Divestment Presentation

On March 6th, 2014, Toronto350.org presented their Fossil Fuel Divestment brief to the University of Toronto president.

View the event details


Presented by Dimitri Lascaris


Thank you. I tend to follow the alternative media and one of the sites that I enjoy to visit the most is a site by the name of Common Dreams. I can’t commend it to you enough, and yesterday I was looking at it and a headline caught my eye. The headline was along the lines of “Investors in Dirty Oil are Scared Senseless by Indigenous Peoples”, and I can’t imagine a more accurate statement because the determination of indigenous peoples in this country and elsewhere to protect mother earth is indomitable, and I have no doubt that in the end they will prevail. And I’m here to do what I can to assist them.

In November of 2007, I was a 42-year old father of two children who were kind enough to join me this evening, and I had barely given a thought at that point of my life to the issue of climate change. Like so many other Canadians of my generation, I had grown up in a country in which plentiful natural resources were relentlessly exploited for our own benefit, with little if any thought given to the question of how that relentless exploitation might one day affect subsequent generations.

That all changed when, in November 2007, I was prompted by a dire headline in a newspaper to read, in its entirety, the fourth report of the Intergovernmental Panel on Climate Change. Thanks to that report, I realized overnight that I and other members of my generation had been taking from future generations to profit ourselves. For that, I became and remain ashamed, but even more, I became alarmed, and alarmed in particular for the future of my children.


Today, I come before you principally, but certainly not exclusively, on their behalf, because it is their future, and indeed the future of all of our children, and our grandchildren that hangs in the balance. Ladies and gentlemen of the University of Toronto, climate change is, to the borrow words of UN secretary general Ban Ki-moon, the defining challenge of our time, and future generations will judge us by the manner in which we rise or fall in the face of this challenge.

In his Grounding for the Metaphysics of Morals, Immanuel Kant described his categorical imperative thus:

“Act only according to that maxim whereby you can, at the same time, will that it should become a universal law.”

Today's short presentation is not intended to be a lecture in Kantian ethics, but Kant’s categorical imperative is perhaps the ultimate distillation of basic human decency, and in determining how we should respond to a crisis of this magnitude, basic human decency should be our guide.

I will seek to explain this evening why divestment from the world's 200 largest fossil fuel companies would play an important part in addressing the climate crisis, would help remedy a major social injury, and would protect both the university's endowment and the university’s global standing throughout the 21st century.


President Gertler, Members of the Governing Council, University of Toronto Teaching Staff, Administrative Staff, Alumni, and above all Students, the younger generation of this institution, I thank you for receiving me today, and I say that by choosing to divest, U of T can join the vanguard of a growing movement. Years from now, people will look back on our conversation about fossil fuel divestment as prescient. Similar discussions are beginning in major institutions all over the world. These include over 300 colleges and universities, nine of which have already committed to divest. 22 cities have taken action toward divestment. This includes the City of Seattle, which has pledged to divest its $1.4 billion pension fund. More than twenty religious institutions have committed to divest, including the United Church of Christ in the United States and, just a couple of weeks ago, Trinity St. Paul's United Church here in Toronto. Private foundations are also committing to divestment. In January, 17 private foundations collectively worth $1.8 billion committed themselves to sell their fossil fuel stocks.

The science of climate change is clear and overwhelming. By burning coal, oil, and gas we are dangerously modifying the atmosphere in ways that are jeopardizing the security and prosperity of people around the world and, above all, of future generations. The negative effects of anthropogenic climate change are already here. The overwhelming scientific consensus is that those effects will continue to worsen for as long as humanity remains dependent on fossil fuels.


At the 2009 United Nations Climate Change Conference, governments including Canada, the U.S., the U.K., China, Brazil, and the 27 E.U. member states, all signed the Copenhagen Accord. Under that agreement, they pledged to take immediate and sustained action to avoid raising the Earth's temperature above 2 degrees Celsius from pre-industrial levels. This was a re-affirmation of the objective of the 1994 United Nations Framework Convention on Climate Change, which aims to prevent "dangerous anthropogenic interference" in the climate system. Based on paleoclimatic records - including data from ice cores - we know the long-run relationship between the amount of carbon dioxide released into the atmosphere and the amount of temperature increase that is likely to occur. There is no mystery any longer. We can use this knowledge to create a carbon budget, if you will, establishing how much more fossil fuel we can burn without definitively committing the planet to breaching the 2˚C safety limit. By comparing that budget with the remaining global reserves of fossil fuel, we reach a stark conclusion: 80% of the world's fossil fuel reserves must remain in the ground if we are to stay below the 2°C limit.

