30 July 2015
Ethical Investment Task Team Appointed by Council The University of Cape Town
Development of a fossil fuel divestment strategy for UCT
2015 is destined to be a year of historic global transformation. World leaders will be deciding within the next few months on new goals for sustainable development and on a new, legally-binding climate agreement. As the top academic institution in Africa, UCT should play a leading role in global transformation towards a climate-resilient, low-carbon society.
Climate change is now widely regarded as the most pressing issue of our time. It is affecting human societies and ecological systems worldwide.5 In Africa and South Africa, there are already impacts on ecosystems; agriculture and fisheries; water availability; and on food, health and economic security.
Although the situation is dire, there are a range of mitigation strategies that can reduce further risks and impacts of climate change. A substantial reduction in emissions caused primarily by the burning of fossil fuels is urgently required to remain within the globally-agreed but still potentially dangerous14 limit of 2°C warming above pre-industrial global temperatures.
A growing number of universities, colleges, institutions, religious groups, foundations and individuals have therefore called on the world’s major fossil fuel companies to support the shift to low-carbon, climate-resilient development. Their failure to do so however, has resulted in a global movement to divest capital from these companies in order to undermine their economic power, legitimacy and ‘social license’ in the eyes of the public.
The global divestment movement has received an unprecedented level of support, with over 260 institutions representing over US $50bn in assets committing to divest thus far.
We understand that in February 2015, the Council agreed to form a task team to adopt an ethical investment strategy and to consider fossil fuel divestment by the University. While we understand the concerns about divestment risks, we believe that the future financial and societal risks due to climate change are considerably greater.
We therefore write to encourage the Council task team to prioritise the critical issue of ethical investments and accelerate the development of an ethical investment strategy that includes fossil fuel divestment. We believe that fossil fuel divestment is morally, financially and developmentally the right thing to do.
- Fossil fuel divestment is morally right because it will help sustain our planet for future generations.18 UCT Chancellor Graca Machel, during last year’s UN climate summit in New York, urged all to “have the courage to tell business that it is not only about profits but about our collective survival and wellbeing.” In addition, Pope Francis’ recent encyclical reinforces the moral argument for transformative action on climate change and environmental stewardship.
- Fossil fuel divestment is financially wise. Since approximately 80% of coal, 50% of oil and 30% of gas reserves need to remain in the ground to stay within the 2oC warming limit, global fossil fuel assets run the risk of losing their value and becoming ‘stranded’. Citi Bank, HSBC,23 the President of the World Bank, the Bank of England, the Bank of America and a group of 367 investors representing more than US $24 trillion in assets, have all acknowledged the risks posed by the ‘carbon bubble’.
- Fossil fuel divestment will help Africa’s development. Unlocking Africa’s green energy potential will drive economic growth and job creation, addressing many of the economic and social constraints on development. In its most recent report, Africa Progress Panel’s Kofi Annan asserts, “Africa can leapfrog over the damaging energy practices that have brought the world to the brink of catastrophe.”
Global leaders are coming together at COP21 in December to reach a new, universal climate agreement. We feel the time is right for UCT to recognize this critical transformation in history, lend powerful support for addressing the most pressing issue of our time and become the first University in South Africa, Africa, and BRICS to divest from fossil fuels.
Class of 2015 Masters in Climate Change & Sustainable Development University of Cape Town
Class of 2015 Masters in Environment, Society and Sustainability University of Cape Town
With “strong endorsement” from the Environmental and Geographical Sciences Department
(See a PDF version of the letter with comprehensive references)