their

overall message however was shown and this triggered a political domino effect which helped

end the Apartheid. Even more incredible was Nelson Mandela’s response, as quoted from the

report: “When Nelson Mandela was released from prison, one of his first stops was in Oakland

where he thanked the University of California system for divesting, an action that he saw as a

turning point for the anti-apartheid movement” (Stanford, 2015, P. 9). If schools and

organizations see the fault of investing in fossil fuels, they can respond by contributing in the

prevention of global warming by divesting and doing so can escalate a trend that can catch the

attention of more powerful entities like national governments and perhaps in the long term fossil

fuel investments. The writers shared their optimism: “By divesting from fossil fuel companies,

Stanford can help to remove the veneer of respectability from those who seek to profit from

obfuscation of scientific consensus. By doing so, Stanford helps to create the political space for

meaningful legislation” (Stanford, 2015, P. 10). The students who constructed this report are not

the first to understand this notion.

Rebecca Leber is a writer for an online political newsletter called New Republic and

wrote an issue published in May 2015 titled “Divestment Won't Hurt Big Oil, and That's OK”

(2015), which approaches the idea of divestment. Leber’s article starts off by explaining that

since 2013 around two hundred thirty organizations, thirty of these being universities, have

initiated divestment totaling around fifty billion dollars so far (Leber, 2015). This amount of

capital is little to what the Big Energy oil and gas companies burning fossil fuels make. Leber

argues the political message is what is most important, stating: “Financial hardship was never the

goal; the goal was political action (Leber, 2015). She also leans on the fact that the divestment

movement against South Africa’s Apartheid in the 1980s and the tobacco industry in the 1990s

helped model the current movement against fossil fuels for many schools and organizations. An

important fact to note is that even though these divestment movements do not hurt those

industries financially, the eventual public response and policy changes alter the course of history

for the better and Leber affirms confidence the same can be done with fossil fuels. Divesting

fossil fuels will help move the energy industry into a cleaner era and schools in Texas are

capable of such actions and paving the way for a better future. The changes they can enact are

possible and doable.

Alternative Investments in Clean Energy

Fossil fuel investments’ contribution toward climate change has caught the attention of

several college campuses. With divestment being urged across the country by students, some

campuses have already taken a progressive step forward, recognizing wind and solar as

beneficial investments. Brian Wingfield is a writer for Forbes who wrote an article in 2008

called “America's Greenest Colleges.” Wingfield states that Stanford and Yale are institutions

that have already planned on transitioning to carbon neutral by divesting in the upcoming years,

but also notes that some schools have taken the extra step of instituting green energy as part of

their campuses by purchasing renewable energy credits or RECs (Wingfield, 2008). These RECs

are not only investments in cleaner energy, but in this particular case, energy that feeds

electricity into schools that have committed toward them. Institutions such as NYU, Penn State

and Oregon State invest their money into energy based companies like FPL Inc. which supplies

power that comes from greener sources, particularly wind power (Wingfield, 2008). Although

this does not necessarily erase the carbon footprint these schools have contributed, it does show a

leading example of how some schools have begun their transition toward financially investing in

renewable resources. Texas universities are lacking in renewable energy investments, as most of

their capital earned in the PUF is through extractable resources and agricultural land (SWFI,

2015).

In recent times, wind power has picked up speed by supplying more electricity to

consumers. According to the National Academies of Sciences, Engineering and Medicines, wind

power doubled production capacity in the United States between 2002 and 2006 supplying

approximately 1 percent of the nation’s total energy production (National, 2015). This may be

minimal in the entire national energy grid, but the U.S. Department of Energy conducted a study

indicating wind could supply anywhere between 4.5 to 20 percent of the entire country’s energy

by 2030 (National, 2015). With the opportunity of such substantial power savings, some

industries and companies have begun heavily investing in the renewable resource. Chelsea

Harvey of The Washington Post wrote an important piece on Google’s major investment in an

African wind farm in late 2015, appropriately titled “Google’s newest renewable energy

investment: Africa’s biggest wind farm” (2015). Located along Kenya’s Lake Turkana, the

project, which is expected to be running by 2017, will house 365 turbines generating a total of

around 1,400 gigawatts of energy; the wind farm would save Kenya 113 million dollars a year in

fuel costs and supply up to fifteen percent of Kenya’s total energy consumption (Harvey, 2015).

