As we all know, coal is dirty. It is a fossil fuel and has a big environmental impact, as the Environmental Protection Agency outlines. When coal is burned greenhouse gas emissions, including carbon dioxide, are released. Mining, cleaning and transporting coal also generate emissions. Large amounts of water are used to remove impurities from coal at the mine, and coal-fired power plants use large amounts of water for producing steam and for cooling. Then, there is mountaintop removal — which blows the tops off of mountains to get to the coal lying beneath.
Stanford University clearly understands just how dirty coal is because its board of trustees, acting on a recommendation from the university’s Advisory Panel on Investment Responsibility and Licensing (APIRL), announced that it will not make direct investments in coal mining companies. Specifically, Stanford will not make direct investments of endowment funds in publicly traded companies whose principal business is coal mining for energy use.
The resolution means that Stanford will not directly invest in about 100 publicly-traded companies whose primary business is mining coal, and will divest of any current holdings in those companies — making it the first major university to divest from coal. In addition, Stanford will recommend to its external investment managers they they avoid investments in these companies.
“Stanford has a responsibility as a global citizen to promote sustainability for our planet, and we work intensively to do so through our research, our educational programs and our campus operations,” said Stanford President John Hennessy. “The university’s review has concluded that coal is one of the most carbon-intensive methods of energy generation and that other sources can be readily substituted for it. Moving away from coal in the investment context is a small, but constructive, step while work continues, at Stanford and elsewhere, to develop broadly viable sustainable energy solutions for the future.”
In 1971, Stanford adopted the Statement on Investment Responsibility, which states that the trustees’ main obligation in investing endowment funds is to “maximize the financial return on those assets.” However, the statement also allows that when trustees judge “corporate policies or practices cause substantial social injury” they can include this factor in their investment decisions.
A student-led organization called Fossil Free Stanford petitioned the university last year to divest from 200 fossil fuel extraction companies. APIRL’s Environmental Sustainability Subcommittee met with the group and then conducted its own research. “Stanford’s decision is a clear testament to the power of the student movement for divestment and the broader movement to combat climate change,” the group said in a statement.
Although Stanford has not divested from other fossil fuel companies, it may do so in the future. Deborah DeCotis, the chairwoman of the board’s special committee on investment responsibility, told the New York Times, “This is not the ending point. It’s a process.” She added, “We’re a research institute, and as the technology develops to make other forms of alternative energy sources available, we will continue to review and make decisions about things we should not be invested in. Don’t interpret this as a pass on other things.”
Stanford is the not the only organization to divest from coal. In January, a group of 17 foundations with almost $2 billion in assets agreed to divest from fossil fuel stocks, including coal, in their endowments. The foundations that agreed to divest include Ben & Jerry’s Foundation and the Schmidt Family Foundation, created by Google’s executive chairman, Eric Schmidt.
Image credit: Wally Gobetz