Faculty Senate rejects ASSU fossil fuel divestment resolution

At its May 28 meeting, the Faculty Senate rejected a resolution presented by the Associated Students of Stanford University (ASSU) calling on Stanford’s Board of Trustees to commit to freezing all new investment in the top 100 oil and gas companies; to fully divest from publicly traded oil and gas companies within 90 days of that commitment; and to fully divest from oil and gas private partnerships within the next five years.

The resolution defeated Thursday also called on Stanford to appoint two full voting student members to the board’s Special Committee on Investment Responsibility.

The resolution, which was unanimously approved by the ASSU’s Undergraduate Senate and Graduate Student Council in March, was written in collaboration with Fossil Free Stanford, a student organization committed to promoting campus discourse on the intersections of climate justice, fossil fuel-driven climate change and ethical university investment.

At the start of the meeting, Tim Stearns, chair of the Faculty Senate, noted that the senate does not have jurisdiction over the finances of Stanford – a responsibility that lies with the Board of Trustees. He described the vote as “a sense of the senate, not a mandate.”

When the resolution was put to a vote following the presentations and discussion, it failed on a divided vote.

Currently, the Board of Trustees is conducting an official review of a divestment request from Fossil Free Stanford, and expects to announce its decision in June.

In other business, the Faculty Senate voted unanimously to approve legislation allowing its Steering Committee to convene in administrative session to make decisions on behalf of the full senate for the duration of the COIVID-19 crisis, and especially during summer quarter, when decisions must be made quickly in response to rapidly changing circumstances. The new policy, which will expire Jan. 28, 2021, also allows senators to request meetings of the full senate on agenda items scheduled to be considered in administrative session.

Update on academic policies

Stearns also gave an update on the legislation passed March 26 that temporarily put in place certain academic policies in light of the COVID-19 pandemic.

The legislation stated that the policies would be operational for the spring quarter unless the provost decided to extend them. He said the provost has decided to extend some of those policies for the summer quarter; namely, that units of credits taken at other institutions will not count toward the limit on transfer credit. All the other temporary academic policies will lapse, which means Stanford will return to letter grading policy.

In a short announcement, Provost Persis Drell said it is critical to being able to begin to operate safely, especially if undergraduates are to be back on campus in the fall, that the university have a robust plan to test, contact trace and isolate persons who are positive for the virus causing COVID-19.

“I’m very happy to report that the dean of the School of Medicine, Lloyd Minor, has agreed to chair a testing strategy task force,” she said. “It will provide an analysis of the options and the recommendations for the three areas – testing, contact tracing and isolation – both for the short term, as well as activities for the longer term and for student groups, if we are able to resume some of our campus activities in the fall. It will also make recommendations on implementation and it is asked to consider how protocols for testing, contact tracing and isolation may be handled differently for students, faculty and staff.”

Update on Stanford’s financial condition

At the senate meeting, President Marc Tessier-Lavigne provided a brief update on Stanford’s financial condition.

He said Stanford expects continued significant financial challenges as a result of the pandemic – a topic he addressed in a May 27 letter.

Tessier-Lavigne said Stanford made the decision to extend the policy of pay continuation for regular, benefits-eligible university employees through Aug. 31, recognizing that everyone is going through a period of turmoil and disruption.

“Looking ahead, we now know that the continuing challenges for our budget will be significant, and that we will need to realign our spending with resources expected to be available in the new fiscal year starting Sept. 1,” he said.

Tessier-Lavigne said that once units of the university have finalized their 2021 budget plans, there may be reductions in some programs.

“Given the magnitude of the budget challenge facing Stanford, we also – very unfortunately – expect that program reductions will make some workforce reductions unavoidable as we enter the new fiscal year,” Tessier-Lavigne said.

He said he doesn’t know the scale of the potential job reductions, which will include temporary and permanent layoffs, but hopes and expects they will be limited in nature.

“In terms of process, we will be working over the next month to review the budget proposals from units, to evaluate additional possible sources of budget relief and to consult with the Board of Trustees,” Tessier-Lavigne said.

“We expect to provide final allocations of general funds and endowment payout to units by the end of June, which will enable them to finalize their budgets in July. We also expect to be able to communicate more detailed information about workforce effects at that time.”

Undergraduate senator presents divestment resolution

Anthony Duarte, a member of the ASSU Undergraduate Senate, presented the measure – Resolution in Support of Divesting Stanford’s Endowment from Fossil Fuel Companies – to the Faculty Senate. The full text of the three-page resolution was distributed to senators before the meeting.

“I speak on behalf of the student body at Stanford when I say that our university’s investment in fossil fuels is tantamount to an investment in violent and unjust consequences for current and future generations around the world,” they said.

Duarte noted that the Board of Trustees may vote to divest from “companies or categories of investment that are deemed abhorrent and ethically unjustifiable.”

“Given our scientific understanding of how fossil fuel corporations endanger human lives across the world, investment in these companies is ethically unjustifiable,” they said.

Duarte said it is an industry with a long history of establishing extraction sites in vulnerable or marginalized communities, failing to take responsibility for their health and safety, and assisting local militaries in committing human rights violations against protesters.

Duarte said Stanford’s recent announcement of a school focused on climate and sustainability “is exactly within the same spirit” of the ASSU resolution, adding that divestment is the next “natural step” in Stanford’s leadership in sustainability.

“It is our hope as students that you as faculty understand the urgency of shifting our economic system away from fossil fuels and that you take this opportunity to use your voice in leading Stanford to be one of the first elite American institutions to make a clear statement on its commitment to a livable climate,” they said.

