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After years of pushing colleges to divest from fossil fuels, student activists are trying a new strategy: filing legal complaints against institutions under a law that requires universities to invest in a manner that reflects their charitable mission.
The Uniform Prudent Management of Institutional Funds Act encourages nonprofit institutions to consider their social mission when investing. That means, as each legal complaint notes, that nonprofit colleges have “a fiduciary duty to invest with consideration for the University’s charitable purposes—a duty that distinguishes non-profit institutions from other investors.”
Aided by pro bono lawyers from the nonprofit Climate Defense Project, students at the Massachusetts Institute of Technology and Princeton, Stanford, Vanderbilt and Yale Universities filed legal complaints last week with state attorneys general, arguing that investments in fossil fuels run afoul of each state’s Uniform Prudent Management of Institutional Funds Act.
“With each attorney general, in these respective states, we’ve written a specific individual legal complaint that asserts that our school’s fossil fuel investments run counter to their charitable purposes as tax-exempt educational nonprofits pursuant to the UPMIFA,” said Molly Weiner, a first-year student at Yale and organizer with the Yale Endowment Justice Coalition.
Each college, the students note, has hundreds of millions of dollars of endowment funds invested in fossil fuels. That means booming endowments are directly linked to the causes of climate change, they say. Student organizers object to the rich getting richer at the expense of the planet and future generations.
The Legal Strategy
If students can’t convince administrators to divest for the sake of morality, they hope to force them to do so on legal grounds. They point to fossil fuel divestments at Cornell University and Harvard University, which they see as victories, after similar legal complaints were made.
“The strategy is to shine a light on how seriously these massive university endowments should be taken,” Peter Scott, a junior at MIT and organizer with MIT Divest wrote in an email. “By investing in fossil fuels, and by repeatedly dismissing calls to divest from destructive industries such as the fossil fuel industry, MIT and other non-divested universities are lending credibility to these industries, essentially endorsing them as socially responsible. MIT administrators love to say that divestment would be a ‘political’ decision, but when universities all around us are making the decision to divest, inaction is undoubtedly political as well. By arguing that fossil fuel investments have legal implications, it will be much harder for administrators to pretend that they are socially responsible investments that belong in a portfolio that claims to have standards.”
Some organizers feel that colleges have ignored student voices urging divestment, leaving them no choice but to force a legal showdown.
“The complaints demand that our schools seriously reconsider their investment strategies and their complicity in the climate crisis,” Hannah Reynolds, a senior at Princeton and organizer with Divest Princeton, wrote in an email. “The added external pressure of the legal ramifications of inaction is the logical next step after Princeton and others have been unresponsive to our activism on the ground. At Cornell and Harvard, divestment happened mere months after complaints were filed.”
Beyond the legal strategy, students suggest that if colleges with major endowments drop fossil fuels for ethical reasons, it could set a precedent that other universities will follow. They also note conflicts of interest among university leadership and endowment managers, many of whom, they say, have deep ties to the fossil fuel industries, thus putting these investments in question.
Students also note the irony of institutions producing research on climate change in labs and classrooms while profiting handsomely off the fossil fuels contributing to that crisis.
“There’s just such dissonance to have the school that produces leading research on the climate crisis have almost a billion dollars—we are estimating $800 million—invested in fossil fuels,” Weiner, at Yale, said. “It makes no sense how those two things can exist at the same institution.”
Colleges have responded to the legal complaints leveled against them by pointing to ongoing efforts to reduce their role in climate change—if they’re saying anything at all.
“We are confident that Stanford investments fully comply with all applicable laws regulating charities in California,” Stanford spokesperson Dee Mostofi wrote in an email. “In 2020, our Board of Trustees completed a year-long review of fossil fuel investments and committed to accelerating our transition to net-zero greenhouse gas emissions. In a resolution and accompanying statement, the Board expressed its commitment to the 2015 Paris Climate Agreement. Stanford is focused on reaching our net-zero emission goals in our operations and investments by 2050.”
Likewise, MIT pointed to the steps it’s taking to address climate change.
“MIT’s leaders explored the question of divestment in developing our Climate Action Plan in 2015 and again in Fast Forward: MIT’s Climate Action Plan for the Decade, released last spring,” MIT spokesperson Kimberly Allen wrote in an email. “As explained in the current plan, MIT is pursuing a path of engagement with a wide range of industries, governments, philanthropists and other partners, as part of a much broader institutional strategy to help develop and deploy large-scale solutions for decarbonizing the global economy as rapidly as possible.”
Allen went on to note that MIT has “begun a process of bringing our investment portfolio to net zero by 2050, to help bring MIT’s investments in line with our larger climate goals.”
Princeton did not provide a statement. Vanderbilt and Yale did not respond to requests for comment.
The Battle Ahead
Students count fossil fuel divestments at Harvard and Cornell as victories won by legal pressure, even if the institutions themselves aren’t saying so. Now they hope to rack up more wins as they push five universities with gigantic endowments to consider divestment.
Susan Gary, a law professor at the University of Oregon involved with drafting UPMIFA, told Reuters that “a prudent investor would want to consider climate risk,” but she suggested that weighing those risks does not require colleges to divest from fossil fuels altogether.
With the legal complaints now in the hands of the attorneys general, it’s up to states to determine how they will move forward. Connecticut and Massachusetts are both reviewing the complaints, Reuters reported. Others did not provide responses on how they are approaching the matter.