Stanford Getting Rid of $18 Billion Endowment of Coal Stock

mdsolar sends this report from the NY Times: "Stanford University announced Tuesday that it would divest its $18.7 billion endowment of stock in coal-mining companies, becoming the first major university to lend support to a nationwide campaign to purge endowments and pension funds of fossil fuel investments. The university said it acted in accordance with internal guidelines that allow its trustees to consider whether 'corporate policies or practices create substantial social injury' when choosing investments. Coal's status as a major source of carbon pollution linked to climate change persuaded the trustees to remove companies 'whose principal business is coal' from their investment portfolio, the university said."

Comments

Activist investors

[EmagGeek]

They are not acting in the best interest of those the endowments are there to serve. They are using the financial clout of the endowments to make a political statement, often to the detriment of the endowment's beneficiaries.

Stupid.

Re:Activist investors

[guises]

Divestment as a prod for inducing responsible behavior is famous mainly for it's role in ending apartheid, and university endowments were a big part of what made it work. In fact, Standford was one of the first universities to do apartheid divestment.

People have called into question just how much of the effectiveness of that campaign came from the financial impact and how much came from the increased publicity, but I think its pretty widely considered to have played a non-trivial role in ending apartheid.

So yes, it is certainly possible that this campaign will prevent some environmental damage. Additionally, let me point out that Standford is not impoverishing themselves here. Money currently invested in coal can be invested in other things, with minimal opportunity loss - coal stocks aren't exactly skyrocketing right now. So the idea that the environmental gains could out way the financial losses is completely plausible.

Misleading headline

[Daffy Duck]

Stanford University has an $18 billion endowment, but only a fraction of that is invested in coal mining companies. They're not just dumping $18 billion worth of stock.

Summary is WRONG

[ShanghaiBill]

they are reducing the value of future offerings by becoming one less bidder for those shares.

Not by much, because the summary is WRONG. $18B is the value of their entire endowment. The fraction of that specifically invested in coal is a tiny fraction of that. If they are smart, they already divested, before making the announcement.

To the Contrary. The last ones out get burned.

[turkeyfish]

To the contrary, Stanford is simply astute enough to be the first to sell, while the price of companies involved in coal are still high. Its now just a trickle, but soon it will be a flood. The smart ones always get out first. The rest won't be able to afford not to and will begin to sell as their portfolios in these companies as they decrease in value. With new solar technologies capable of energy capture at up to 70% likely to start hitting the market within 5 years and wind energy becoming cheaper and cheaper and the electric car industry just around the corner, fossil fuel dinosaurs will be returning once again to the depths. Only those locked in will ride coal and ultimately fossil fuels all the way to the bottom.

The energy barons of the future will be those that invested in renewables first. Its inevitable and of course, the reason that China is now spending 3 times more on solar ($147 billion in 2011) than the US ($52 billion in 2011). No one can say the Chinese don't know how to grow their economy, which will be the world's largest this year, if it isn't already.