Part of Google’s goal was to decrease the reliance of fossil fuel imports and promote increased

investments in renewable resources (Harvey, 2015). Africa is only one of few places Google has

invested its two billion dollars in wind energy, adding North Dakota, Oklahoma and Texas to its

vast resume of geographic operation involvement (Harvey, 2015).

Texas itself produces an outstanding amount of wind power. Randy T. Simmons, Ryan

M. Yonk and Megan Hansen of Utah State University wrote an academic review called “The

True Cost of Energy: Wind” (2015) in which they covered Texas’ wind power growth and

financial contributions. As of 2012, eight percent of the state’s power was generated from twelve

thousand megawatts coming from in-state wind farms, doubling any other U.S. state (Simmons,

Yonk & Hansen, 2015, P. 9 & 24). Interestingly enough, Texas enacted state-of-the-art policies

to “incentivize the development of wind energy” by relying mostly on subsidies paid by residents

through taxes (Simmons, Yonk & Hansen, 2015, P. 9 & 24).

Absorbing solar energy and converting it into electrical power has been one of the

leading examples of clean energy rapidly expanding across the globe. Governments and

companies have been conducting research and investing money into solar panel projects, some in

the most unthinkable places. Saudi Arabia is a nation known for its abundance and financial

dependence of oil but in recent times it has begun its shift toward solar power reliance. Jeffrey

Ball, a writer for The Atlantic, wrote “Why the Saudis Are Going Solar” in mid-2015 explaining

the country’s latest move toward cleaner energy production. Ball interviewed Prince Turki Bin

Saud Bin Mohammad Al Saud who explained the kingdom’s recent green move is based on

conserving the country’s limited oil consumption to use for a longer extended amount of time

rather than preventing the fragile global climate shatter even more (Ball, 2015). This step is

arguably one of the world’s biggest moves toward investing in solar energy. Ball explained that

the kingdom plans on constructing ten solar panel zones across the arid landscape along with two

factories supplying polysilicon to each project (Ball, 2015). The solar panel zones are being

financially invested by Saudi Aramco, which is the largest petro-company on the planet, with

some funding by the country’s royal family and other international industrial firms (Ball, 2015).

Their goal is to produce 41 gigawatts by 2032, supplying 1/5 of the kingdom’s electrical

consumption (Ball, 2015).

National Geographic’s Josie Garthwaite wrote an article in 2013 titled “Mojave Mirrors:

World's Largest Solar Plant Ready to Shine” which is primarily focused on the trade-off of

having a solar power plant located within vicinity of an endangered species of tortoise. However,

it does enlighten readers about the benefits of expanding solar power in the states. Garthwaite

briefly noted companies like Google and NRG have begun investing millions of dollars into what

is the Earth’s largest solar thermal energy plant in California’s Ivanpah Valley within the Mojave

Desert (Garthwaite, 2015). The plant stands on 3,500 acres of desert generating 377 megawatts

of energy, equivalent of supplying 140,000 homes of electricity (Garthwaite, 2015). They plan

on investing on the construction of additional plants called ‘Stateline’ and ‘Silver State South’

which will each hopefully generate 300 to 350 megawatts of electricity and return substantial

funds toward investors when it takes off (Garthwaite, 2015).

