Pitt Office of Finance publishes ESG report for fiscal year 2023

The University of Pittsburgh continued its push for sustainability by publishing a report about its exposure to fossil fuels.

“It is the University’s core belief that supporting responsible business practices is integral to producing strong investment outcomes,” University spokesperson Jared Stonesifer said.

The University of Pittsburgh’s Office of Finance released its Consolidated Endowment Fund Environmental, Social, and Governance report for fiscal year 2023 on May 7. The update details the CEF’s current investment into fossil fuels and the University’s plan to phase out these investments within the next decade.

This is the third ESG report following its introduction in March of 2020. The goal of the ESG policy, according to Stonesifer, is to “[Balance] equity, environment and economics.”

“The ESG Policy provides the University with a more consistent and comprehensive approach to evaluating investment opportunities,” Stonesifer said. “The University believes that certain ESG factors are a logical and important consideration in thoroughly assessing long-term, risk-adjusted investment returns.”

According to the report, the ESG policy incorporates factors such as greenhouse gas emissions, data protection and discrimination into its due diligence process when making investments. Many students and faculty have voiced their support for fossil fuel divestment in recent years, and according to the report, this coincides with Pitt’s financial goals.

“The increased significance of these topics among community stakeholders has coincided and overlapped with a growing investment sector awareness of the potential benefits of considering ESG factors in investment decision-making,” the report said. “ESG factors include considerations that can improve the quality of investment decision-making by presenting a deeper and more robust assessment of expected risks and returns.”

According to the report, the CEF’s private and public exposure to fossil fuels increased from 8.1% to 8.2% from June 30, 2022 to June 30, 2023.

“The change in total exposure to fossil fuels was primarily attributable to fluctuations in the value of, and improved visibility into, underlying public fund holdings and was not the result of new investment activity,” the report said. “[The CEF’s private exposure to fossil fuels] is forecast to become de minimis around 2034-36, given current trend lines.”

The Office of Finance specified that public investment increased from 1.8% to 2.0% while private investment decreased from 6.3% to 6.2%. Public investment will continue to fluctuate with the market while private investments will roll off over the next decade, according to the report.

To Thomas Allen, a senior political science major and representative of Fossil Free Pitt, the ESG policy and report aren’t doing enough to divest from fossil fuels.

“There’s all this twisted, obscuring language about what Pitt’s actual plans are for divestment,” Allen said. “The ESG report tries to hide the fact that it looks like Pitt is walking back its commitment to not invest in fossil fuels by 2035. They split the ‘projected to become de minimis’ line about what the fossil investments are going to do between the private and the public side.”

The report references the University’s decreasing private investment in fossil fuels and said that “The Office of Finance has not made any direct investments in fossil fuel companies or new commitments to fossil fuel-focused funds in more than three years.” It does not reference a similarly decreasing trend for public investment.

In a statement, Stonesifer explained that the University hasn’t divested from fossil fuels or implemented a “negative screen” — a block on future investments — against fossil fuels because it would incur a significant financial loss.

“That loss would conflict with the purpose of the endowment, which is to support institutional financial aid, scholarships, faculty positions and research activities in perpetuity,” Stonesifer said. “However, it was recommended that, for financial reasons, private holdings of fossil fuels would be allowed to roll off over time.”

Allen also expressed concern that students don’t have enough influence over investment decisions.

“I think SGB needs a real role in making investment decisions,” Allen said. “They can participate in Board of Trustees meetings, but I think it’s important that [they] have some decision-making ability.”