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Education The Almighty Buck Businesses

Stanford Getting Rid of $18 Billion Endowment of Coal Stock 208

Posted by Soulskill from the unconflicting-itself-of-interests dept.
mdsolar sends this report from the NY Times: "Stanford University announced Tuesday that it would divest its $18.7 billion endowment of stock in coal-mining companies, becoming the first major university to lend support to a nationwide campaign to purge endowments and pension funds of fossil fuel investments. The university said it acted in accordance with internal guidelines that allow its trustees to consider whether 'corporate policies or practices create substantial social injury' when choosing investments. Coal's status as a major source of carbon pollution linked to climate change persuaded the trustees to remove companies 'whose principal business is coal' from their investment portfolio, the university said."
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Stanford Getting Rid of $18 Billion Endowment of Coal Stock More

Stanford Getting Rid of $18 Billion Endowment of Coal Stock

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  • Activist investors (Score:5, Insightful)

    by EmagGeek ( 574360 ) on Wednesday May 07, 2014 @05:35PM (#46943687) Journal

    They are not acting in the best interest of those the endowments are there to serve. They are using the financial clout of the endowments to make a political statement, often to the detriment of the endowment's beneficiaries.

    Stupid.

    • Re:Activist investors (Score:4, Insightful)

      by Travis Mansbridge ( 830557 ) on Wednesday May 07, 2014 @05:41PM (#46943729)
      It would seem they simply consider the environmental detriment more significant than the economic detriment.

      • Stanford can afford to do it. Most of the lesser-known colleges cannot.

        Either way, I wonder where they will put the money. After all, almost any actually profitable stock out there is connected to a company that in some form or another is considered 'evil' in the eyes of some activist organization, so what's to stop some activist group form using this as a precedent?

        • Re: (Score:2)

          by mysidia ( 191772 )

          Either way, I wonder where they will put the money.

          In other news... the FBI just sold off $18 out of 25 billion worth of Bitcoins from Silk road, and MIT is giving out $100 in Bitcoins to students.

          What do you think Stanford spent the $$$ on? :)

        • Re:Activist investors (Score:5, Insightful)

          by ShanghaiBill ( 739463 ) on Wednesday May 07, 2014 @06:14PM (#46944005)

          so what's to stop some activist group form using this as a precedent?

          The fact that the endowment managers can pick and choose which activists they pay attention to. They didn't divest from coal because of a few whining activists. They divested because of broad support among students and faculty for the divestiture. It is also likely that they looked at coal mining companies, and decided that they weren't a very good investment in the first place. Coal mining may not be a good long term growth industry.

        • To the Contrary. The last ones out get burned. (Score:5, Insightful)

          by turkeyfish ( 950384 ) on Wednesday May 07, 2014 @06:18PM (#46944037)

          To the contrary, Stanford is simply astute enough to be the first to sell, while the price of companies involved in coal are still high. Its now just a trickle, but soon it will be a flood. The smart ones always get out first. The rest won't be able to afford not to and will begin to sell as their portfolios in these companies as they decrease in value. With new solar technologies capable of energy capture at up to 70% likely to start hitting the market within 5 years and wind energy becoming cheaper and cheaper and the electric car industry just around the corner, fossil fuel dinosaurs will be returning once again to the depths. Only those locked in will ride coal and ultimately fossil fuels all the way to the bottom.

          The energy barons of the future will be those that invested in renewables first. Its inevitable and of course, the reason that China is now spending 3 times more on solar ($147 billion in 2011) than the US ($52 billion in 2011). No one can say the Chinese don't know how to grow their economy, which will be the world's largest this year, if it isn't already.

          • Of course, the Chinese also have a lot of interest in getting the pollution out of the air around Shanghai and other cities.
            • The bulk of preset coal use is for power plants. Stanford is probably right in that that will soon decline, together with profitability. However coal and coal mining are valuable long term assets, because, after the crude oil and natural gas reserves are exhausted, chemical refineries and chemical manufacturing - including plastics, asphalt, detergents, drugs, some fertilizers/soil modifying ion exchange resins - and also biological things, such as plain potato and corn, might use coal mines as their main c
          • The Chinese aren't investing in solar out of some good green-hearted ideal. The US Navy can cut off China's oil supply at any time, and China knows it. You can't attribute to altruism what was due to lacking any sort of choice in the matter.

