The stake in fossil fuels currently held by the University portfolio amounts to almost $19 million, according to financial data provided to Fossil Free AU by Douglas Kudravetz, AU’s chief financial officer.
According to the University’s 2016-2017 annual report, student tuition and significant portions of the endowment are both pooled into the University’s operating funds, which maintains AU’s $18.8 million-stake in fossil fuel companies out of the University’s $1.8 billion investment portfolio. In other words, fossil fuel assets make up approximately 3 percent of the university’s $642 million endowment and approximately 1 percent of all of AU’s investments. Any investments in fossil fuels are unacceptable and the University has a responsibility to redirect this small portion of its funds.
The average cost of tuition and fees at a private college in the 2017-2018 academic year was $33,450, according to figures from the College Board. American University’s tuition and fees amount to $47,640 for this academic year. With this extraordinary financial commitment to the University, students’ interests should be represented in AU’s decision-making.
We believe that it is painfully inconsistent for the University to tout a cultural and political dedication to sustainability while holding a hefty financial stake in the fossil fuel industry.
In the same vein, it is contradictory for a university whose universal mission is to enrich the lives of young people to also pour millions of dollars — upwards of 87 percent of which come from those same students’ pockets — into the destruction of their futures.
Colleges have a moral duty to protect the environment for the next generations. Simply put, they are strapping students with enormous debt with no hope of a brighter future.
The earth can no longer sustain continued extraction and combustion of fossil fuels. Scientists agree that we must cut greenhouse gas emissions to avoid a global temperature increase above two degrees Celsius (a greater temperature increase is deemed catastrophic for life on earth by scientists).
The UN Intergovernmental Panel on Climate Change, in a recent report published on Oct. 8, called for urgent and transformational change, warning that 45 percent of CO2 must be cut by 2030. In addition, countries must achieve a “net zero” of carbon emissions by 2050 in order to avoid rapid intensification of weather disasters and food shortages.
According to 350.org, we can only burn 565 more gigatons of carbon dioxide to stay below this level of warming. However, fossil fuel companies have enough fossil reserves to release five times this amount and fully intend to do so. American University must take action to morally bankrupt these corporations now and stand on the right side of history.
There is overwhelming evidence that fossil fuels will soon no longer be profitable. If a future of climate chaos cannot compel AU to divest from fossil fuel corporations, then an economic one might. With increasing demand for low-carbon energy sources, studies have predicted that there will be a “carbon bubble” by 2035. Renewable energy sources are expected to surpass fossil fuels in affordability within the next 10 years, according to a report from the International Business Times.
There is a growing consensus among economists that fossil fuel investments’ worth will plummet, financially devastating those involved. Rather than waiting for these risky investments to collapse, AU should be proactive and reinvest in green energy and socially responsible initiatives.
American University must reassess its investments in order to remain dynamic in a (climate) changing economy. Not only should the University divest from fossil fuels corporations to remain financially solvent, but because it has a moral responsibility to do so.
Climate change threatens the futures of young people. It is unconscionable for the University to invest $19 million in the destruction of the only planet we have. As measured by economics or ethics, divestment is the right thing to do.
Fossil Free AU is a student-run campaign that demands that American University divests their endowment from fossil fuels. They are an outside contributor. The opinions expressed by the organization are theirs alone, and do not necessarily reflect the views of The Eagle and its staff.
