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For years, Royal Dutch Shell has tried to portray itself as one of the good guys in the battle against climate change. It recently completed improvements to an oil upgrader in Fort Saskatchewan, near Edmonton, to capture up to a third of its greenhouse gas emissions - equivalent to removing the annual pollution of about 250,000 cars.

On its website, the company posts stories about how to achieve a low-carbon-future and sponsors a fuel efficient vehicle in the eco-marathon.

But a recent conversation left a high-profile Canadian university official concerned that the oil company might not be so nice if the school went ahead with divestment - a policy to eliminate its investments in fossil fuel companies.

"A senior executive at Shell... told me directly that the company is monitoring the university divestment movement closely and would look unfavorably on any university that divested in regard to future investment," said Chris Moore, the Dean of Science at Halifax's Dalhousie University.

Alarm within Dalhousie University

Moore's comments were featured in a recent Dalhousie report in 2015. The warnings highlight the conundrum faced by universities as members of the public who care about climate change push the institutions to make their endowment funds and other investments fossil free.

Although a Shell Canada spokesman denied that the company would consider yanking funding from a university that divests from fossil fuel investments, Moore warned that millions of dollars of investments from Shell and other oil companies were at stake.

"Certainly, Dalhousie’s divestment would send a clear signal that the university is not supportive of the oil and gas industry and could well lead to withdrawal or non-renewal of investment by oil and gas companies in Dalhousie activities," Moore was quoted as saying in the report. He also explained that some of the research was "extremely expensive to carry out and would be almost impossible given the typical levels of funding available through government agencies.”

Thomas Duck, an associate professor in the Physics and Atmospheric Science Department at Dalhousie, viewed Moore’s remarks with alarm.

“Really, I think our investments shouldn’t at all be tied to whether a company is investing in us or not," said Duck in an interview with National Observer. "In fact, I think there’s a considerable threat to the university if we link those two things together.”

Duck sat on a university panel that was convened to review the divestment options, but he stressed that he was commenting about the situation as an individual.

Shell Canada spokesman Cameron Yost downplayed the concerns, stating that the company would not consider pulling investments from a school that indicated it might divest from fossil fuel investments. But he said he wasn't aware of the concerns raised by Moore.

”That’s interesting," Yost said. "That’s news to me. That’s the first time I’d heard that, so it’s difficult for me to comment on that specifically.”

Yost described Shell’s relationship with the universities as longstanding.

“We’ve gone through a lot collectively over that period of time. I wouldn’t say the universities should be worried,” he said.

“I think a great example of that would be Dalhousie, which does have a fairly strong divestment movement. That is an opportunity to have a conversation about the energy challenge or the energy transition. It’s not tied to that,” Yost said.

Moore, who is on sabbatical from Dalhousie, could not be reached for comment.

Thomas Duck. Photo from Thomas Duck
Thomas Duck. Photo from Thomas Duck

But the schools are concerned.

The comment in the report left many shell-shocked - and peeled back the polite veneer of the academic arguments over divestment. It showed that behind the civil-toned reports, Canada’s universities are grappling with a serious moral issue while they fight to retain valuable research dollars.

Dalhousie is not the only one under pressure to give up its investments. Over the past year, several major Canadian Universities have been pressured, but declined to divest. Among them are the University of Toronto, the University of British Columbia, Simon Fraser University, McGill University, Queen’s University, Trent, and, as of late April, the University of Ottawa.

The latter rejected calls for full divestment this week, pledging instead to reduce the carbon footprint of its entire investment portfolio by 30 per cent by 2030.

Dalhousie University is organizing another committee to examine the issue after already having convened two.

The rejections calls into question the effectiveness of the divestment campaign, but it has also provoked vigorous debates on campuses across Canada about the power and influence of oil and gas interests in the classrooms of the nation.

Financially, companies such as Exxon Mobil and Shell Canada support research at Canadian schools that might otherwise fall by the wayside. Shell's funding for the university - has totaled about $1.9 million since 2005 in a special program for engineers, science and management. Exxon Mobil has provided or promised funding worth more than $26 million up until 2020.

Additionally, the Dalhousie report identified the following energy-related donors to Dalhousie include Exxon Mobil Oil Canada (plus-$1-million); Imperial Oil; Emera; Petro Canada; Shell (all of whom contributed $250,000 to $499,000); and TransCanada Pipelines ($100,000 to $499,000).

According to Dalhousie’s Duck, he doesn’t have a problem if the funding is done properly, but that’s not always the case. And when the line between the fossil fuel company's contributions to an university and an university's investments is blurred, as in Halifax at Dalhousie University, it becomes a cause for concern.

For example, contracts between Shell and Dalhousie contain a controversial clause that allows the company to have “final approval on all student research projects” undertaken as part of its investments.

