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The University of Toronto will divest from fossil fuels as part of its commitment to combatting climate change, the school announced Wednesday.
The university said it would end any direct investment in fossil fuel companies within a year and would extract itself from indirect investments through pooled or commingled assets by 2030 or sooner. It also committed to placing 10 per cent of its investments, or about $400-million, in what it called “sustainable and low-carbon investments” by 2025.
U of T has an endowment of $4-billion, the largest among Canadian universities, run by its own asset-management corporation. The university says its fossil fuel investments are worth just under $65-million, or about 1.6 per cent of its holdings.
U of T president Meric Gertler said in a letter to the university community that universities have an economic imperative and moral obligation to encourage the reduction of carbon emissions.
“The evidence of a climate crisis is now incontrovertible,” Dr. Gertler said in his letter. “The growing severity of the climate crisis now demands bold actions that have both substantive and symbolic impact. When a large institution like the University of Toronto decides to take such steps, it is our belief that this will both accelerate the transition to a low-carbon economy and inspire other investors to do the same.”
A number of universities have announced plans to divest from fossil fuels in recent years. The University of Guelph announced its divestment initiative in 2020, which prompted the resignation of its chancellor, Martha Billes, who said the decision was incompatible with her business interests. Several Quebec universities, including Concordia and Université du Québec à Montréal have also made commitments related to reducing fossil fuel holdings.
Harvard University announced last month that its endowment fund, now worth US$53.2-billion, would divest its remaining fossil fuel holdings.
Atiya Jaffar, who was part of the divestment campaign at Guelph during her time as a graduate student at the university and now works as a digital specialist at 350.org, a group that advocates for divestment and a green energy transition, said momentum has shifted in favour of divestment.
“It’s clear what the right side of history will be, and universities are changing their positions accordingly,” Ms. Jaffar said. “Universities can see the tide changing. When people move, institutions move.”
Gary Mar, president of the Canada West Foundation, a Calgary-based think tank, said he thinks divestment campaigns are based on a misguided view that focuses on energy production rather than on reducing emissions. He said the transition to alternative energy sources will take years, and in the meantime there is still a need for the energy that fossil fuels provide.
Olaf Weber, who holds a research chair in sustainable finance at the University of Waterloo, said U of T’s announcement is symbolically significant. He said for many years universities argued that such a move would be financially harmful, but as energy companies have fared less well in recent years, the arguments shifted towards a wariness of appearing to sell Canada’s oil-producing regions short. But university administrators have been in a difficult spot as many of their own professors and students argued to keep fossil fuels in the ground, he said.
U of T president Dr. Gertler said he had been urged by many in the university community to use every means at his disposal to help tackle the climate crisis, and thanked U of T students for their advocacy on the issue.
Julia DaSilva, a recent graduate involved in organizing efforts around divestment at U of T, said she was shocked and pleased to see the university’s announcement after years of petitioning an often unreceptive administration.
“This is what the divestment campaign has been working toward,” Ms. DaSilva said.
U of T has been assessing the climate-related risks in its portfolio for several years and has already reduced the carbon footprint of its long-term investments by more than 35 per cent, the university said. It has also joined the Net-Zero Asset Owner Alliance, a group of institutional investors committed to achieving net-zero carbon emissions associated with their portfolios by 2050.
The university also aims to cut greenhouse gas emissions from its own campuses, announcing a commitment on Wednesday to reducing emissions from its downtown Toronto campus by 80 per cent before 2050. It said it would do so by improving energy and utility infrastructure, incorporating new technology in construction plans and retrofitting some of its buildings.