By continuing to burn fossil fuels at the present rate, we are committing ourselves to warming of 4˚C or more by the end of the century. This outcome is projected to cause severe global effects, and may destabilize the climate altogether. The direct warming from fossil fuels is compounded by feedback effects like melting sea ice and methane release from melting permafrost. These effects will add further warming to that caused directly by fossil fuels, and so add to the danger of continued fossil fuel dependency. If we continue to burn fossil fuels at the current rate, we will commit ourselves to surpass the 2˚C safety threshold within 15 years. Scientists predict that doing so would have severe effects both locally and globally, including in the form of more extreme weather events, more severe droughts, floods, agricultural disruptions, and widespread detriments to human health.


The enormity of the danger becomes clear when one considers the effects of sea-level rise and its possible impacts in a ‘beyond 4°C world’. In a recent peer-reviewed paper authored by 8 climate scientists, the authors concluded that humanity is now confronted by the real risk of the forced displacement of up to 187 million people over this century. Even worse, there are other plausible mechanisms through which climate change could drive even greater displacement of human populations, such as desertification, changes to precipitation patterns rendering agricultural areas unproductive, and fresh water scarcity.

And yet, in spite of these pressing dangers, the business models of fossil fuel companies rely on the assumption that they will have freedom to burn 100% of their massive reserves, and that massive investment in the expansion of those reserves will one day prove profitable. Every year, the industry invests billions of dollars in the hunt for new resources, principally in this country crude bitumen, which pose even more danger to the global climate. British economist Nicholas Stern describes this as the "gross inconsistency between current valuations of fossil fuel assets and the path governments have committed to take in order to manage the huge risks of climate change." Immediate action is needed to avert the worst possible consequences of this crisis.

All of the reasons I will be outlining tonight are provided with more detail and full references in the fossil fuel divestment brief that Toronto350.org is formally presenting to President Gertler today. By visiting the Toronto350.org website, you can download the whole brief. It describes the scientific, ethical, and financial rationales for divestment, and is structured specifically to meet the requirements of U of T's divestment policies.

The brief describes the science of climate change in detail and demonstrates that the threat of that crisis is no longer properly the subject of ongoing academic debate. The brief establishes why the continuing activities of fossil fuel companies constitute social injury, under the definition the university has chosen. It explains how the activities of fossil fuel companies are socially injurious and why the social injury they create cannot be remedied through shareholder activism. It illustrates how the harm they cause is inherent to the primary business of fossil fuel companies. It underscores how their behaviour frustrates the enforcement of the rules of domestic and international law intended to protect individuals against deprivation of health, safety, and basic freedoms. The brief also includes the positive financial case for divestment. It explains why divestment will help to protect the university's endowment and its pension fund against the over-valuation of fossil fuel stocks, and the un-avoidable bursting of the carbon bubble.


The brief is available at Toronto350.org/divest/ and has been read and attested to by over 400 members of the university community. A petition supporting the campaign has been signed by over 2,000 members of the university community, including more than 45 faculty members. It has also been endorsed by 25 campus organizations. The campaign has the public support of many esteemed Canadians, including David Suzuki, Naomi Klein, Winona LaDuke, and former Toronto mayor David Miller. The list of supporters continues to grow.

In keeping with U of T's March 2008 Policy on Social and Political Issues With Respect to University Divestment, we call on President Gertler to create an ad hoc committee to consider fossil fuel divestment. In addition to the brief prepared by Toronto350.org, the committee should be willing to consider the published portions of the Fifth Assessment Report of the IPCC [Intergovernmental Panel on Climate Change], as well as relevant written or oral submissions from members of the University of Toronto community. Toronto350.org would be pleased to assist the committee in any way, including by providing detailed answers to any further questions from the committee, the Office of the President, and the Governing Council.

