SEASIDE — Lobbying for change through online petitions, engaging in one-on-one conversations with state officials and passing small resolutions in a push for something bigger.
This has been CSU Monterey Bay senior Ethan Quaranta’s reality for months as he and a group of more than 40 students, faculty and alumni from across the state known as “Divest the CSU” urged the California State University system to sever ties with fossil fuel companies.
And it looks like their commitment to a reduced carbon footprint has paid off.
With encouragement from Divest the CSU, the university system will no longer be directly invested in fossil fuels and intends to allow its remaining public holdings in the sector to expire, the CSU announced Oct. 6.
Many other institutions, including Brown, Cornell, Harvard and the University of California system, have already committed to divesting from fossil fuels. The CSU, the largest public four-year university system in the U.S., is the latest educational institution to carry on the movement’s momentum across the country.
“We’re aligning values of science and financial well-being while promoting environmental policy,” said Quaranta. “The CSU kept telling us that it’s a hard decision, but it’s really not. There’s an alignment of all of these things and that’s divesting.”
What it means
Divestment is essentially the opposite of investment — it simply means getting rid of stocks, bonds, or funds. Institutions, including colleges in the United States, have often put billions into these types of investments to generate income. The CSU’s two biggest financial portfolios currently have over $4.5 billion in assets, with $155 million in shares of fossil fuel companies, including over $80 million in Chevron and ExxonMobil bonds.
Divest the CSU argues these funds can be better allocated for the benefit of not just the environment but the financial health of institutions. Since 2015, more than 200 U.S. oil and gas producers have filed for bankruptcy, pushing investors to increasingly question the long-term viability of the entire sector. Divesting and diversifying portfolios can avoid these risks and maximize returns by investing in other industries.
When the UC system chose to divest in May 2020, for example, it did so on the grounds of reducing “financial risk,” the system said at the time. The CSU has echoed this sentiment, recognizing the economic durability that investing elsewhere will provide.
“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 CSU Chancellor Joseph Castro in a press release.
Starkly aware of the eco-friendly growth divestment can provide, environmental science major Quaranta has been interested in the idea for more than a year and a half. Through Divest the CSU, the leisure fascination transformed into an attainable project.
“The work of Ethan and other student leaders in Divest the CSU is heartening and inspiring,” said Ryne Leuzinger, a CSUMB information literacy instruction coordinator who has worked closely with Quaranta in local divestment efforts. “Their thoughtful activism leaves me optimistic about the possibility of a fossil fuel-free future.”
The man himself
Yet Quaranta’s work as a student organizer didn’t begin until a few months ago. In fact, Quaranta’s introduction to the world of university politics came from inside the legislative bodies he now lobbies for progress.
Last year, Quaranta served as CSUMB’s vice president of external affairs, an executive position with the college’s Associated Student government. Hooked into leadership, Quaranta then ran for vice president of legislative affairs of the Cal State Student Association, which is the student government for the entire CSU system. Having already worked closely with the body through his work at CSUMB, Quaranta wanted the chance to widen his reach as a student leader — a chance he never received.
Quaranta lost the election by one vote. The outcome marked the start of his career in activism and relationship with Divest the CSU, a relatively new organization that needed more support from those who understand the CSU bureaucracy, he explained.
Created by Cal Poly SLO alum Lisa Swartz, the conglomeration of Cal State students only started organizing in late January. Their ideas, though not yet fully fleshed out, interested Quaranta and encouraged him to exchange student leadership for grassroots activism.
“Well, I had just lost an election and divestment was one of my big issues during my time with student government, so I thought I would give student organizing a try,” he said.
Not willing to wait until his term with CSUMB was up to act, Quaranta doubled as a leader turned activist for his first few months with Divest the CSU before being named co-chair of the group alongside Cal Poly SLO student Heath Hooper. During that stretch, Quaranta helped push a resolution through the Cal State Student Association strongly urging CSU-wide fossil fuel divestment, as well as a similar vote of support from his own Associated Student government.
Glimmers of hope
Slowly, Divest the CSU’s cause started to seem more feasible. In May, Castro asked the CSU’s Investment Advisory Committee to review the university system’s investments to ensure alignment between fiduciary responsibility and commitment to sustainability. Divest the CSU then engaged in one-on-one meetings with individual members of the Committee to show those two values wouldn’t align until divestment. The Committee shared its recommendations with Castro on Oct. 6, who agreed to adopt the measures.