      • It would seem they simply consider the environmental detriment more significant than the economic detriment.

        And the net effect of their political statement on the coal industry will be 0. The effect on their endowment, however, will not be. If they'd instead used the money they wouldn't have lost due to this change to further studies of nuclear or sustainable energy they'd have done a lot more good. There are those of us in the world concerned with "making a statement" about a problem, and then there are those of us concerned with "fixing" the problem. (and yes, I'm aware that most of us that just want to ignore

        • Re: (Score:2)

          by Dahamma ( 304068 )

          WTF. Do people not understand that:

          1) it WASN'T $18B in coal stock, That's the entire endowment.

          2) selling stock doesn't mean you are GIVING IT AWAY.

          If I told the slashdot crowd I thought Microsoft was immoral, and I was selling the $1M I had in their stock (which they'd mostly love, I'm sure), am I losing $1M? No. I'm transferring my investments somewhere else. It's not an issue of not "using that money" somewhere else, etc, they are just reinvesting it. So they decided that coal was a bad bet, and w

    • Comment removed (Score:5, Informative)

      by account_deleted ( 4530225 ) on Wednesday May 07, 2014 @05:41PM (#46943737)
      Comment removed based on user account deletion

    • Re: (Score:2)

      by Shakrai ( 717556 ) *

      It's a prestigious University. They'll just jack tuition and fees. What, are you gonna go somewhere else? Okay. We've got a waiting list ten miles long.

      You're right of course, but that's basically what their attitude is. I highly doubt they'll go broke over this or any other activist investment decision.

      • They're voting with their wallet, as the Randians so often demand. What's the big deal?

        • Re: (Score:2)

          by amiga3D ( 567632 )

          They are voting with the endowment's wallet. If it costs the endowment money it's a big deal and if not it's no problem at all. If they did it because they feel coal is a bad investment then I praise them. If it was done as a political statement and ends up being a loss for the endowment then it's foolish. Hopefully they got a good price for the stock. Maybe they can invest it in some politically correct company like Solyndra or Amonix Solar or Abound Solar or Evergreen Solar or Ener1, the list goes on

      • Re: (Score:2)

        by Dahamma ( 304068 )

        Why would they raise tuition? This would be like you selling "that cool but perverted lamp" you had in your living room because you realized some people don't want to see it when they come to your house. Didn't affect your life, and you got $50 from that weird guy down the block for it, so now you can go invest in other, less perverted lamps that will make you just as much gain on your investment (which for lamps or fossil fuels, is currently VERY LITTLE).

    • Re:Activist investors (Score:4, Informative)

      by pixelpusher220 ( 529617 ) on Wednesday May 07, 2014 @05:42PM (#46943745)
      I'll wager it is in the interest of the 'shareholders'. As in coal may not be the best 'growth' industry in the coming years.

      That said, the only way to be 'whole' with what they are saying is 'reducing' their endowment by 18 billion dollars. I.e. donate the stock and give it away. If they simply sell it, then they still have the benefit of having been given it. One might call it laundered money from a social conscience point of view.

    • Money can't buy you lungs that convert CO2 to oxygen, so I would say they are in fact acting in the best interests of their beneficiaries.

      • Money can't buy you lungs that convert CO2 to oxygen

        No, but I bet I could buy a shitload of trees with $18B and trees are pretty good at converting CO2 in O2

        • Re: (Score:2)

          by geekoid ( 135745 )

          Lets look at some numbers:
          the Kielder Forest has 150 million trees that temporarily hold 89 thousand tons per year.
          We emit an EXTRA 29 gigatonnes per.
          so that mean we need to build 326,000 kielder forest, or 48,876,404,494,382 trees.
          And that's just to stay even, with today's emissions.
          Suddenly 18 billion looks like chump change.

          Don't get me wrong., I like forests, and would like to see more of them. I'd also like to see an aggressive rain forest restoration program.

    • I am not sure why helping to reduce carbon emissions and pollution counts as a political statement. Maybe investing in science is a political statement too because so many Republicans believe in the bible as the ultimate source of truth.

