Frequently Asked Questions
What is USC’s stance on investing in fossil fuels?
In February 2021, the USC Board of Trustees voted to freeze making new investments in funds dedicated to investing in fossil fuels and to liquidate legacy investments in a prudent manner over time. The Board’s action formalized what had been in practice for some time as the endowment had not made a new dedicated fossil fuel investment since August 2018.
What is included in USC’s definition of fossil fuels?
We define fossil fuel investments as upstream companies that pursue the extraction and production of crude oil, natural gas or thermal coal. USC’s freeze on new fossil fuel investments includes funds that are dedicated to investing in this sector.
Why did the Board take this action?
After listening to students, faculty and staff, the President and the Board of Trustees wanted to align investments with a more sustainable university. University leaders believe this is good business and also good policy. It’s the right thing to do at the right time, for the University and the Earth.
What is the current status of investments related to fossil fuels?
The endowment’s fossil fuel investments continue to be liquidated over time in a financially prudent manner. These legacy investments are held in long-term private partnerships that are illiquid. As a result, we anticipate that it will take between five and ten years to meaningfully reduce this exposure. The pace of liquidation is highly dependent on capital markets and commodity prices, and an immediate divestment of these assets would result in a significant financial loss to USC’s endowment.
Why has the value of USC’s fossil fuel investments increased in the University’s financials?
USC has not made any new fossil fuel investments. However, the value of these legacy assets will fluctuate during their hold period as their valuations are correlated with the prices of oil and gas. Higher energy prices in 2021 and 2022 have caused the value of these assets to appreciate in recent periods.
Is the endowment invested in sustainable investments and clean energy?
The endowment seeks to identify more sustainable investments going forward, such as renewable energy. Such investments must deliver competitive market returns to warrant an allocation. USC has been selectively adding new investments in sustainable industries and technologies since 2018. Thus far, the endowment has invested nearly $350 million in sustainable investments, and we plan to increase that even further.
What does the endowment consider a sustainable investment?
When making an investment deemed to be sustainable, the Investment Office considers opportunities that promote resource efficiency and conservation, pursue emission reductions, or seek to mitigate or recapture greenhouse gases. Further, the Investment Office encourages companies and its investment management partners to adopt best practices around sustainability and ESG governance given the importance of good stewardship in safeguarding and promoting the endowment’s long-term economic interests.
Who can answer additional questions about ESG investing at USC?
You can reach us at acir@usc.edu.