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Duke moves forward on sustainability but stops short of fossil fuel divestment

Duke has made further steps toward sustainability over the past year, but the University has not moved further toward divestment from fossil fuels. 

Students have long called for commitments from the Advisory Committee on Investment Responsibility (ACIR)—which advises Duke on its investments—to recommend divestment, and the matter was raised again at the committee's November 2020 open forum. Activists at other universities, including Harvard, have made renewed calls for divestment in recent months.

A few advancements in regards to sustainability have been made in the last year and ACIR Chair Lawrence Baxter told The Chronicle that the creation of the Board of Trustees Strategic Task Force on Climate Change is chief among them

Along with creating that task force, the Board also approved DUMAC, Duke’s financial management company, to "consider the qualification of climate change and the effects of fossil fuels when considering investments."

Yet Duke remains firm in its decision not to fully divest from fossil fuels after ACIR declined in 2019 to recommend that Duke do so. At the time, President Vincent Price decided to take other steps to address the University’s carbon footprint following the committee’s recommendations.

ACIR currently assesses Duke’s fossil fuel investments based on the Carbon Underground 200, an index of “the top 100 coal and the top 100 oil and gas publicly traded reserve holders globally, ranked by the potential carbon emissions content of their reported reserves.”

As of now, Baxter says that there is little to no direct investment in any of those top 200 emitting companies. While there was a period of time when Duke had such investments due to inheriting shares after a third-party asset manager dissolved, DUMAC has set about unloading them. Baxter previously told The Chronicle that he believes that Duke has already liquidated those shares.

Baxter emphasized that DUMAC has a fiduciary responsibility to “optimize investment”—and the shifting profitability of green energy has encouraged the move away from fossil fuels. Baxter believes that two years ago, such investments would not be profitable. Now, clean energy funds are achieving higher returns, which allows DUMAC to fulfill its fiduciary responsibility while pursuing funds which reduce greenhouse gas emissions.

However, DUMAC only exercises control over direct investments, where shares of companies are purchased with endowment funds. 

The majority of Duke’s investments are instead managed by asset management funds with which DUMAC signs an agreement, giving managers of those funds discretion over their investment. DUMAC works with “approximately 128 third-party asset managers, which it has selected to assist in managing university endowment assets,” according to its website.

ACIR not has not formally recommended that Duke should divest from fossil fuel companies, and doing so could be complex. Baxter said that fossil fuel investment and its impacts on the environment are “such deeply systemic issues that it would be a hollow gesture” to divest.

Baxter drew attention to the other actions Duke is taking to address its environmental impacts, saying that the committee “felt that our carbon neutral policies and alternative energy policies were real expensive but genuine ways to get at the problem of greenhouse gases.” 

Junior Margot Armbruster, a student climate activist and opinion managing editor for The Chronicle, feels differently. She wants the University to divest from fossil fuels as a signal that holding shares in major polluters is not socially responsible or acceptable. She added that the act of divesting is far more important than the specific sum of money in funds associated with oil and gas companies.

Student groups’ demands—and ACIR’s early recommendations—have previously led Price to grant $100,000 in seed funding to Duke Impact Investment Group, though some activists were frustrated with the decision not to pursue other policies.

Baxter noted that the fall’s meeting saw a smaller showing from the student body. He noticed that the meeting was “not as inquiring” as previous meetings where more students were present. The 2019 open forum was itself poorly attended.

Baxter encouraged students to take advantage of this opportunity, as he says that student voices weigh heavily into ACIR decisions. In the past, student protests over investments into companies benefiting from the harvesting of “conflict minerals” led to a swift recommendation for divestment. 

Armbruster expressed frustration that Baxter faulted poor student turnout for a lack of pressure to pursue divestments. Having attended the October 2019 meeting herself, she recalled that this event was poorly publicized. 

“The only reason that I found out about it was because they'd sent out an email, a day or two before, and a fellow student had taken it upon himself to create a Facebook event and invite people to it,” Armbruster said.

Not only is there a high barrier to entry, Armbruster said, but the meetings are also dominated by terms and acronyms that many students are not familiar with. She credits nine years of student activism for divestment for the progress that has been made and categorizes the claim that if students were to work harder, tangible change would be accomplished as a “diversion tactic.”

Baxter himself was shocked by the urgency and severity of the climate crisis after hearing from student groups who presented at past ACIR forums. His own recognition of the gravity of climate change occurred after he began to chair ACIR. 

“Four years ago, I thought climate change is important but for me personally, it’s not a big deal,” he said. After he became chair and witnessed presentations from student groups, he began to feel that the matter is “really serious.” 

He was inspired to start a course in the Law School on the impact of climate change on financial markets with Sarah Raskin, visiting professor of the practice in law, to explore the intersection of law, finance and climate change. 

Baxter stressed that there must be a strong feeling that Duke is invested in harmful industries, and if this conclusion is reached then the ACIR “would recommend to President Price to divest from such holding and he would take that to the Board, and if the Board approves it, DUMAC doesn’t have to worry about failure to meet their fiduciary obligation.”

Armbruster said she hopes to see Duke confront its relationship with Duke Energy and be “more transparent about how it's using stakeholder power.” Armbruster feels that as a major partner and customer of Duke Energy, the University has the ability to pressure the utilities provider to be held accountable for its role in coal ash spills and emissions. 

While disappointed that Duke put the nail in the coffin a proposed light rail project in the past, she hopes to see the University invest in alternative transportation options, given that commuting is a part of the University’s emissions profile. 

Baxter argued that though the ACIR can be perceived as not being as forthright as they should be, they do not possess decision-making power and can only make recommendations. He added that he and other members of the committee are grateful for the work done by student groups to shed light on issues of concern to this generation. 

Baxter suggested students also pursue other, more direct avenues of effecting change on campus, such as working with the Campus Sustainability Office—as these institutions are set up to make change more quickly than ACIR.

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