Today, fossil fuel reserves are stranded assets. To quote from a recent article by Craig MacKenzie in Responsible Investor:

“Investor ears should be deaf no more. Coal mining share prices have fallen by two thirds in two years. Several oil majors are seeing their lowest rating against the market for a decade. A wave of new broker research from Bernstein, Citi, Deutsche Bank, Goldman Sachs, HSBC and Morgan Stanley takes a markedly bearish view of the prospects for these sectors, pointing to serious difficulties with their economics, and even, in some cases, suggesting they could be about to go into ‘terminal decline’. An Economist front cover (Aug 3rd) summed it up, showing a dinosaur at a gasoline pump headlined ‘Yesterday’s fuel.’ This bearish turn in investor sentiment dramatically changes the debate about stranded assets.”


As the costs and dangers of climate change become more glaring, governments will make it increasingly clear that they won't allow the atmosphere to be used as a vast, unregulated dumping ground for greenhouse gas pollution. U of T can put two and two together faster than other investors, recognize how the business models of fossil fuel companies are untenable, and sell its holdings before their value is eviscerated through rigorous and indispensable climate regulation. Divestment can therefore be seen as protecting the endowment of the university. Eventually and inevitably, the market as a whole will realize that most of the assets of the largest fossil fuel corporations are unusable and therefore their current stock prices are immensely over-valued.

The decision to divest should not harm the returns or long-term value of the university's endowment and pension funds. Chapter four of the brief of Toronto350.org makes this financial argument in detail and in a compelling manner. Studies conducted by the UN Environment Programme Finance Initiative and have found fossil fuel divestment to be compatible with the fiduciary duties of institutions like U of T. Indeed, a plausible argument can be made that given the catastrophic effects of uncontrolled climate change, and the inevitable bursting of the carbon bubble, this university in it’s fiduciaries have a duty to divest from the fossil fuel industry. At the same time, analyses conducted by Standard & Poor's and UNEP have concluded that there is no evidence of a divestment penalty for investors. A 2013 study by Impax Asset Management found that a global portfolio that excluded fossil fuel stocks would have performed slightly better than the MCSI World Index over the last seven years, with only a modest increase in tracking error of 1.6 percent a year. In January, World Bank President Jim Yong Kim expressed his support for divestment. He also articulated his concern that unmitigated climate change could reverse the development gains the world has experienced.


Financial analysis of the prudence of investing in fossil fuel companies must take into consideration the value at risk from the carbon bubble. In a report for the Canadian Centre for Policy Alternatives, Marc Lee and Brock Ellis conclude that even if Canada is allotted a disproportionate share of the world's carbon budget, 78% of Canada's proven fossil fuel reserves will need to remain underground. Regulatory risk from stronger climate change policies has not been incorporated into the stock market values of these firms, and there is a strong potential for malinvestment in capital-intensive, long-term projects in areas like the oil sands and deep offshore drilling. In 2012, the global fossil fuel sector spent a staggering $674 billion in order to expand the reserves, 80% of which must remain in the ground for us to remain beneath of 2 degrees celsius barrier. Canadian companies are desperate to spend billions more on export infrastructure for the world's dirtiest fuels. Divestment has the potential to raise the cost of capital for the fossil fuel industry, helping to constrain that investment and that is something we cannot afford not to do.

This is an opportunity for this institution to show leadership on one of today's biggest social issues. People around the world look to this institution to see how scientific institutions of knowledge production are investing their money. The decision to divest would send a powerful message to other institutional investors - not just universities, but public pension funds, and the investment community at large. That message is that the fossil fuel industry as a whole is overvalued and smart investors will be diversifying away from it.

By contrast, the university’s continued commitment to this investment may well erode its global standing as the world awakens to the enormity of the climate challenge. As many of you know, the University of Toronto was recently ranked eighth in the world for scientific performance. There is, however, a vast intellectual divide between the broad scientific consensus on climate change, and the university’s continued investment in fossil fuels. Fossil fuels investment is, with the greatest of respect to the university’s administration, an implicit disregard of the overwhelming scientific consensus on climate change. In a sense it is as though this university had embraced the theory that the world is flat.


