No more oil and gas company investments for University of Utah?

U. Academic Senate wants the school to change how it invests, and offers environment-friendly recommendations.

(Francisco Kjolseth | The Salt Lake Tribune) University of Utah faculty members are making a push to distance the school from oil and gas companies. On Monday, the Academic Senate voted 69 to 22 to approve the Ad Hoc Committee’s recommendations for putting endowment funds towards environmentally sustainable investments, according to information from the university.

University of Utah faculty members are making a push to distance the school from oil and gas companies.

On Monday, the U.’s Academic Senate voted 69 to 22 to approve a set of recommendations to put the university’s endowment funds toward environmentally sustainable investments, according to a summary posted online by the Academic Senate.

The suggestions came from a committee — the Ad Hoc Committee for Divestment and Reinvestment Investigation — set up to advise the Academic Senate on how best to balance the U.’s economic, ethical, community and environmental concerns, according to the school’s website.

The university’s Board of Trustees will now consider the recommendations, which include:

  • Divesting, within one year, from companies on The Carbon Underground 200 list, which identifies the world’s top 200 coal and oil/gas reserve owners.

  • Selling all private equity holdings from “upstream” and “midstream” companies within 10 years. Upstream companies discover oil deposits, drill wells and extract raw materials, while midstream companies trade, transport and store raw natural gas and crude oil, according to the Council of Petroleum Accountants Societies, a nonprofit organization comprised of accounting professionals in the oil and gas industry.

  • Using funds regained by selling off holdings in oil and gas companies to reinvest in sustainable companies.

The committee, in its 61-page report, also posted online, recommends the university appoint its chief sustainability officer to the school’s investment advisory committee, create a management team to manage the transition away from oil and gas investments, and hire fund managers who advocate for sustainability.

Utah Rep. V. Lowry Snow, R-St. George and chair of the House Education Committee, said the fact that the U. is considering this move highlights the conflict between those that oversee investments and those concerned with social policies.

On the one hand, Snow said, universities shouldn’t be limited in the scope of their investments, as that can hurt their bottom line; on the other hand, sustainability is a legitimate concern.

“I think they will have to take into consideration how you balance those competing interests and try to make the right decision,” Snow said. “We have competent people sitting on the Board of Trustees. They get input from their [Academic Senate] and they also get good advice from those that they have entrusted with their investment to get the best return they can, and they’ll come to a good decision.”

But Utah Sen. John D. Johnson, R-District 19 and chair of the Senate Education Committee, called the ad hoc committee’s recommendations a “misguided edict” and “a direct attack on the fiduciary duty of the endowment overseers.”

Johnson said there are better ways to reduce carbon emissions than the committee’s recommendations, which he said imposes a cost on students and taxpayers at “the worst possible time to do such a thing.”

“To insist [the U.] fritter away millions because of some empty gesture is misguided folly,” he said. “Investments should be made based on science, not politics.”

The ad hoc committee has 16 members. Eleven are voting members, with eight from the faculty and three student representatives. The five nonvoting members represent the university president’s office, the investments office, the sustainability office, the student body’s sustainability board, and the Staff Council.

The university’s Endowment Pool, according to the school’s website, manages financial gifts to the school — spending a small portion to support the university, and investing the rest to grow the funds for the future.

As of June 30, 2020, the pool had amassed approximately $1.047 billion in assets, and in the 2020 fiscal year it returned 0.7%, according to the university’s Investment Management Office website.

In that fiscal year, the pool provided over $43 million to the university’s operating budget — a 4.9% increase from the previous year. Individual endowment gifts totaled over $20 million in the 2020 fiscal year.

Correction: 2:34 p.m., April 29,  2021 • This story has been updated to correct Sen. John D. Johnson’s position on the Senate Education Committee.