“This means that the company is being given the ability to interfere in academic matters at the university and this is clearly something we shouldn’t have,” Duck said.

For the moment, the school is tight-lipped about anything related to divestment. Three different staff members of Dalhousie’s media relations team did not respond to multiple calls from National Observer.

The university is also in hot water for not responding to set of freedom of information requests - all related to divestment.

Originally, Stephen Thomas, a member of Dalhousie’s student divestment committee, requested information related to emails between the school’s president and a number of fossil fuel companies.

That was back on July 27, 2015, far beyond the time frame of 30 days in which such requests are supposed to be fulfilled. At that point, some 80 percent of the information Thomas had asked for had yet to be supplied.

Finally, the Nova Scotia Office of the Information and Privacy Commissioner had to prod the school. Thomas is still waiting to see if his request will be fulfilled.

“That’s a problem," Duck said. “Clearly the university under the legislation from Nova Scotia should be responsive to these kinds of requests and if it’s taking an undue amount of time, that’s clearly not being responsive and would be a problem.”

Duck noted that some of the submissions to the Dalhousie committee “gave us a little bit of a peek at what’s going on. I can’t really characterize it as anything other than a threat that was made to the university in the one submission.

“One can imagine that if this is happening here, it’s probably happening elsewhere. So perhaps that explains what’s going on at other universities, but I don’t have any insight into that beyond what was said to us very directly right here.”

The issue has become a sore spot for most university administrators who tend to avoid any public discussion with the media about divestment. The University of Toronto politely demurred from an interview with National Observer, pointing us toward its news releases instead.

McGill University not divesting from 'less than 10%" oil and gas holdings

Montreal's McGill University was the most forthcoming. A spokesperson at that university said oil and gas companies don’t sponsor any research chairs, while funding from fossil fuel companies since 2008 adds up to around $2.3 million.

“To put that in context: McGill receives around $550 million annually in sponsored research and donations funding, with more than 90 per cent coming from government and other non-industry sources -- and less than 10 per cent from industry partners of all types,” the spokesperson said.

Divest McGill protesters rally at McGill University. Photo from Divest McGill
A divestment protest at McGill University. Photo from Divest McGill

McGill is ground zero of the Canadian divestment movement. It was here in 2012 that the call began for academic institutions to rid themselves of fossil fuel holdings. All the more reason then for Kristen Perry to be bitter over McGill’s decision in late March to hang onto its oil and gas investments.

Perry, an environmental science student at the university and organizer of the Divest McGill campaign, recalls being a nervous 18-year-old the first time she presented to McGill’s administration in an attempt to get them to divest.

“I was trembling,” she recalled.

Now, four years later, Perry is a hardened campaigner and she bristles with disbelief at the school’s reluctance to part with its investments in what she describes as dirty tar sands firms, among others.

In the same way that oil and water don’t mix, Perry is one of many in the divestment movement who believes fossil fuels and academia doesn’t go together.

The school’s continued investments in fossil fuels cost the university some $43-million in investment returns over a three-year period, according to a 2015 analysis of McGill’s $1.3 billion endowment.

Corporate Knights with and the South Pole Group carried out the analysis on a number of Canadian universities.

For divestment campaigners like Perry, that figure was even more frustrating in that it was larger than the $39-million in provincial cuts to McGill’s budget for 2012 to 2015.

Perry said it’s baffling to see why the school continues to cling to its oil and gas investments.

“It’s just perhaps resistance to change. McGill is quite traditional in a lot of ways.”

It’s not unusual for Canadian universities to accept corporate donations while investing in businesses as part of their larger financial portfolio.

For instance, energy companies contribute several hundred thousand dollars in donations to McGill University for funds, fellowships and research. The firms include Cenovus Energy, Shell Canada, Suncor Energy and the Imperial Oil Foundation.

Like many schools, McGill has an unspecified amount of money invested into oil and gas companies.

University of Ottawa not divesting from oil and gas: 'it'll have no impact'

In a report released in April explaining why the school is not divesting, the University of Ottawa offered a number of reasons.

“Shortly stated, the FTC [the Finance and Treasury Committee] is of the opinion that divestment is an insufficient and an ineffective response to global warming.”

The university noted that three-quarters of world oil is produced by state-owned companies in Russia, Iran, Saudi Arabia, China and Venezuela. “Those state-owned entities also hold 90 per cent of known fossil fuel reserves,” the report observed.

“Divestment by uOttawa will have no impact on these major producers.”

The school further opined that while divestment might hold symbolic significance, it is more effective to remain invested and use the means available to the school as investors to influence companies in its portfolio to behave more responsibly.

However, Bergel argued that it’s precisely divestment’s symbolic significance that gives the movement its strength.

