FAQ

 

 

Questions and answers:
Fossil Free Ghent

 

If you’d like some more info, feel free to ask us more questions, but here are the most frequent ones answered

Be sure to sign the petition

 

1. What is Divestment?

2. Does the UGent even have money invested in fossil fuels?

3. Why divest?

4. Companies like ExxonMobil, Shell, and BP have billions of dollars/euros. How can divesting the funds from the UGent make an impact?

5. Why focus on divestment instead of investment?

6. Does divesting from fossil fuels mean less return on investment?

7. Which other institutions have divested so far?

8. What’s next?

 

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1. What is Divestment?

Divestment means to consciously stop investing in a certain economic sector. In our case we want the university to stop investing its money in fossil fuel companies. In the past a successful divestment campaign has contributed to the fall of the apartheid regime (read more at Article) and campaigns have been held to divest from tobacco and the arms industry.

 

2. Does the UGent even have money invested in fossil fuels?

Yes, in our meeting with the financial services they clearly told us they have money invested in fossil fuels. If you would like more details on which companies and how much money is involved, we suggest you get in touch with Mr. Jeroen Vanden Berghe, as some of the numbers we were quoted were confidential. 

It’s also not that important how much money exactly the UGent has invested in fossil fuels. Because:

(1) Even very small percentages become an important amount when taking into consideration the UGent has invested more than 230 million.

(2) What’s important is the symbolic force of divestment. Most historical analyses agree the divestment movement wasn’t the only force at play in bringing down the apartheid-regime, most analyses say it played an instrumental role because of its symbolic power. We want to use this divestment campaign to delegitimize the fossil fuel sector.

 

3. Why divest?

1. The ethical argument

There’s no doubt about it: the burning of fossil fuels is the biggest contributor to climate change. Knowing this the UGent can position itself as a progressive voice in society by stating it’s not ethical to grow its financial reserves and revenue by investing in the extraction of fossil fuels, risking the lives of many.

2. The political argument

Carbon divestment has the strength to break down the credibility of the fossil fuel sector. They’ve known for more than 40 years about the disastrous effects of their business, yet their powerful lobbies block decisive action on climate change. When important institutions such as the UGent break their ties with this economic sector this implies important reputational damage for the fossil fuel companies and it hurts their social license to operate. 

3. The economic argument

At the recent climate summit of Paris in December 2015 all countries agreed the economy should decarbonize as fast as possible. If we want to keep global warming beneath 2°C, 80% of all known reserves should be left unburned and the investment of firms as Shell, Exxon and BP in exploration of new fields and infrastructure will turn out to be worthless. Their stock risks crashing rapidly, a risk acknowledged by e.g. Blackrock, the world’s largest asset manager, who said climate risks are underappreciated and undervalued. They also noted the yield of funds choosing for lower carbon exposure is similar to those with fossil fuel investments. 

(full report: Adapting portfolios )

 

4. Companies like ExxonMobil, Shell, and BP have billions of dollars/euros. How can divesting the funds from the UGent make an impact?

Divestment isn’t primarily an economic strategy, but a moral and political one. Just like in the struggle for Civil Rights in America or the fight to end Apartheid in South Africa, the more we can make climate change a deeply moral issue, the more we will push society towards action. We need to make it clear that if it’s wrong to wreck the planet, then it’s also wrong to profit from that wreckage. At the same time, divestment builds political power by forcing our nation’s most prominent institutions and individuals (many of whom sit on university boards) to choose which side of the issue they are on. Divestment sparks a big discussion and — as we’re already seeing in this campaign — gets prominent media attention, moving the case for action forward.

 

5. Why focus on divestment instead of investment?

Clearly these are two sides of the same coin, but it’s easier for the university to act on one side, that is the ‘divestment’-side.

The reason for this is there are limited investment opportunities in renewable energy. For this to change the Belgian government needs to take more measures in order to give more opportunities to the development of renewable energy. We obviously think the government should do so, but it’s a goal which is harder for us (and the UGent) to achieve. This is why we choose to focus on the divestment-side of the story for now.

The other reason why we chose to focus on the divestment-side is that this is a big international campaign gaining ever more momentum. As such it can be an important symbolic gesture, strengthening the call for sustainable alternatives.

A third and final reason is that institutional fund managers in general are very risk-averse. This means it will be a very hard task to convince them to start investing significant amounts of money in emerging technologies. On the other hand fossil fuel companies have proven to be less and less reliable the last couple of years, and analyses such as those of Blackrock saying that climate risks are undervalued on the market make an easier case for fossil fuel divestment.

 

6. Does divesting from fossil fuels mean less return on investment?

Several analyses have proven this needn’t be the case and it’s not just activist groups who wrote these reports. 

One important analysis comes from Morgan Stanley Capital International (Responding to the call of fossil fuel free investments). “The performance of the MSCI ACWI IMI  excluding  the carbon reserve stocks closely tracked the MSCI ACWI IMI over the time series.   Slight underperformance of the “ex Carbon list” appeared near the beginning of the time series, and slight outperformance of the “ex Carbon list” emerged toward the end of the time series.   The active return differential over the entire  5-year  time series was 1.2 percent (120 basis points , or 22 basis points  annualized ) in favor  of the “ex Carbon list” relative to the full MSCI ACWI IMI.   The tracking error relative to full index was 1.9 percent (190 bps).”

more info: Responding to the call of fossil fuel free investments

The other important study was released more recently by Blackrock (Adapting portfolios). They also noted the yield of funds choosing for lower carbon exposure is similar to those with fossil fuel investments. “The simulated portfolio’s yield was essentially unchanged at 2.17% but its duration rose to 5.0 years, from 4.6.”

 

7. Which other institutions have divested so far?

Worldwide about 550 universities, city councils, faith groups, NGO’s and pension funds have divested from fossil fuels. Among them many important universities such as Stanford, Oxford, Cambridge, London School for Economics and many others. The UNFCCC, the UN climate panel, has also expressed sits support, as has UN secretary-general Ban Ki-Moon.

 

8. What’s next?

We’re currently trying to inform all staff and students at the university of the fact that the university has invested its money in fossil fuels. We’ve already launched a petition and will organize more events to inform as many people as possible. We’re also gathering support to convince the financial services of the university that there’s a broad demand to stop investing in fossil fuels. For the moment we’d just like to know if you’re interested in hearing more about this campaign. If you’d like to be more actively involved, please do send us an e-mail at questions/support

 

Thank you for your interest, time and engagement. We're hoping to hear from you in the case you would like to support the Fossil Free Ghent campaign.