      • Refusing to invest in coal industries does not help reduce carbon emissions and pollution one jot. If there's ever a polluting industry it would be the so-called renewables which use rare earths and cause massive pollution.

        • Re: (Score:2)

          by geekoid ( 135745 )

          "which use rare earths and cause massive pollution."
          not compared to coal. Coal is far, far worse.

        • Refusing to invest in coal industries does not help reduce carbon emissions and pollution one jot.

          Do you not believe that investment drives use?

          If there's ever a polluting industry it would be the so-called renewables which use rare earths and cause massive pollution.

          I didn't mention anything about renewables, but I will agree that solar does in fact generate a lot of pollution, wind not so much. The pollution from coal is on a level orders of magnitude higher than any renewables. It even causes more radioactive waste than nuclear does. Coal is by far the dirtiest form of energy we have.

    • Re:Activist investors (Score:4, Insightful)

      by KeensMustard ( 655606 ) on Wednesday May 07, 2014 @06:16PM (#46944021)
      Fossil fuel industries are the buggy whip manufacturers of our age. In the medium term it makes sense to divest, they don't have a future beyond supporting plastics manufacture and fuels for specialised fields (e.g. manufacturing fuel for aircraft, rather than mining it). So, even supposing their financial obligations should override their ethical obligations (which they don't) there isn't even a financial argument to do so.

    • Re: (Score:2)

      by JanneM ( 7445 )

      The endowment is there to serve the university. And the university is plenty sensitive to its public perception; that affects both enrollment as well as donations. It's not a stretch to say that a fairly large proportion of both current and former students and faculty view global warming as a threat and coal as a bad choice for producing power.

      Making these people happy is vital for the universitys bottom line - not to mention that "the university" consists of people that themselves share many of these value

    • Re: (Score:2)

      by gtall ( 79522 )

      Well, as fracking and the gas industry is starting to eat coal's bread and butter, i.e., the power plants (no one is planning new coal power plants in the U.S., they are all gas), it was probably a good financial move spun to feed the Stanford rank and file as a eco-conscious decision to save the planet blah blah blah.

      It is good for the environment to have coal take it in the neck, but I'd rather the U.S. go back to nuclear. It is also bad for the coal states and the coal workers.

      • Re: (Score:2)

        by geekoid ( 135745 )

        I would also stop permitting the sale of coal mined on public lands to be sold outside our borders.
        his will drive up the cost in other countries which would lend themselves to cleaner fuels.

    • Re: (Score:2)

      by dirk ( 87083 )

      Only if you believe their only purpose to to make money. Schools are not corporations in that they have other interests besides making money. There is something called contentious investing where you only invest in businesses and industries you believe are worth investing in. You may give up a little money by not investing in coal companies or tobacco companies or for profit prisons or whatever industry you feel isn't worth your money, but you gain a small amount of leverage by taking money away from those

    • Re: (Score:2)

      by radl33t ( 900691 )
      it is increasingly likely that renewable energy returns will be significantly greater while offering less risk in the future compared to coal. Coal's future is mired in health and environmental problems that will be addressed (in some uncertain way) by the public and government. New coal generation is no longer economically competitive compared to alternatives. Private capital has been quietly making this shift from traditional energy companies into renewable energy for some time now at an overall scale muc

    • Re:Activist investors (Score:4, Insightful)

      by NoKaOi ( 1415755 ) on Wednesday May 07, 2014 @07:34PM (#46944611)

      They are not acting in the short term interest of those the endowments are there to serve. They are using the financial clout of the endowments to make a political statement, often to the detriment of the endowment's beneficiaries.

      FTFY. They are allowed to divest of companies that will create substantial social injury. Being a major contributor to global warming will indeed to significant social (among other types) injury. Such harm will indeed do harm to the endowment's beneficiaries in the long term. Therefore, they are acting in the long term interest of the beneficiaries (and their children, and their children's children, and their children's children's children...etc).

      • Not quite.

        Stanford may better serve its short-term interests by remaining vested until the market conditions grant advantage to another investment (including cash holdings). This would increase Stanford's holdings, providing more basis to invest further, thus serving the long-term interests of its beneficiaries.

