Frequently Asked Questions

What is divestment?

Divestment is simply the act of un-investing; it is pulling money out of stocks, bonds, and other investment pools and reinvesting that money elsewhere or holding it as cash. Religious institutions, corporations, retirement funds, individuals, and universities invest their money in these pools just like individuals do so that they can make more money over time. Divestment may happen for financial or moral reasons–one might divest because another investment is more profitable, or one might divest to make a statement that the institution no longer supports the practices of the industry in question.

So, what is Fossil Free?

Fossil Free is an international movement that grew in response to systematic inaction at the international level on dealing with climate change. The industry that is the most responsible for climate change, however, is also that which holds the most power in our government — the fossil fuel industry. In order to put the industry’s social, environmental, and economic injustices in the spotlight, and to spark an international conversation which cripples the industry’s reputation, Fossil Free calls upon universities to do three simple things: 1) Stop all new investments in the industry, 2) Drop all remaining investments over a 5 year time period, and 3) Roll out a reinvestment strategy that takes into account climate risk. The UC campuses are working together to call upon the Regents to invest in our futures, instead of in the industry that is actively compromising them. Once our universities begin to do the math and see how much climate catastrophe will cost, it will be clear that not only is divesting from fossil fuels morally right, but also financially. It’s time for the UC to lead the way.

Ok, but how can Fossil Free actually make an impact?

Divestment is a moral and political strategy to expose the reckless business model of the fossil fuel industry that puts our world at risk. It exposes the fossil fuel industry’s influence on our democratic system, its perpetuation of climate change denial, and its continued extraction of hydrocarbons that heat our planet. Divestment calls on citizens to build a powerful climate movement and pressure elected representatives to enact meaningful legislation. The time has come for institutions to take a stand on climate change by divesting.

Furthermore, history has proven that divestment is effective. Many credit the UC for leading the successful South African Apartheid divestment campaign in the mid-1980s, as one of the first major research universities to divest. This action, in conjunction with other divestment campaigns, helped release the stronghold of the racist Apartheid government.

But aren’t fossil fuels profitable?

In the short-term, possibly. In the long-term, probably not. A groundbreaking report by Carbon Tracker (drawing on research from the Potsdam Institute) outlines the science behind what’s known as “the carbon bubble.” The report calculates how much fossil fuel the world can burn over the next 40 years (while limiting global warming to an approximate two degrees Celsius), and concludes that fossil fuel companies own five times the amount of fossil fuel in their reserves than it would take to cross the two-degree threshold. [1] The Intergovernmental Panel on Climate Change came to a similar conclusion in their most recent “Fifth Assessment Report.” [2] This means that if fossil fuel companies are successful in implementing their current business plans, we will be unable to avoid runaway climate change.

Because of the impending threat of regulation, climate-change related threats to infrastructure, litigation, competition from the renewable energy sector, and social movements pushing for a transition away from fossil fuels, economists are warning that these reserves might lose their value. Therefore, these carbon reserves are being referred to as “stranded assets.” If fossil fuel companies cannot burn their reserves, their stock prices are overvalued and will eventually collapse.

Now is the time to prepare portfolios for a low-carbon future. Acknowledging the risk in continuing to invest in fossil fuels, a group of institutional investor networks bluntly stated that “further delay in implementing adequately ambitious climate and clean energy policy will increase investment risk for institutional investors and jeopardize the investments and retirement savings of millions of citizens.” [3]

Won’t this hurt financial aid and the university?

A critical and growing body of research is demonstrating that divestment from the top 200 fossil fuel companies has a net-zero, or even positive, effect on portfolio returns. Renowned investor groups show through peer-reviewed methods of risk analysis that the increased risk and theoretical return penalty associated with divestment from these companies is statistically insignificant. [4] Moreover, through historical back-testing, these and several additional studies demonstrate that an endowment free of fossil fuel investments would have outperformed one with investments in these companies over a 10-year period. [5]

Shouldn’t the UC avoid politicizing its investments?

