University of Washington Moves to Divest from Fossil Fuels, Up Its Investing in Climate Solutions

By David G. Barry

The University of Washington is joining the ranks of institutions divesting from fossil fuels and set a goal of investing at least 2.5% of its $4.7 billion consolidated endowment fund in climate-solutions companies or asset managers.

At its September meeting, the University of Washington Board of Regents approved a resolution to begin exiting from all direct investments in fossil -fuel companies with the goal of completing divestiture by fiscal year 2027. Victor Balta, a university spokesman, said that the endowment currently has "3% energy exposure." 

The school also made a commitment to achieving net-zero emissions in the endowment fund by fiscal year 2050.

The resolution also includes a commitment not to renew indirect investments in funds primarily focusing on fossil -fuel extraction or reserves. The commitments, however, do include allowances for firms contributing to the transition to sustainable energy.

In voting to divest, the University of Washington joins more than 1,300 institutions globally, including the University of California, Harvard, the University of Southern California, and the University of Michigan.

In a statement, UW Board Chair David Zeeck called the actions “an early step in a very important journey to reduce the UW’s impact on the environment.”

He added that “the board wishes to avoid greenwashing and to take meaningful action, putting the University of Washington in the front ranks of universities addressing climate change through research, teaching, operations, and investments.”

Balta said that less than 1% of the endowment is invested in climate-solutions companies or asset managers 

The University of Washington Investment Management Company (UWINCO) manages the $4.7 billion endowment and did evaluated the recommendations. Those recommendations arose from a petition submitted in 2020 by UW’s Institutional Climate Action group. The board will consider revised climate-investing guidelines at its November meeting.

In a report to the board, UWINCO said the endowment reported a negative 5.5% return for the fiscal year ended June 30, exceeding its policy benchmark of negative 12.8%. It returned 35.1% for the fiscal year ended June 30, 2021.