The Van Mag Q&A: UBC’s Philip Steenkamp on divestment
UBC's VP of external relations talks about why his university decided not to sell off its holdings in publicly-traded fossil fuel companies—and why that doesn't mean it isn't serious about climate change
February 23, 2016
UBC has taken plenty of heat over the last week for its decision to reject a push to divest its endowment funds from fossil fuels, but nobody’s been subjected to the flames quite as directly as the university’s vice president of external relations, Philip Steenkamp. That’s why we caught up with him last week to talk about the response he’s been hearing, why he thinks it was the right decision, and whether he has any regrets about how the process was handled.
What’s the response been like to the decision to reject divestment from fossil fuels?
It’s been a mixed response. From some donors and friends of the university and people in business and industry, it’s generally been ‘We think this was the right decision. Good for you.’ But some of the students and some of the faculty who have been engaged in the campaign are very disappointed in the result. They’ve said that the fight’s not over, and that they will continue to make the case for divestment. Exactly what form that takes? We’ll wait and see.
One of the points you’ve made is that the referendum that was cited as evidence in support of divestment isn’t necessarily representative of the student population as a whole, given the vanishingly small turnout. Can you expand on that?
It’s always difficult to judge. Student referendums are generally characterized by very low turnout, and in this instance it was less than 20 percent. Of that, 77 percent voted [in favour of divestment], so that’s around 10 percent of the student body. And when it comes to the faculty one, the faculty association represents only a portion of the faculty on this campus—clinical faculty, for instance, aren’t represented. So if you look at the entire faculty complement here, that faculty vote represents a really small percentage.
Having said that, they’re a very activist faculty—they’re very engaged, and they feel very passionately about this. There’s representation from across the board in those numbers. So these are really important constituencies. But you do have to step back and think about what percentage they represent. And if the issues are so pressing one would anticipate you’d get higher turnouts, right?
What would be the cost to the university—and its student body and faculty—if it did decide to divest from fossil fuels?
When this debate started, we had about $110 million invested in the energy sector. The numbers keep changing, but it was down to around $85 million right now, and of that $41 million was invested in companies that had been identified by 350.org. There’s the issue of the financial cost of divesting at a time when the market is down—why would one sell right now, when you’ve already taken that big loss?
More significantly, we do have a fiduciary obligation to the donors. These investments were made under certain terms and conditions, primarily for us to seek the best possible return, because the endowment supports the academic mission of the university and in fact supports students directly in the form of scholarships and bursaries and student aid. So that would be the cost. And while cases can be made for fossil fuel free funds and their returns, the evidence is pretty mixed right now on what those returns look like. The university is not in the position to risk those investments right now.
Is it fair to assume that the finance committee is aware of the so-called ‘carbon bubble’ and positioning the university’s assets under management accordingly?
Absolutely—and that raises a really a good point. The university’s mission is really an academic mission. We’re charged with carrying out the best possible programs of education and research, and we hold endowment funds in trust to advance that mission. We trust those investments to investment managers—it’s not our business. We do rely on expertise here, and we obviously give guidance and identify what’s important for the university. But the university is also not in the business—and cannot be in the business—of making political statements. Universities are supposed to be environments where people can express different points of view, but we should not be using our endowment as an instrument to make a political statement, because then where does it stop?
Some of the students have suggested that there wasn’t enough consultation leading up to the decision. What do you say to them?
The finance committee and the board indicated that they’d look at the process and see whether there couldn’t be improvements in the process for consultation. But they made a deliberate decision. The responsible investment committee made a deliberate decision not to invite different stakeholder groups and lobby groups in. For instance, there was a request from the Canadian Association of Petroleum Producers to make a presentation to the committee and they said no—and equally, they said no to the divestment group. They felt that would allow them to look at all the evidence and not favour one particular actor over the other.
Having said that, the divestment group on campus does represent the campus community, so there were opportunities for them to speak directly to the board committee and the finance committee. Their spokesperson, Alex Hemingway, was invited to speak to the finance committee just over two weeks ago. He was invited to meet with the president, which he did. And they were invited to address the board meeting, which they did. They met with the chair of the finance committee as well. So their views were heard, and were well understood. But I’d go back and say that if we were doing it all over again, we probably would do it differently. We’d think about whether there were more opportunities for consultation along the way. But this has been a long process. It’s been a long deliberation, and a thoughtful deliberation.
Did this put the Board of Governors in a no-win situation, in that no matter how they decided somebody was going to emerge frustrated by the outcome?
Yeah, absolutely. I think the process here was pretty straight-up. You look at other universities that have actually arrived at exactly the same decisions, and yet haven’t been really up front about the fact that they’re not going to divest. Here, it was pretty clear. We want to lead with the creation of the sustainable future fund, and the fact that even within the current endowment we have instructed investment managers to look at high ESG [environmental, social, and governance] factors. But we’re also clear that the case for divestment wasn’t made—it didn’t meet the criteria that the committee had established. And among those criteria is a really important one around the particular fiduciary obligation we have to endowment donors.
We think our mission is primarily an academic mission, and we make a contribution through our research and teaching. UBC is a global leader in sustainability. We have some of the leading experts in this area doing amazing research and doing amazing teaching. And then in the operation of the university, we’ve committed to significant reductions in GHG emissions. We’re on track to meet those particular targets, and there are all kinds of other sustainability initiatives here as well. I think that’s the proper place of the university rather than some symbolic political act, which actually has no impact. We can have an argument over whether that symbolic political act sends a signal, but we think staying engaged and staying involved is far more effective.