If it is wrong to cause severe damage to the planet and to future and present generations of humans, then it is wrong to fund and profit from such activities. By holding investments that sanction and legitimate the behavior that leads to the climate crisis, we are subsequently endorsing the very business model which makes climate change education necessary in the first place. Universities are supposed to be the primary source of information and policy guidance for scientific and social matters, and should therefore align their portfolios with their mission statements and formal declarations. Although it is not the direct intention of the investments committee to exacerbate climate change, the declarations of our own institutions of the dramatic consequences of policy inaction and complicity are taught to students in almost every department of our University. The UC has historically involved itself in political issues in a number of different ways, including lobbying. [6] The UC has also politically engaged on Sudan, South Africa, and tobacco, regarding genocide, apartheid, and public health, respectively, via its investments. Although each were important matters, climate change is clearly much more dangerous in terms of severity of its global impact and effect on human populations.

Doesn’t the Fossil Fuel Industry invest a lot in renewables?

Contrary to the assumption that  fossil fuel companies are heavily investing in renewables and leading the transition to a low-carbon economy, the fossil fuel industry has generally avoided renewable energy in favor of more extraction of carbon-based energy. For instance, although the American Petroleum Institute points to $71 billion invested in energy improvements in the last decade, only $9 billion of that was actually invested in renewable energy. [7] By contrast, the petroleum industry has dedicated $341 billion in developing oil sands technology during that same period. [8] Furthermore, global energy investment in renewables for year 2011 alone topped $257 billion. [9] These numbers show that the fossil industry is only concerned with extraction, not viable alternatives to extraction.

Isn’t climate change hundreds of years away?

We wish. The planet has already warmed about 0.8 degrees Celsius and cost millions of lives and billions of dollars. Moreover, if greenhouse gas emissions continue at their current pace, we would reach warming of two degrees Celsius within just two to three decades, according to the IPCC. In order to have a shot of not surpassing this threshold, which scientists believe is necessary to prevent catastrophic climate effects, nations must start a downward trend in GHG emissions within three to five years and keep more than two-thirds of carbon reserves underground and unburned.

Still have questions? Check out these other FAQs!


[1] Leaton, James. (2012). “Unburnable Carbon: Are the World’s Financial Markets Carrying a Carbon Bubble?” Carbon Tracker Initiative. http://www.carbontracker.org/wp-content/uploads/downloads/2011/07/Unburnable-Carbon-Full-rev2.pdf

[2] Intergovernmental Panel on Climate Change. (2013). “Climate Change 2013: The Physical Science Basis”. http://www.ipcc.ch/report/ar5/wg1/#.Unx1yZTTVhM

[3] IGCC. (2013) “Letter from the Global Investor Networks of the World’s Largest Economies.”  http://www.ceres.org/files/investor-files/2012-global-policy-letter

[4] Geddes, Patrick. (2013). “Do the Investment Math: Building a Carbon Free Portfolio”. Aperio Group LLC. http://www.aperiogroup.com/system/files/documents/building_a_carbon_free_portfolio.pdf

[5] Begos, Kevin, and Joan Loviglo. “College fossil‐fuel divestment movement builds”, Associated Press, 22 May 2013. Available at: http://news.yahoo.com/college-fossil-fuel-divestment-movement-173859677.html

[6] “University of California Lobbying”, Opensecrets.org. http://www.opensecrets.org/lobby/clientsum.php?id=D000000406

[7] Wells, Ken. “Big Oil’s Big in Biofuels”, Businessweek, 10 May 2012. Available at: http://www.businessweek.com/articles/2012-05-10/big-oils-big-in-biofuels

[8] Wells, Ken. “Big Oil’s Big in Biofuels.”

[9] “Global Trends in Renewable Energy Investment 2012”, Frankfurt School UNEP Collaborating Centre. Available at: http://fs-unep-centre.org/publications/global-trends-renewable-energy-investment-2012