The IU Foundation, which manages the university’s $3.3 billion endowment, does not consider divestment from fossil fuels to be in the best interest of IU.
“Operationally, divesting introduces a lot of risk,” co- Chief Investment Officer Jim Bergstrom said.
The money in IU’s endowment derives from donations to the university. Most of those donations are for a purpose the donor specifies, such as building improvements or creating a scholarship.
In addition, almost all of IUF’s investments are made through a series of other investment companies that are not a part of IU. IUF owns very few direct investments, Bergstrom said. The funds managed by the other companies may include some fossil fuel investments, but IUF is not able to pull its money for only energy investments without jeopardizing the relationship with that investment manager.
IUF does not consider divestment to be the best way to create a sustainable future and believes it would hurt its financial obligation to support IU, according to an Aug. 30 statement from IUF.
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Other Big Ten Conference schools have committed to divestment. The University of Michigan and Rutgers University, which has a smaller endowment than IU, have both committed to divestment, according to a database operated by environmental protection group Stand.earth.
For 15 years, IUF maintained a goal to have a specific percentage of their portfolio invested in natural resources, which may include oil and gas. That goal was reduced in 2016 and eliminated in 2020, according to the statement.
“It’s important to note that it doesn’t mean we are restricted from owning natural resources, it just means there is no longer a specific target,” Bergstrom said.
In 2006, the United Nations developed the UN Principles for Responsible Investment, a guide that investors can follow to maintain a sustainable environment and global financial system. Over 3750 companies, which control over $120 trillion in investments, have committed to UNPRI as of 2021.
A majority of the public investment managers that handle IUF funds have committed to the UNPRI, Bergstrom said.
Since early 2021, Sunrise Bloomington has been leading an effort, supported by other student groups, to push IUF to divest from fossil fuels.
“If they divest, that could lead to a domino effect of other universities divesting,” Sunrise co-leader George Schafer said. “It would be a PR win to divest, I’m not sure what their motivations are.”
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According to a statement from Matt Kavgian, director of strategic communications at IUF, the foundation believes they can create change by investing in sustainable assets that shift demand from fossil fuels to sustainable energy.
Through investment managers, IUF has put millions of dollars into companies that contribute to the energy transition from fossil fuels to renewable energy, according to the statement from Kavgian.
Some of those sustainability companies include an electric delivery vehicle manufacturer, a food producer that grows produce with minimal water and no fertilizer, and Tesla.
