California State University Will Not Make Future Fossil Fuel Investments in University Investment Portfolios and Funds
California State University (CSU) Chancellor Joseph I. Castro announced today that the university will not pursue any future investments in fossil fuels in the university’s three investment portfolios: Systemwide Investment Fund Trust (SWIFT), Intermediate Duration Portfolio (IDP) and Total Return Portfolio (TRP).
“Consistent with our values, it is an appropriate time to start to transition away from these types of investments, both to further demonstrate our commitment to a sustainable CSU but also to ensure strong future returns on the funds invested by the university,” said Castro.
The CSU has a long-standing commitment to sustainability, which includes the CSU trustees’ adoption of a university-wide sustainability policy in 2014, its pledge to honor the Paris Agreement after the Trump administration’s withdrawal in 2017, and codifying sustainability considerations in its master investment policy later that same year.
In May 2021, Chancellor Castro tasked the CSU’s Investment Advisory Committee (IAC) to review the university’s investments to ensure alignment between the university’s fiduciary responsibility and its commitment to sustainability. At the conclusion of their meeting on October 6, the IAC shared its recommendations with the Chancellor, who agreed to adopt them and has tasked staff at the Chancellor’s Office with implementation. The IAC’s recommendations include:
Liquidating fossil fuel-related bonds held in SWIFT as soon as reasonable and restrict future fossil fuel investments for that same portfolio and the IDP.
Transition out of the TRP’s direct energy mutual fund and into other non-fossil fuel mutual funds.
Work as appropriate and feasible to further reduce fossil fuel exposures in the TRP, which due to legislative restrictions is limited to mutual funds.
Allow CSU investment managers discretion to continue to invest in businesses that are successfully transitioning to sustainable green business models.
CSU investments are centrally managed on behalf of the system and its campuses. As of June 30, 2021, the CSU has approximately $5.2 billion invested in its portfolios. Neither state general fund nor CSU auxiliary funds are included in CSU investments.
Auxiliaries, which support the university and campuses but are separate legal entities, cannot be obligated to adopt the recommendations of the IAC but are free to adopt an investment strategy that best supports their own specific missions.