With major corporations and government agencies rolling on toward cleaner investment,

what is questionable is why many institutes of higher learning have yet to do the same. Texas

universities have a substantial amount of property holdings in West Texas that could be used for

large scale solar and wind energy projects with a clean footprint and a sound investment on their

underutilized properties. Reinvestment away from carbon energy assets like oil and gas could be

diversified in renewables, increasing the overall variance of the PUF portfolio and reducing asset

stress from fossil fuels (Williamson, 2015).

The Pro’s and Con’s of University Divestment

The pro’s and con’s for a university to divest in oil can lead to several controversies, with

both sides having merit to their argument. All the universities holdings in the country own less

than 1% of the entire oil market shares (Chandler, 2015). If all the universities in this category

did divest from oil and gas, it would not significantly hurt the oil and gas companies financially.

Most people realize divesting will not hurt the oil companies at all and in fact may hurt the

university. From the debate at MIT on pro’s and con’s of divestment, the participants stated,

“divestment transfers shareholder prerogatives to another party, reducing the ability to influence

the choices of fossil fuel companies (Chandler, 2015)”. Divestment also takes away the

dividends that institutions could use to invest in green research and development, hurting the

green energy market substantially (Chandler, 2015). Another concern would be the divested

shares being purchased by an entity or representative that could do more harm to the

environment by owning the shares than the university endowments. According to Jeff Eshelman

of the Independent Petroleum Association of America, divestment is “mostly about grabbing

headlines with no tangible impact on the environment or the climate change movement. It’s

really a distraction from gaining any sort of real discussion on climate change on college

campuses (Wirth, 2015).”

For the UT/TAMU Systems, a large portion of funding is the Permanent University Fund,

which is a sovereign wealth fund created by the state of Texas (Smyrl, 2010). With all this

money coming into the coffers of Texas A&M University and the University of Texas, it might

seem hypocritical to divest from the companies paying them for access on state land. If

divestment from oil and gas companies were to occur, it would also mean a halt to accepting

money coming from the state resources of oil. Mark Warner, the senior managing director of the

University of Texas Investment Management Company says, “The investing business is difficult

enough. When one makes an initial calculation on a social basis with regard to their investing

policy, where the next will lie and where to draw the line is difficult. Our view is, we have a very

clear mandate. And that is to grow and manage the assets of the University of Texas and Texas

A&M systems to the very best of our abilities, to preserve their purchasing power over the very

long term. And that just doesn’t include a social mandate (Wirth, 2015).” Mark makes the

argument that they are looking out for what is best for these two universities instead of

attempting to make a statement to the country. Jeff Eshelman mentions, “the people who have

the most to lose by the divestment campaign are not the oil and natural gas companies but the

students who benefit from fossil fuel investments in the college endowments. Their financial aid,

the upkeep, maintenance and improvements to the academic institutions and even pension funds,

these are the ones who have the most to lose by the divestment movement, not the industry itself

(Wirth, 2015).” Students who cannot individually support themselves to attend college are the

true victims of this argument. If divestment occurs, it could mean tuition rate changes and

possibly cuts on jobs or classes around the campuses to make up for the financial loss of stating

their social opinion on oil and gas.

The carbon risk argument is that oil companies are a terrible investment to begin with.

They we’re once a sound financial investment in the 1950’s but have been on a spiral since the

2008 recession. In the recent years, oil companies have spent close to a decade researching for

easy access oil with no results. The oil companies are already pumping the cheap-to-get-to fossil

fuels and it would be smart to maintain current strategies but business is always going to be

searching for the next resource pool. The energy return on investment (EROI) and the financial

return on investment for oil and gas is just unreasonable compared to renewable alternatives such

as wind and solar.

Recently, as of October 22, 2015 MIT has rejected the divestment of their $12 billion

endowment from fossil fuels. MIT’s reasoning being that a divestment is just a dramatic public

disengagement which makes a symbolic public move to divest and would not be the most

effective way to drive progress on climate. Instead, MIT has announced that a ‘plan for action on

climate change’ which makes better engagement and research initiatives (Chandler, 2015).