The decision resonated with the CSU’s longstanding intention to forge a more sustainable future for its 23 campuses, while acting as a testament to the power student voices can have in operationalizing broad, system-wide goals like sustainability into tangible action, according to officials and activists.
“Sustainability is reflected in the design and construction of our facilities, across university operations, and embedded in our academic programs,” said Castro. “Additionally, sustainability considerations have been codified in our master investment policy since 2017.
“Our recent announcement to no longer pursue future investments in fossil fuels reflects our longstanding commitment to sustainability and our fiduciary obligations to remain trusted stewards of public resources. We commend our students’ passion and perseverance around the issue and look forward to working together on other issues that impact the university and the broader community.”
As part of its choice to divest, the CSU will not pursue any future fossil fuel investments in any of the system’s three investment portfolios: Systemwide Investment Fund Trust, Intermediate Duration Portfolio and Total Return Portfolio. Before any action being taken, the CSU’s fossil fuel exposure, or the percent of fund assets linked to fossil fuel companies, between these three portfolios was 3%.
The system agreed to liquidate fossil fuel-related bonds held within the first two portfolios, which account for 2% of the system’s fossil fuel exposure, as soon as reasonable. The remaining 1% will have to be divested further down the road with legislative action, as those funds are wrapped up in the Total Return Portfolio’s direct energy mutual fund where assets are blended and not attributable to a single source.
That means full divestment of the CSU will not come to fruition until these commingled and harder to address fossil fuel investments are taken out of the equation, which the system anticipates will happen within the next several years.
Though full divestment is not likely in the immediate future, Quaranta argues the real power of the policy in CSU’s case is symbolic.
“Divestment is about taking social capital away from fossil fuel companies so passing necessary and visionary environmental policies becomes the norm,” he said. “We aren’t pushing for a specific policy like increasing waste diversion. We’re trying to create a different political environment so those other, more specific policies can be enacted.”
Apart from policymaking, the CSU’s decision also has an influence on individual Cal State universities, whose own fossil fuel investments in campus-based auxiliaries are not affected by the CSU-wide decision to divest.
As of Aug. 31, fossil fuel exposure at CSUMB was 2.4% within the Foundation of CSUMB investment portfolio, just one auxiliary source of funds for the school, according to the Foundation of CSUMB Chief Executive Officer Barbara Zappas.
Further, all fossil fuel exposure at CSUMB is indirect, meaning held within some type of mutual or index fund. Like the CSU’s Total Return Portfolio, fossil fuel exposure caught up in these funds is not as easily disentangled and divested. While a difficult process to begin, Quaranta thinks a cue from the CSU is just the kickstart CSUMB needs to get going.
“Having the biggest domino fall in the CSU divestment push is exciting to see and surely brings momentum to our campus-level divestment pushes too,” said Quaranta, who is also the campus lead for Divest the CSU at CSUMB. “As we are a system of higher education we look forward to pushing campus-level divestment harder moving forward. While our general message won’t change, our strategies will.”
It only took a matter of 15 minutes for students at CSUMB to turn momentum from the CSU into a campus-level push. Just moments after the CSU’s Investment Advisory Committee decided to divest, CSUMB’s President’s Sustainability Committee drafted a letter that will be sent to CSUMB president Eduardo Ochoa urging the college to follow suit.
“(Divestment) is no longer a ‘niche concept — it has become mainstream,’” the letter reads. “We need to join to be a campus committed to creating a world for the future generations we serve, and for our own long-term viability.”
The next step for the university rests on the Foundation of CSUMB’s Investment Committee meeting scheduled for Nov. 8. A university spokesman said CSUMB will have more to say on the issue after this meeting. There, those involved in Divest the CSU at CSUMB, including Quaranta, will make their demands for divestment known and lay the groundwork for further discussion.
“If we can knock their socks off… then maybe we could push them to take us seriously,” said Quaranta. “I think then we could at least get the Committee talking about divestment seriously at the beginning of 2022… This is the fastest possible timeline, but hopefully, by the end of spring semester there can be some action at CSUMB.”
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