Following Duarte’s presentation, three speakers addressed the Faculty Senate on the issue of fossil fuel divestment: a member of the Stanford Board of Trustees; a professor emeritus and former dean of Stanford Law School; and an assistant professor of history in the School of Humanities and Sciences.

Trustee explains Stanford’s approach to ethical investing

Trustee Gene Sykes, chair of the board’s Special Committee on Investment Responsibility, said the ad hoc task force leading the review of the divestment request from Fossil Free Stanford has engaged with students, faculty and external experts this academic year.

Sykes commended the student organization for its efforts to educate trustees and the university community on the critical issue of climate change.

“The board’s review is still underway, so I can’t speak to the ultimate outcome of the divestment request,” he said. “However, I can share what the committee has learned about Stanford Management Company’s approach to ethical investing and management of the endowment relating to energy investments.”

(The Board of Trustees is expected to announce its decision in June. The divestment request from Fossil Free Stanford is different from the ASSU resolution.)

Sykes said that Stanford Management Company (SMC) has made “very substantial changes” to its portfolio over the last several years in order to improve its risk and return potential, and to ensure investments are in line with the Ethical Investment Framework adopted by Stanford in 2018.

“The framework particularly highlights climate change, noting that climate change alters ‘the risk and return characteristics of conventional energy holdings’ and requires SMC to consider carbon-related damage to the environment when investing in this rapidly evolving sector,” he said.

Sykes said SMC’s energy investment exposure – the amount of money Stanford has invested in the sector – has declined by 75 percent since 2011. He said energy, which is a subcomponent of the natural resources asset class in the Merged Pool – the combination of the endowment and other financial assets – represents only 4 percent of the Merged Pool, of which 3 percent is on track to be liquidated.

An environmental historian’s perspective

Mikael Wolfe, an environmental historian at Stanford, said he agreed with the principal argument in the ASSU resolution – that oil and gas companies have engaged in uniquely “abhorrent and ethically unjustifiable behavior” by playing a leading role in causing and perpetuating the global climate catastrophe.

Wolfe, an assistant professor of history in the School of Humanities and Sciences, said distinguished Stanford scholars have been “connecting the dots” between environmental destruction and the greater prevalence of infectious disease outbreaks for years.

He said that in ethical terms, for Stanford to continue investing in oil and gas companies would be like investing in hypothetical biotech companies that created the coronavirus in a lab and blindly spread it far and wide across the world – and then did everything in their power to stop any significant governmental regulation of their harmful actions.

“As bad as it is, the COVID-19 crisis will eventually end with the successful development and distribution of a vaccine, hopefully within the next year,” he said. “Unlike the COVID-19 crisis, however, there is no vaccine for the climate catastrophe. But like the COVID-19 crisis, as we await a vaccine many governments can still slow down the climate catastrophe and flatten the emission curve. Doing so will give humanity precious time to adapt to the kind of dramatic socioenvironmental changes that will dwarf the effects of this pandemic.”

Consider divesting on case-by-case basis

In his presentation, Paul Brest, professor emeritus of law, said fossil fuel divestment raises complicated questions of ethics, practicality, benefits and costs, and academic freedom – issues explored in a new report produced by Stanford Law School’s Law and Policy Lab.

“We examined whether Stanford’s investment policies could reduce fossil fuel production and use, and if so, at what cost,” said Brest, who led the policy practicum that produced the report Assessing Stanford University’s Climate-Related Policies and Practices. “We also considered other Stanford practices related to climate change.”

Brest questioned whether it was fair to assume that all of the top 100 oil and gas companies and all public and private oil and gas companies have engaged in “abhorrent and ethically unjustifiable behavior.”

Brest also said there is good evidence that some – but not all – oil and gas companies have engaged in human rights violations, environmental damage, misrepresentation of risks and policy lobbying to forestall renewable energy.

He offered an alternative: that Stanford make divestment decisions on a case-by-case basis – not through “an attribution of collective guilt” for all oil and gas companies.

Senators discuss the ASSU resolution

In the discussion that followed, senators expressed a variety of opinions and perspectives.

Several senators said they preferred a case-by-case approach to divesting from fossil fuel companies, rather than targeting the top 100 oil and gas companies, as outlined in the ASSU resolution. Several senators said they would prefer to leave investment decisions up to the Stanford Management Company, trusting them to carry out their work under the university’s Ethical Investment Framework and Statement on Investment Responsibility.

One senator said he makes it a personal principle not to act differently than what he believes, and it would be hypocritical for him to decry an entire industry while continuing to get on airplanes and drive cars.

Another senator said Stanford partnerships with the petroleum industry over the last several decades have contributed toward research that produced tangible benefits to the health of the planet, as well as toward the education of more than 1,000 students and postdocs in the university’s science and engineering departments. He expressed concern that a vote in favor of divestment may undermine those partnerships, which were successfully cultivated over the years, and result in a shift in critical funding away from Stanford and toward other institutions.

Speaking in support of the ASSU resolution, one senator said there was value in making a strong statement holding fossil fuel companies to account for their actions.

Another senator who spoke in favor of the resolution said one reason fossil fuel companies engage in what could be called “abhorrent and ethically unjustifiable behavior” is because they have spent the last 30 years pouring billions of dollars into campaigns that have blocked climate legislation at the state and federal level.

The minutes of the May 28 meeting will include the full presentations and the discussion that followed. The next senate meeting is June. 11.