As we plunge headfirst into a climate disaster, UofT continues to sink hundreds of millions of dollars into the fossil fuel industry.
Over the past eight years, students, faculty, and staff have called on the University to divest from fossil fuels. In 2016, President Gertler rejected a unanimous recommendation from his advisory committee to divest University funds from the fossil fuel industry. With his rejection came a new, alternative policy—a 14-point plan titled Beyond Divestment: Taking Decisive Action on Climate Change. As the title suggests, it was advertised as a sustainable and ethical investment strategy that would go beyond the scope of what could be achieved with full divestment. Instead, Beyond Divestment initiated a new era of University environmental policy characterized by reductive, neoliberal greenwashing tactics that prioritize the wellbeing of investments over the wellbeing of people and land.
Beyond Divestment directed UofT Asset Management Corporation (UTAM), the private company that manages UofT’s $11.4 billion in assets, to consider integrating environmental, social, and governance (ESG) factors into their investment mandate. The document also recommended that UTAM sign onto the Montréal Protocol, which requires investors to annually report the carbon emissions of their investments. In the years following Beyond Divestment, ESG factors and carbon emissions have continued to take the spotlight in UofT’s environmental initiatives, such as UTAM’s annual Responsible Investing Reports, the Low Carbon Action Plan, and the Investing to Address Climate Change charter.
Both ESG factors and carbon emissions reporting, however, fall short of meaningfully addressing the root of the climate crisis. Critically, neither strategy prevents the University from investing in fossil fuels. In fact, these strategies may make it easier for University funds to remain invested in fossil fuels behind a greenwashed, ivy-leafed facade of sustainability.
The ESG rankings of companies are unstandardized, poorly-regulated, and often based on self-reported data. As ESG rankings rely on comparisons with peer companies, any fossil fuel company can have a high ESG ranking so long as it scores relatively better than other fossil fuel companies—and we know that for the fossil fuel industry, the ethical bar is not set high. Given the lack of accountability for investment managers claiming to adhere to ESG principles and the absence of transparency and standardization in data use, we cannot accept ESG rankings as anything more than greenwashing.
Carbon emissions data is especially misleading when applied to fossil fuels. This is because the standard method for measuring and reporting carbon emissions includes only emissions generated by the facilities and operations of the company (scope one and two emissions), but not the company’s products (scope three emissions). Because up to ninety-nine percent of the lifecycle emissions of fossil fuels happen downstream of production during burning and are thus not reported, fossil fuel companies have deceptively low carbon footprints. This allows fossil fuel companies to easily land within the scope of “low-carbon” and even “fossil-free” investments. Thus, despite touting its progress in low-carbon and ESG investments, the University’s refusal to be transparent in where their investments lie means that students, faculty, and taxpayers are left unaware of how their contributions to the University benefit the fossil fuel industry.
Equal scrutiny should be given to these initiatives’ lack of significant acknowledgement of the human dimensions of climate change. The Beyond Divestment-era environmental initiatives report extensively on the benefits of sustainable investing as a tool to mitigate climate-associated risks to investment returns, but do not meaningfully address the risks to human and non-human life brought on by the extraction and burning of fossil fuels. The University cannot achieve its goals of reconciliation and equity through a narrative of “climate leadership” that revolves around the performance of financial investments.
No amount of ESG investing, carbon footprint reductions, or shareholder activism erases the fact that UofT uses its financial and social capital to support an industry that has disseminates decade’s worth of misinformation about climate science, unleashes unchecked pollution onto the biosphere, and drives the ongoing dispossession of land from Indigenous peoples around the world. Fossil fuel companies, whose entire business model is predicated on the extraction and marketing of fossil fuels, will not be transformed by the good intentions of investors. In order to be a true climate leader and materially uphold its institutional values, UofT must break permanently with the fossil fuel industry, both financially and ideologically, and reinvest resources into equitable mitigation and real action on climate change.
One thing is clear from President Gertler’s 2016 rejection of divestment: financial and scientific reasoning will not convince UofT to sever its ties with fossil fuels. President Gertler’s decision was ultimately rooted in politics and power, and it’s time we tipped the scale. There’s a powerful grassroots divestment movement growing on campus, and students, faculty, and staff are demanding that UofT immediately divest from fossil fuels and reinvest in a just transition. Anything else is just greenwashing.
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