Northwestern establishes new fossil fuel investment guidelines

Northwestern announced June 23 that it has adopted investment guidelines regarding fossil fuels, greenhouse gas emissions and energy transition in response to concerns about climate change. The new strategies will limit certain investments in companies in the fossil fuel industry while supporting investments in cleaner energy technologies. This, plus Northwestern’s leadership in research, programming and other sustainability efforts, is designed to promote more urgent action on climate change while remaining sensitive to society’s need for safe and affordable energy.  

“As an institution with global influence, Northwestern is committed to taking into account ethical considerations in our investment decisions while also meeting our responsibility of fulfilling the University’s mission for current and future generations,” said J. Landis Martin ’68, ’73 JD (’02, ’08 P), chair of the Board of Trustees. “The board considered the potential unintended consequences that could result from indiscriminate policies that target energy supply without addressing demand. These include concerns about the sharply higher costs of energy and electricity, which disproportionately impact people with lower incomes and by extension exacerbate inequality. The board believes its guidelines will help address climate change without causing undue harm to vulnerable populations.”

As stewards of the University’s endowment, Northwestern’s Board of Trustees has considered a range of investment policies to ensure University investments are consistent with growing concerns regarding climate change and identified policies that would most likely accelerate the transition to cleaner energy sources and reduce carbon emissions, while continuing to meet energy and transportation needs. Trustees also considered the input of the University’s Advisory Committee on Investment Responsibility (ACIR) and other constituents, including students.

At its most recent meeting, the University’s Board of Trustees directed Northwestern’s Investment Office to take the following measures:

• Limit future direct investments in energy to companies that produce alternative or responsible transition fuels with lower levels of greenhouse gas emissions relative to energy supplied as compared to alternatives.
• Divest as possible from direct holdings of public or private companies identified as pursuing poor practices with respect to greenhouse gas emissions, energy production or climate change information and research.
• Seek out and support investments in technologies that accelerate the transition to a carbon-free energy future, promote energy efficiency and reduce atmospheric carbon while meeting the University’s general standards for investment excellence.
• Adopt a system of compiling the endowment’s overall carbon footprint, actively engage with company management teams and investment managers to promote the reduction of this aggregate carbon footprint and report annually on progress in achieving a net zero emissions status. As a first step, the Investment Office will measure and report on the carbon footprint of the top public holdings of the endowment and will seek to expand this monitoring as possible over time.

Northwestern’s Investment Office will provide the Investment Committee of the Board of Trustees and the President of the University with an annual report on all energy-related investments and the carbon footprint of the endowment.

During Fall Quarter, the Investment Office will engage with students, staff and faculty to discuss the new guidelines.

As stated in Northwestern’s Statement on Investment Responsibility, adopted by the Board of Trustees in 2019, the funds held in the endowment are first and foremost dedicated to serving the financial needs of the University. Proceeds from the endowment represent approximately 25% of the University’s revenues, funding current expenses for nearly every facet of University life, including scholarships, research and facilities across all global campuses.

The board is committed to the principle of enacting only those policies it believes are both urgently important and highly likely to result in real change. At the same time, the University will continue to seek out investment opportunities in cleaner technologies, renewable energy, battery storage, sustainability and more. It also will continue to limit investments at greater risk of becoming stranded or devalued assets.

Northwestern will continue to support research, operations and institutional programs, including research through the Institute for Sustainability and Energy at Northwestern (ISEN), which is a University-wide enterprise that advances global sustainability and energy solutions, numerous international research opportunities supported by the University’s Buffett Institute for Global Affairs, the Center for Engineering Sustainability and Resilience (CESR) within the McCormick School of Engineering and more.

Like many of Northwestern’s peer institutions, environment and sustainability education, experiences and career readiness are in high demand by students and faculty alike. Northwestern offers undergraduate and graduate certificate programs focused on climate change and sustainability. There are also campus learning and programming efforts to further educate the community on sustainability efforts throughout the academic year.

Plus, efforts under sustainNU help reduce the campus carbon footprint and waste, increase efficiency in energy, water and resource use, and incorporate sustainability into University purchasing and practices.  

“Northwestern’s commitment to climate action and energy efficiency is award-winning,” said Amy Falls, Northwestern’s chief investment officer. “Active investment in new energy technologies and infrastructure to promote a greater supply of fossil fuel alternatives, coupled with the efforts of the administration and University research and programming, paves the way for real change.”

Read more about this and other work of the Investment Office.