The University of Maine System is planning to fully divest from fossil fuels by 2030 — starting with the elimination of all direct fossil fuel holdings by the end of May.
On Thursday, the investment committee for the system's board of trustees approved two steps that it framed as major milestones in its commitment to address climate change. The first is a short-term change: to divest from all direct fossil fuel investments by May 31, and make no such investments moving forward.
But that still leaves open other funds held by the system, such as mutual funds and commingled funds, that may have some limited exposure to fossil fuels. The system has set a goal of divesting from those accounts by 2030.
"We are again at the forefront as we adopt divestment actions and goals," said Kelly Martin, the chair of the Board of Trustee's investment committee. "Our effort is to continue to demonstrate our strong commitment to addressing climate change in portfolio objectives."
The new policy defines fossil fuels as companies in the Carbon Underground 200 list: the 100 largest public coal companies in the world, and the 100 largest public oil and gas reserve companies.
The system estimates that about 1.9% of its assets, or $15.5 million, is exposed to fossil fuels. About $400,000 is invested in direct holdings, which would be divested by next month.
The university system's board already voted in 2015 to divest from coal, and two years later, it announced a new policy of considering environmental, social and governance factors in investment decisions.
However, faculty members and student groups have repeatedly urged the system at public meetings and rallies to move even further, saying that rapid action is needed to fight climate change.
"This is a great commitment and a great goal," said Charlie Cooper, a University of Maine sophomore and president of the group Divest UMS.
Cooper said that the system's latest action is a significant step forward, particularly its short-term commitment to end direct fossil fuel holdings, which has been one of his group's major priorities. As for the more long-term goal, Cooper said students will work to hold the university accountable in the years ahead.
"There's a chance for it to get lost among things," Cooper said. "As administrations change, and maybe new trustees are appointed. So it's definitely going to be a continued goal of Divest UMS to hold them accountable to this. But I think a long-term goal of 2030 is pretty reasonable for something like this."
The sustained pressure from students had an effect on at least one of the system's trustees, Roger Katz, who urged the board's investment committee on Thursday to divest even faster, for the benefit of future generations.
"I'm not going to be able to justify to them a board position which says, 'Oh, we're all in favor of divestment. And we'll get around to it sometime in the next eight years.' That's too long a horizon, it seems to me," Katz said.
But other leaders were more cautious and pointed out that divestment can be a complicated process requiring careful consideration. Trustee David MacMahon said that while that he personally is trying his best to address climate change, from composting to driving a hybrid vehicle, the board must balance divestment with ensuring a solid financial return.
"The balance is the fiduciary obligation we have to the beneficiaries of our pension plan, to the beneficiaries of the stabilization fund, the beneficiaries of income from endowments, student grants, loans, whatever else there is. So there is this balancing act," he said.
Several colleges and universities have already divested from fossil fuels, including Maine's Unity College, which acted a decade ago. And Tom Sanzillo, with the Institute for Energy Economics and Financial Analysis, said a recent study from the investment advisor BlackRock found that funds that had divested still produced solid returns.
"None lost money," he said. "They either gained or were neutral, in effect."
The new policy does allow for the system to have "de minimis" - or very limited - exposure to fossil fuels. Chair Kelly Martin argued that is needed for now, as the system shifts its commingled funds in the years ahead.
"The world is evolving to climate change, and trying to help the planet. It's not there. So we have that glidepath, and in the meantime, you have to have that de minimis amount, because you can't just turn the switch on and off," she said.
The new policy requires that the system continually monitor any funds with fossil fuel exposure, and to consider climate goals when selecting investment managers.