What divestment can provide, however, is headlines that will move others to action in a snowball effect, he said. “That’s where I think divestment has a fair bit of power.”

Toby Heaps, publisher and co-founder of Corporate Knights, "the magazine for clean capitalism," agreed. He said capital markets sit at the top of the financial food chain and that signals and ripples reverberate throughout the system and have implications in political corridors when people begin to vote with their dollars.

One thing seems certain: Divestment in and of itself won’t be enough to solve the global climate crisis.

McKibben said as much in his Rolling Stone article in 2012. “Even if such a campaign is possible, however, we may have waited too long to start it,” he wrote.

“To make a real difference – to keep us under a temperature increase of two degrees – you'd need to change carbon pricing in Washington, and then use that victory to leverage similar shifts around the world.”

In Halifax, in April 2016, Thomas Duck echoed those words.

“The problem is there’s not any one thing we do any more. If we got started on this 20 years ago, it would have been easy. We’re at this point now where addressing climate change is really urgent and it’s not going to be one thing.

“People are proposing (divestment) as a silver bullet. It’s not a silver bullet. It’s one way for the university to send a message to broader society we need to move on, but it’s not the only thing the university needs to do and there are many things now that society needs to do to solve the problem.”

Dump stocks that are destroying the planet, Bob Massie says. A movement agrees.

The divestment movement’s roots are found in 1980s South Africa, according to a Rolling Stone piece author, activist and leader Bill McKibben published in 2012. In the ‘80s, a campaign emerged on college campuses and then spread through municipal and state governments, calling for economic action against companies connected to apartheid.

Then came the fossil fuels divestment movement in 2011. That’s when a group of students on half a dozen college campuses in the U.S. called on school administrations to divest their endowments from coal and other fossil fuels, according to a 2015 report from Arabella Advisors.

In his Rolling Stone article, McKibben quoted Bob Massie, a former anti-apartheid activist who helped found the Investor Network on Climate Risk. "Given the severity of the climate crisis, a comparable demand that our institutions dump stock from companies that are destroying the planet would not only be appropriate but effective,” Massie said.

"The message is simple: We have had enough. We must sever the ties with those who profit from climate change – now."

According to Arabella Advisors, in 2015, some 436 institutions and 2,040 individuals across 43 countries and representing $2.6 trillion in assets had committed to divest from fossil fuel companies.

Heaps said he’s seen estimates as high as $3.4 trillion divested, but said of actual money divested, it’s probably more like $34-billion. He noted that only a fraction of investments are in equities. Of that, a fraction are fossil fuel companies. And of that, he said that a fraction of the announced divestments have happened and have mostly involved coal.

Nonetheless, Heaps said the movement has grown 50-fold in the last year.

Yet for all that, progress in Canada in the universities seems slow and frustrating. Heaps attributed that partly to the conservative nature of the financial advisors who administer the capital.

“People who are stewards of capital have an inherent non-abrupt nature,” Heaps said. “It’s not an easy thing. How do you do this sensibly? They have big responsibilities. A lot of the slow movement is understandable.”

For its part, the divestment movement generally works off a list known as the carbon underground, which ranks the world’s top 200 public companies by the carbon content of their fossil fuel reserves.

But Heaps argued that trying to wholesale divest all at once could have unintended financial consequences. He suggested dumping thermal coal companies, which are large global greenhouse gas contributors, and climate obstructionists first.

After that, he suggested universities send a letter to the remaining companies on the carbon underground list, calling for them to develop a business plan consistent with a two-degree world. That would be made public and monitored as schools continued to develop their divestment plans.

On the institutional side, Heaps pointed out that schools might want to think about how they can reduce their risk as oil and gas continues to flounder. If a school is depending on fossil fuel companies for support, the cash flow might be down along with the fossil fuel market.

At the same time if the institution has oil and gas investments, and the stocks are down, then the endowment also suffers. “You’re getting hurt twice,” Heaps said. “You’re taking double risk.”

Andrew Bergel is a Ph.d student in Halifax and a faculty member with the school’s college of sustainability. Before he arrived from New York City, he worked as a hedge fund trader and a financial portfolio manager.

Bergel helped the Dalhousie divestment campaign with their report and assisted in the presentation to the university president and some of the board of governor members who oversee the school’s finances.

He pointed out that many of the schools in the United States that have divested tend to be small universities with relatively small endowments. “I think it will be tough for some of the large universities to do it,” Bergel said.

“First they have a bit more money in it, a little more skin in the game.”

By contrast, if it’s a small liberal arts school in New England with mostly English literature and history majors, it’s not too worried about Shell pulling out, Bergel noted. “When it comes to these things there’s a lot of self-interest involved.

“It is easier for these smaller Liberal arts colleges in the states to make themselves look very strong morally by divesting and not risk very much by doing it.”

