Legal Opinion Confirms the Way Forward to Divestment

On Dec. 5, 2019, the Board of Governors formally directed VP Finance and UBC Counsel to lay out a pathway to full divestment of the university’s main endowment and approved the transfer of $381 million from the Trek Endowment to the Sustainable Future Pool (SFP), in a manner consistent with the fiduciary obligations of the Board of Governors.

“UBC has received a legal opinion which further confirms the way forward to divestment.”

The Board of Governors also unanimously passed a motion expressing support for the principle of fully divesting the balance of the Main Endowment Fund of $1.71 billion from fossil fuels. Since these meetings, the university has been moving aggressively to move towards divestment in receiving the necessary legal opinion and conducting a detailed financial analysis and asset and liability studies.

Now the university has received a legal opinion which further confirms the way forward to divestment. The opinion covers both UBC Trek assets (land revenues) and endowment assets held in trust so efforts are being focused on the conducting the necessary financial analysis required to divest the entire endowment rather than the two pools separately.

UBC staff have been consulting with UBC IMANT on a divestment transition strategy that is based on financial considerations. The IMANT Board has been meeting to assist with the development of a divestment plan that incorporates the twin priorities of transitioning the endowment as quickly as possible while being fiscally responsible.

We understand that some members of our community are interested in knowing more about our divestment transition strategy and plan. Given the significant and sensitive fiduciary and legal considerations we must take into account, there’s a very limited amount of information we can disclose about our investment strategies and assets. That said, we are able to let our community know that while our criteria is evolving, our current intent is to exclude fossil fuel companies based on reserves in the ground — rather than based solely on historical financial performance. Further, we recognize that divestment is only the first step in implementing our planned comprehensive responsible investing framework. Our initial focus will be to divest from public equities as a first step with consideration around the rest of the university’s private equity holdings to be undertaken in a later phase.

The university will continue to collaborate with IMANT and other community members as we work towards divestment as quickly as possible and the administration prepares to return to the Board in April with the requested financial analysis.

This work demonstrates that UBC is committed to developing solutions to address climate change risk and other sustainability issues while protecting our investment portfolios from climate risk and maximizing financial returns. We are proud to be recognized as the #1 ranked university for taking urgent action to combat climate change in the 2019 Times Higher Education University Impact Rating. We’ve demonstrated our commitment in this area through our work around divestment, our declaration in 2019 of a Climate Emergency and ongoing research and operations aimed at increasing UBC’s sustainability. For more about the declaration, please read our update on our next steps following our Climate Emergency Declaration and commitment to divestment.