Harvard has also recently rejected the idea to divest as they state, “to advance academic aims, not

to serve other purposes, however worthy (Mothersole, 2015).”

Recommended Course of Action for University Oil and Gas Divestment

The recommended course of action based on the data available is to divest from fossil

fuel resources including oil and gas from educational institutions and their holdings. Divestment

is a political and social tool used to display the ideological disposition of the public about a

certain practice or activity. As Naomi Klein stated in her best selling political change novel “This

Changes Everything: Capitalism vs. the Climate”, adoption of divestment ideology is paramount

on the fact “that it doesn’t financially harm, but that it sends a message socially and pressures

politicians” (Klein, 2014). Dropping investments from university endowments that are in Big

Energy and resource consumption removes professional respect from an unethical practice; this

solves the social equity issue of oil and gas investment by dismissing the positive regard

associated with these investments (Yglesias, 2015). Student groups and citizens largely support

divesting around the country and in Texas, ranging from small scale protests to successful

divestment campaigns of fossil fuel interests (350.org, 2015; DivestFund, 2015; Fossil Free,

2015; Garcia-Giddens, 2014; Gardner, 2014; Zighelboim, 2015). Ethical concerns arise within

divestment literature and debates for the role that universities play. Arguments for university

elimination of fossil fuel representation in endowments voice attention that even divesting from

the most responsible sources of pollution and reinvesting in either greener and/or cleaner energy

is in the interest of progressive goals universities already strive for in a better future (Cleveland,

2015). Texas A&M University and University of Texas students have experienced the ethical

dilemmas that surround fossil fuel interests in Texas education. The University of Texas’ Energy

Institute has exhibited questionable behavior when a conflicting study on groundwater

contamination sided with industry when collected data presented a different conclusion and

further investigation showed the leading researcher’s financial ties to the fracking industry

(Henry, 2012). The Battalion, TAMU’s student newspaper, has been investigating unethical

choices that UTIMCO has made by investing in multinational corporations that have a role in

“repressing” underdeveloped countries, some of them being oil and gas conglomerates (Davis,

2015a). UTIMCO CEO and CIO Bruce Zimmerman cited the dangerous behavior of investing

ethically, as UTIMCO is an investment company and not a social institution, but a common role

of universities (and consequently the financial assets they control) is to be a leader in social

reform and not a saboteur (Davis, 2015b; Whittaker, 2008). UTIMCO has shown ethical

reasoning as discussion of divesting funds from Russian companies after the Crimean annexation

occurred (Wilts, 2014). The Texas economy has evolved in the past 40 years away from a

dependence on fossil fuels as a main source of resource capital and financial security, but it is

still present in employment and investment sectors (Thies, 2011). Divesting fossil fuels in

university holdings is an increasingly important way to diversify an energy portfolio, as divesting

fossil fuel resources and shares in companies frees capital for investment in renewable energy

which allows resilience and flexibility for Texas energy consumption (Office, 2014).

Divesting from oil and gas holdings is a better option than either further investment in

fossil fuel assets or maintaining the status quo of investment because it solves the issue at hand –

widespread use of unsustainable fuel sources. While Big Energy conglomerates are the main

source of environmental degradation along with consumer purchasing power of these fuels, the

system isn’t black and white anymore. Renewable resource markets are being purchased or

researched by these multinational firms but divestment can still send a clear message that the

overall system is not working to the standards of society (Gross, 2014). In the overall view of the

environment and its connections with humans, investing in fossil fuels also encourages short

term gains instead of long term sustainability or efficiency, evidence of future discounting.

Institutions such as Texas universities have a continuing role in economic longevity and social

reform, and divestment can be a form of indirectly combating future discounting (Rehmeyer,

2015). Continued or further investment in these sources of negligent, limited growth is opposite

of what universities exist for and should be reevaluated. From the comprehensive data collected

on ethics, diversity, progression, sustainability and community support, divestment from oil and

gas should be reasonably considered by Texas universities.

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