In a letter to the community on October 27, President Meric Gertler announced that U of T will divest from all direct investments in fossil fuel companies through U of T’s endowment fund over the next 12 months, and will fully divest from all fossil fuel investments by 2030 at the latest. Divestment is part of a larger three-part plan Gertler laid out for addressing climate change at the university. 

“The growing severity of the climate crisis now demands bold actions that have both substantive and symbolic impact,” Gertler wrote in the letter. 

Climate advocacy groups on campus such as Leap U of T celebrated the announcement, but pointed out that, while the endowment fund makes up a large portion of the university’s investment portfolio, the University Pension Plan (UPP) is not directly controlled by the university, and has not yet divested from fossil fuel investments. 

History of divestment at U of T

Previously, in 2016, Gertler had rejected a recommendation to divest from fossil fuels by the President’s Advisory Committee on Divestment from Fossil Fuels, a move which has since been widely criticized by environmental advocacy groups on campus. 

Instead, U of T chose to follow an Environmental, Social and Governance (ESG) framework which assesses the climate-related risks of long-term investments instead of fully divesting from fossil fuel investments. Gertler noted that the university’s change of course is due to the growing urgency of the climate crisis, the evolving landscape of the investment industry, and the work of student and university-affiliated activists. 

In his statement, Gertler also acknowledged the importance of the President’s Advisory Committee on Divestment from Fossil Fuels, noting that its work “marked a key milestone in the journey towards today’s announcement.”

Campus groups have been advocating for U of T to divest for the larger part of the last decade. Groups such as Divestment and Beyond and Leap U of T signed onto a nationwide demand that universities divest from fossil fuels in 2020. 

Universities across North America have shifted toward divestment in the past five years, with Harvard University announcing in September that it was starting to divest from all investment in fossil fuel companies. That same month, Gertler said in an interview with The Varsity that U of T would also be unveiling an “even more ambitious plan to reduce carbon emissions from our operations” during the fall semester. 

Details of the plan

Gertler laid out a three-part plan for addressing climate change at the university level, with divesting from fossil fuel investments as the first part. Divestment will happen over the course of the next decade — although the university is planning to cut out all direct investments in fossil fuels from its portfolio over the next 12 months, funds invested in fossil fuels through pooled funds handled by third-party investment managers will be phased out by 2030 because of the more complicated nature of these arrangements. U of T will also divest from all subsidiaries of fossil fuel companies. 

Gertler announced that the University of Toronto Asset Management Corporation (UTAM) — the organization that manages the university’s investments — will commit, by 2050, to an endowment portfolio that will have zero net carbon emissions associated with it. Gertler further highlighted the fact that the UTAM recently joined the United Nations’ (UN) Net-Zero Asset Owner Alliance, a global group of investors all aiming for zero net carbon emissions by 2050. 

By 2025, the UTAM will also ensure that 10 per cent of U of T’s endowment portfolio is invested in “sustainable and low-carbon investments,” significantly higher than the 2 per cent currently invested in these types of investments. According to the current portfolio, that means the university will make a $400 million investment in these areas. 

Gertler added in an interview with The Varsity that the university’s renewed position reflected the increasingly risky nature of investing in the fossil fuel industry. The university will continue to assess all investments through its ESG framework, which aims to produce responsible investments by considering factors that impact the physical environment, the well-being of people and communities, and the governance of a company.

According to Gertler, there are several ways the university will hold itself accountable to its commitment to divestment. The UTAM releases annual reports on its responsible investments, and its inclusion in the UN Net-Zero Asset Owner Alliance means that it will have to hit certain targets regarding climate action, of which the first one is set for 2025. The UTAM also receives annual report cards on its investing from the UN, based on UN principles for responsible investing.

“When a large institution like the University of Toronto decides to take such steps, it is our belief that this will both accelerate the transition to a low-carbon economy and inspire other investors to do the same,” wrote Gertler. 

Funds controlled by UTAM

According to the 2020 report from the UTAM, the endowment fund made up $3.7 billion in investments in 2020, while the UPP made up $6.3 billion. The short term working capital fund made up $3.1 billion. 

[plotly-graph url=’//’ width=’800′ height=’600′]

Though U of T’s endowment portfolio will divest, its pension plan is managed by the University Pension Plan (UPP), which is the pension plan jointly sponsored by U of T, Queen’s University, and the University of Guelph. The U of T pension plan was joined with the UPP in July of 2021. 

The UPP has its own board of trustees separate from U of T that will decide whether or not to divest. In an interview with The Varsity, Gertler added that he would be surprised if U of T representatives on the board “did not reflect the general direction and the philosophy that the university itself has embraced quite publicly in the last couple of days.”

U of T also has a short-term working capital fund which is composed of funds that the university must have access to on short notice. Consequently, the investments the fund makes are much more modest and for which “fossil fuel investment isn’t really a factor at all,” according to Gertler. 

Community reaction

Community members reacted positively to the announcement, with activists celebrating the victory, which comes after years of campaigning for divestment. However, many are also cautious about celebrating, knowing that there is still work to be done.

In an email to The Varsity, Leap U of T noted that the divestment commitment does not apply to U of T’s pension plan and that it does not mention the social and political implications of divestment connected to land disputes or colonial violence. 

This only further contributes to the evidence that UofT was in little to no way morally incentivized to divest, but rather that divestment was a financially motivated decision that was also convenient for restoring the University’s reputation, having been mired in a variety of scandals over the past year,” Leap U of T claimed.

Leap U of T also told The Varsity that the university lacks financial transparency regarding its direct and indirect investments, adding that given the information it had, most of U of T’s investments in fossil fuels appear to be indirect. Consequently, Leap U of T sees the timeline for divesting from indirect investments as lacklustre, especially given that some universities have committed to doing so within the next five years.

In an interview with The Varsity, Allie Rougeot, a climate activist and U of T alum, expressed a similar cautiousness because of the length of the timeline. She also noted that the federated colleges have separate investment portfolios, which are not included in the larger divestment. She pointed out that U of T is “late in the game” with regards to divestment. 

Moreover, Rougeot said that U of T still has ways to go to become a leader in climate justice. For her, the next step would be changing U of T’s curriculum to provide students with a really solid foundation on the climate crisis.

As for Leap U of T, it will continue to put pressure on the university, and on the federated colleges in particular, to divest from fossil fuels. 

“We are thrilled that UofT has finally taken this step, but there is much more to be done to ensure the future of our planet and to continue our commitments to the liberation of life and land,” Leap U of T concluded.

Editor’s Note (October 31): This article has been updated to include comment from Gertler, Leap U of T, and Rougeot.