Accordingly, we propose that the university sell its direct stock holdings in the 200 companies listed in the brief of Toronto350.org over the span of five years. Because of Shell’s especially problematic environmental and human rights record, we also call upon the university to sell its holdings in that company over the course of one year. We suggest making an immediate statement of principle that the university will make no new purchases of the stock of these 200 companies.

For 250 years, humanity has been investing heavily in and benefitting greatly from fossil fuel use. By continuing to do so, we are seriously harming the lives and prosperity of people around the world, in ways that prove irreversible. In the face of this danger, there is opportunity. By re-investing our assets in the parts of the economy that are sustainable, we can help drive the emergence of the suite of technologies that we need to control climate change. These include energy efficiency, non-greenhouse-gas-emitting forms of climate-safe energy, and the supporting technology that will help us achieve the deep long-term cuts in fossil fuel use that climatic stability requires.

By choosing to divest, the University of Toronto can assert its values as an academic community while protecting its endowment from the inflated stock prices of companies with largely-unburnable reserves of coal, oil, and natural gas. This is an opportunity to take an intellectually rigorous position of leadership on the defining challenge of our time. The example of South Africa is pertinent here. When institutions - including this one - chose to divest from companies that were supporting and profiting from Apartheid, it had an important impact on the global willingness to act against that nefarious regime, which in turn helped to bring about the dismantling of that system. Nelson Mandela said: "It always seems impossible until it is done". So it shall be with the global transition to a climate-safe form of energy.


Taking this step as an institution would require moral courage, and show U of T to be on the forefront of a strengthening movement. This will be a social and political movement to control climate change, accompanied by a financial movement based upon the major re-allocation of the world's financial capital to building a climate-safe global energy system. Instead of doubling down on the technologies that have created this crisis, we need to invest in a transition to a climate-safe and energy-rich future. U of T can be a leader in this transition, and the decision to divest would be a critical first step.

In the frequently-asked-questions section of the brief, the brief responds to many common criticisms of fossil fuel divestment. Divestment isn't an example of the university needlessly taking sides in a politically controversial manner. Rather, it's a situation where the university must examine the impact its financial choices are having and whether that aligns with its core values. The science of climate change is now so clear, and the interests that climate change jeopardizes are of such a fundamental nature that strong action to address climate change is no longer a mere political issue. By choosing to divest, the University would be rising above politics, rather than becoming embroiled in them.

Climate change is also an area where the university's preferred policy of shareholder activism will be ineffective. Whereas this approach may be a feasible way of encouraging better corporate behaviour in some circumstances, it doesn't work when the problem is the main product of the industry. Shareholder activism would not have convinced tobacco companies to stop selling tobacco; it will not convince fossil fuels companies to stop selling fossil fuels.

The brief of Toronto350.org also describes why we cannot rely exclusively or even largely upon the emergence of future technologies. For example, carbon capture and storage, to stop climate change. The matter is too urgent. The climate crisis is here and now. No developing technology can be scaled up to solve this problem. Divestment is something we can choose to undertake as an academic community.

The University of Toronto's Statement of Institutional Purpose includes "a resolute commitment to the principles of equal opportunity, equity and justice." If future generations are to have opportunities that are equal to those that we have enjoyed, they cannot inherit a world that has been impoverished and destabilized by uncontrolled climate change.


The principles of equity and justice indeed forbid us from ignoring what we know about the harms of greenhouse gas pollution. They forbid us from continuing to impose risk on innocent people around the world today, and on future generations who cannot defend their fundamental interests for the simple reason that they are not yet born.

Canada, Toronto, and this university have historically benefitted from fossil fuel use far exceeding the global per capita average. Having benefited for decades from behaviour that we now know to be damaging, we have a special moral obligation to be part of the solution.

Kant's categorical imperative, in essence, is “do as you would like to see everyone else do.” By choosing to divest, the University will show that it believes in creating a prosperous future with a safe climate, and that it is willing to make intelligent financial decisions that advance the endowment and its global standing, and help to drive a global push to deal with this crisis.

On behalf, therefore, of all of our children, Toronto350.org and I ask the university to rise to the defining challenge of our time.

I thank you for coming, and I thank in particular the members of Toronto350.org for their commitment to this cause, and for conferring upon me the privilege of speaking here tonight. Thank you.