        Holding a stock does not contribute to the company. When you sell, their bank accounts do not decrease. Stanford will sell high, raising or stabilizing the market value. They may sell low, c

    • They are a university, and universities have a duty to guide their actions on ethical and scientific principles. Whilst out in the wider world there are infact still hold out flat earthers convinced of the vast left wing conspiracy to make scientists lie, in actual places of research theres little room for such comfortable delusions. Stanford are acting in the interests of the people they serve, by doing their part to make sure they aren't contributing to wrecking the planet.

    • It's too much money for that. Coal is on the way out. Real "Clean" Coal is expensive as hell. Solar has gotten cheaper if you're not offsetting the costs by dumping pollution into the air and water and letting the gov't clean it up. I think they're just going to sell off what they've got while they stock price is still pretty high.
    • The endowments serve the university's interests . Stanford might think that coal is a bad investment.
    • They may just invest that money into something else that will give a better return. You'll have to wait some years before you can make such a statement in retrospect. If you can already predicting that they will fail to find a better investment, you should be working for an investment company and not posting here on SlashDot.

  • Misleading headline (Score:5, Informative)

    by Daffy Duck ( 17350 ) on Wednesday May 07, 2014 @05:55PM (#46943873) Homepage

    Stanford University has an $18 billion endowment, but only a fraction of that is invested in coal mining companies. They're not just dumping $18 billion worth of stock.

    • Re: (Score:2)

      by gtall ( 79522 )

      They got started by Leland Stanford who was a railroad baron and not a particularly nice guy. However, one does not spend an endowment, one invests the endowment to use some of the returns for Stanford research, education, etc. and they use some for plowing back into the endowment so that inflation doesn't make it go bye-bye.

      Lemme guess, if you win the lottery, you are going to piss it all on wine, women, and song.

      • Re: (Score:2)

        by cdrudge ( 68377 )

        Lemme guess, if you win the lottery, you are going to piss it all on wine, women, and song.

        Eventually. That sounds good to me. He who dies with the most money...still dies. Might as well die drunk, laid, and entertained.

  • This is an amazingly stupid approach to look good and get into the good graces of green initiative supporters. But, I am sure, they are not going to stop producing coal from those mines. They are just going to sell it to another entity, which in turn will utilize "dirtier" methods to cultivate these mines and sell the same product to the public to cause the same amount of pollution. It is just plain dumb, but again this is a university suystem with roots in the most liberal of the places, San Francisco Bay
    • While understanding US politics is always a struggle for me, I think this attitude is particularly noteworthy.

      I think what you are suggesting is that to be a good Non Liberal you must invest blindly and only consider short term share value - even if you don't like the industry you must buy their stock if it is seen as a reasonable investment option on a profit basis only.

      Does this imply that an authentic Non Liberal would need to invest in abortion pills, pornography, islamic religous organisations and

    • Re: (Score:3)

      by gtall ( 79522 )

      Not really, look at employment in the coal industry...it has shrunk quite a bit and certainly a lot recently as gas is eating their lunch.

    • One can only imagine buggy whip and slide rule salesmen had the same sentiments as you express. How dare they divest from our anachronistic products. Stanford is simply wise to be the first institution out before the stock prices tank.

  • Unless they want to turn off every light and computer on campus, they are still regularly using coal energy.

  • Misleading... (Score:2, Interesting)

    by erp_consultant ( 2614861 )

    First of all, Stanford does not own $18B in coal stocks. 18B is the ENTIRE endowment amount. Coal stocks are a small fraction of the total.

    Now that that little correction is out of the way....

    Stanford seems to me to be making an entirely political statement. Selling all of their coal stock is not going to change the supply of coal by even an ounce. Someone else will simply buy the shares.

    I wonder how many of those coal plants are producing electricity that powers all those Teslas that I see on the roads her

  • This is about the likely future value of such investments in face of regulatory hostility. If their fund managers thought the investments were long-term viable, they would keep them. They really should have quietly divested in early 2011, as did most hedge funds.
  • Stanford's own Professor Mark Jacobson and twenty Stanford students demonstrated that California could be entirely fossil fuel free by 2050. Stanford should divest from all fossil fuel companies. http://www.stanford.edu/group/... [stanford.edu]
  • Divest (and stop buying!) anything even partially owned by the fucking Koch brothers.

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