Commit portion of UTIMCO funds to green energy

Michael Lazenby, Columnist

Editor’s Note: This article first appeared as part of the November 30 flipbook.

The University of Texas/Texas A&M Investment Management Company holds nearly $32 billion in assets.

The endowment manager selects external money managers to directly invest the $32 billion in companies. From currencies and bonds to stocks and funds, UTIMCO has a variety of available investment avenues. However, they’ve failed to sufficiently invest in the expansive and environmentally conscious green energy sector, and instead invested millions in oil and gas.

UTIMCO should reallocate a percentage of its funds into green energy companies in order to commit to environmental practices and redirect itself away from harmful investments. 

“I am very much in favor of this idea, and I think divesting from fossil fuels and reinvesting in green energy is not just the morally right thing but the right thing from a business standpoint,” said Leland Murphy, a government junior and active participant in on-campus climate coalitions. “The market is moving towards green energy; we really (should) want to be a university (system) that’s making moves in the right direction.”

In addition to the compelling climate and sustainability benefits, the green energy market is ripe for growth. Investing in green energy is not only conducive to creating a more environmentally sustainable portfolio, but also a more economically sustainable one as well.

“We absolutely should be divesting (from our holdings in big oil). We have this huge (endowment) but we’re not investing in the right things,” Murphy said. “Having (invested funds) in that endowment (for green energy) would help continue building up an industry.”

While divestment is the ultimate goal, investing in green energy can offset the effects of climate change UTIMCO is contributing to by investing in major oil companies.

Karen Adler, director of media relations for the University of Texas System, explained UTIMCO’s stance on investing in green energy companies and referenced UTIMCO’s policy statements in an email.

UTIMCO is prohibited from using any funds to ‘achieve temporal benefits for any purpose including use of its economic power to advance social or political purposes,’” Adler said in an email.

While UTIMCO can’t invest for the sake of sustainability, Adler mentioned that the money managers they employ consider nonfinancial factors.

“Many external firms that UTIMCO hires to manage endowment assets do consider environmental, social and governance (ESG) factors in their investment processes,” Adler said.

Consideration is not action. It would make sense for the endowment manager to be hesitant about investing in sustainability if it hadn’t been pursued in the past. However, Harvard University’s endowment pledged to fully phase out its investments in fossil fuels. If endowments across the globe are taking steps, why isn’t UTIMCO?

It’s reasonable that the nation’s largest public endowment fund is focused on high returns on their investments. However, they’re overlooking potential investment opportunities. For example, Shell’s share price has fallen roughly 20% in the last five years, while green energy companies such as Cheniere Energy have delivered a five year return of over 166%.

Oil and gas companies are also at the mercy of volatile oil prices, while green energy companies are not as heavily impacted. Many of these green energy companies not only exert a smaller carbon footprint, but can also offer a more predictable increase in stock price.

If not for the societal impact, do it for the return on investment.

UTIMCO was “the first investment corporation formed by a public university system.” While a pioneer in the public endowment space, they’re lacking in their current environmental considerations. UTIMCO can continue their financial success while playing their part in reducing the effects of climate change by redirecting funds into green energy companies.

Lazenby is an economics junior from Chicago, Illinois.