For larger research-based universities in Canada - such as Dalhousie - the risk is tangible.

“If they felt they were getting a lot of push-back and that they might lose out and the industry might go elsewhere for their research, I can see where that would put a little bit of distress on them, especially given economically speaking things haven’t been the greatest for the universities especially since 2008,” Bergel said.

Canadian Youth Climate Coalition's Kiki Wood: concerned about 'influence' fossil fuel firms wield over universities

Kiki Wood, the national director of the Canadian Youth Climate Coalition, said all the universities cite fiduciary responsibility as the primary reason for not divesting.

But Wood said the real reason behind a lack of decisions is concern about damaging donor relationships, specifically donor relationships with large oil and gas companies that fund large research sectors of the university.

Wood is concerned about the influence fossil fuel firms have in universities, and says along with donor agreements has come a heavy presence of oil and gas executives on university boards and investment committees.

“It’s definitely made us very concerned about academic integrity and autonomy, and we’ve started to see there’s a greater level of influence from the industry in universities,” she said.

“If it were the tobacco industry funding the health programs, we’d be really concerned.”

Stuart Cobbett, Chair of McGill’s Board of Governors, doesn’t agree with that analysis. In a terse email reply to National Observer questions, asked if oil and gas influences the school’s divestment decisions, he simply replied, “No.”

As for reasons for not deciding to divest, Cobbett directed National Observer back to McGill’s report, adding that the Committee to Advise on Matters of Social Responsibility (CAMSR) believes there are more effective ways for McGill to address climate change.

Among its recommendations, CAMSR advocates establishing a socially responsible investment fund option for donors; looking for opportunities to invest in renewable energy firms; and future collaborative work with the board and senior administration to create a comprehensive climate action plan.

In Dalhousie University’s Ad hoc report, the Department of Engineering argues that divestment may on occasion carry the force of an ethical imperative as in the case with schools in the 1980s that had South African holdings.

But the department adds, “We do not believe that any such claim can be made in this instance. The apartheid regime was morally repugnant root and branch in its inception. To place the energy companies into the same category simply puts them outside the circle in a way that allows us to forget that the responsibility for climate change extends far beyond them….”

Engineering described energy companies as “part of a web” that includes individuals’ personal choices and the choices that government makes on peoples’ behalf.

The department also argued that “symbolically isolating energy companies” through divestment would harm the work of the firms who are “repositories of knowledge and expertise” and are already investing in alternative energy sources.

Government lacks depth and global reach to solve the climate change challenge without the fossil fuel companies, the department stated.

Certainly Shell, unlike Exxon Mobil, has been quick to acknowledge climate change. When Alberta Premier Rachel Notley announced the new provincial climate change plan in 2015, Shell was one of the companies represented on stage beside her.

Shell’s carbon capture and storage project, Quest, in Fort Saskatchewan - east of Edmonton - is the first commercial scale carbon capture and storage project that captures carbon emissions from the oil sands.

Shell also advocates for a government price on carbon pollution.

Royal Dutch Shell CEO Ben van Beurden
Royal Dutch Shell Chief Executive Ben van Beurden at launch of Quest project in Alberta on Nov. 6, 2015. File photo by Mike De Souza

For divestment activists, nothing short of divestment itself is enough. Wood said that as social barometers, universities should be doing everything they can to support Canada’s commitment to staying below the 1.5 degree Celsius global warming target.

“What we’re seeing is a desire to play it safe, hold back and not be part of the change we’ve committed to, “Wood said.

In and of itself, divestment at the universities isn’t going to make a huge difference to the companies involved, according to Bergel, who maintained that the sums involved were small in the overall scheme of things.

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Frankly, the oil companies are the tip of the (rapidly melting) iceberg. The general problem is that universities are scrambling for funding and corporations are gaining influence by replacing some of that funding. Much like corporate donations to political parties, the whole thing should probably be outlawed. And if they have the money to spend on buying influence they aren't being taxed enough. Tax corporations a bit more, use the money to fund the universities properly, and ban corporate money from campus. Universities as a place of learning and inquiry and research for knowledge and the public good would be significantly improved.

Divestment is predominantly virtue signalling. Selling shares into the marketplace will do absolutely nothing to reduce emissions. The new owners of the shares sold by universities may not care at all about the environment, and may in fact end up being activist shareholders in the "wrong" way; i.e., they'll push for more oil and gas industry growth and extraction, and emissions be damned.

Universities should be rewarding the "best in class" oil cos. for good ESG performance (and, yes, cynics, there are some cos. that are better than others in the O&G industry). Universities should also become activist investors, pushing for more action on emissions and other aspects of ESG. Once those shares are sold, universities will lose the leverage they may now have.

Beware the Law of Unintended Consequences....