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MIT Rejects Demands to Divest Fossil-Fuel Stocks, Joining Yale

Wednesday, 21 Oct 2015 03:53 PM

(Bloomberg) -- The Massachusetts Institute of Technology rejected demands from a student-led group to divest its $13.5 billion endowment of fossil-fuel investments, joining universities such as Harvard and Yale.

MIT said in an announcement on Wednesday that it will instead remain engaged with energy companies and introduced a five-year plan to combat climate change that includes bolstering research and cutting carbon emissions on its campus in Cambridge, Massachusetts. About 5 percent of MIT’s endowment is invested in fossil-fuel companies.

The advocacy group 350.org is leading a campaign that has spread to 400 college campuses worldwide, calling on schools to banish 200 publicly traded companies from their investment portfolios. The companies, such as BP Plc and Exxon Mobil Corp., have large reserves of fossil fuels which contribute to global warming. MIT has had a partnership with energy and other companies that donate $50 million a year to the school to study clean and efficient power.

"We believe that divestment -- a dramatic public disengagement -- is incompatible with the strategy of engagement with industry to solve problems that is at the heart of today’s plan," MIT said in a statement.

MIT President Rafael Reif in March joined the board of directors of Alcoa Inc., the largest U.S. aluminum producer and one of the 200 companies targeted in the divestment campaign. Reif said in an e-mail that his role with Alcoa played no part in the university’s decision.

“This decision was driven by one objective only: to solve the problem of climate change,” Reif said. “And solving the problem means engagement.”

Schools Divest

Reif has been given about 8,200 shares of the company, currently valued at about $77,000. The stock, known as phantom shares, won’t be paid out until the end of his term on the board, according to an October filing with the U.S. Securities and Exchange Commission.

While about 40 schools including Stanford University have divested from fossil fuel companies, others such as Harvard and Yale, which have the largest endowments, have rejected demands from activists. Instead, the schools have said they are taking steps to reduce carbon output on campus.

MIT said that its five-year plan includes creating eight low-carbon energy research centers with corporate partners as well as a degree in environmental studies and sustainability. It also plans to eliminate the use of fuel oil on campus by 2019.

’Money Before Morals’

“There is room and reason for each of us to be part of the solution,” Reif said in a statement Wednesday. “I urge everyone to join us in rising to this historical challenge.”

Geoffrey Supran, a student with Fossil Free MIT, the group that spearheaded the divestment effort on campus, called the school’s announcement “business-as-usual repackaged.”

He said that a majority of the members of a university group created by Reif had recommended divesting from coal and oil-sands companies this year as part of a effort against climate change.

“MIT has put money before morals and its students’ futures,” Supran said in an e-mail.

--With assistance from Brandon Kochkodin in New York.

To contact the reporter on this story: Michael McDonald in Boston at mmcdonald10@bloomberg.net To contact the editors responsible for this story: Lauren Streib at lstreib@bloomberg.net Vincent Bielski

© Copyright 2017 Bloomberg News. All rights reserved.

 
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Wednesday, 21 Oct 2015 03:53 PM
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