From The University of Washington (US) : “How public pension funds can help address climate change”

From The University of Washington (US)

October 29, 2021
Kim Eckart

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With public pension funds managing $4 trillion nationally and essentially representing the retirement plans of 20 million U.S. workers, where that money is invested has a lot of ramifications.

In recent years, attention has focused on the fossil fuel industry, where public pension fund investors play a growing role.

As Michael McCann, political science professor at the University of Washington, and Riddhi Mehta-Neugebauer, a graduate student in political science and former research director for the UW Harry Bridges Center for Labor Studies, point out, private equity firms – including the Blackstone Group, KKR and the Carlyle Group – own and are expanding fossil fuel operations such as pipelines and gas- and coal-fired power plants. Meanwhile, reports from the International Energy Agency and the U.N. Intergovernmental Panel on Climate Change provide dire warnings about global warming.

“It is time that private equity also acts upon information the rest of the world seems to already understand,” said Mehta-Neugebauer. “Willfully expanding fossil fuel infrastructure amid intensifying opposition exposes pension fund investors and retirees to investment risks, and exposes all of us to more dangerous climate and public health outcomes.”

Ahead of the U.N. Climate Change Conference that begins Oct. 31, the Harry Bridges Center released a report on the issue, following a spring panel discussion with representatives from labor, public pension funds, Indigenous groups and grassroots organizations around North America. The goal: collaboration and change.

McCann and Mehta-Neugebauer discussed the relationship among public pension funds, private equity and climate change with UW News.

What do you think people overlook, or perhaps don’t even know, about this issue? And what are the consequences?

RMN: Private equity firms benefit immensely from a structure of secrecy. Through regulatory exemptions, private equity assets are, by definition, private and not subject to most public disclosure rules, like other publicly listed companies such as Chevron or ExxonMobil. As a result, neither the public nor government regulators fully understand the environmental and community impacts of private equity investments.

At the same time, private equity firms extoll their commitment to environmental and sustainable goals, but they fail to disclose the thousands of miles of oil and gas pipelines they manage, or the acres of oil wells they own, or the extent to which communities and ecosystems are impacted by their operations. Thus, private equity’s pension fund investors do not have an accurate understanding of the public health and climate risks associated with private equity’s ever-expanding fossil fuel footprint and run the risk of making investment decisions based on inaccurate and incomplete information — a serious fiduciary risk.

For instance, the same day that private equity firm Brookfield Asset Management raised $7 billion for a new clean energy fund, its $6.7 billion bid to takeover Inter Pipeline, an oil sands pipeline company, was recommended by the company’s board for shareholder approval. Brookfield failed to discuss this connection, and very few industry analysts observed how Brookfield’s attempts to mitigate climate change were immediately nullified.

Systematic, detailed and comprehensive disclosure of private equity portfolio’s climate risks, and plans to shift toward a pollution-free energy portfolio are necessary to enable the public, investors and regulatory agencies to effectively monitor and mitigate negative financial risks as well as climate and health impacts.

Financial returns are often considered the priority for investments, but you argue not only that other issues are important, but also that private equity investment in the fossil fuel industry is risky. Can you explain?

MM: The majority of private equity energy funds have underperformed comparable buyout funds over the past decade. On the other hand, over a similar period, renewable energy stocks beat a fossil fuel-focused strategy by more than threefold. Yet total investment in renewable energy assets is still lagging. And the heavy debt that private equity firms typically load onto their portfolio companies resulted in private equity-owned oil and gas companies dominating the unusually high number of bankruptcies in the energy sector last year.

Looking to the future, major oil companies are acknowledging a permanent decline in oil demand. In February 2021, Royal Dutch Shell joined other major oil companies in saying that the world reached peak oil production in 2019, and going forward, it expects annual declines. Governments and auto manufacturers are also responding to the writing on the wall, setting 2035 as a goal: California, one of the largest markets for vehicle sales, established that target for a phaseout of gasoline-powered cars; the United Kingdom mandated that any car sold after 2030 must have at least a hybrid drivetrain capable of running on a battery; and General Motors announced plans to completely phase out vehicles using internal combustion engines by 2035. GM also plans to use renewable energy for its U.S. factories by 2035, and for overseas plants by 2040.

How can labor unions — or any of us — be part of the solution?

MM: Public pension funds are essentially labor’s retirement capital. Investment decisions are made by pension fund trustees, who are often union members, state elected representatives, and investment experts. These trustees can demand robust climate risk reporting standards that take community and environmental impacts into account. Assessing a private equity fund’s performance by financial benchmarks alone underestimates the full costs associated with these energy investments.

RMN: Labor unions can do a better job of committing resources to educating themselves and their trustee representatives on how their pension fund invests their retirement capital. Workers and retirees can demand from their pension funds more transparent climate-related disclosures as a condition for future private equity funding.

MM: Much political analysis has focused on the reluctance of labor organizations to fully support a clean energy future. However, greater engagement of labor within the pension fund investment sphere can bring about an alliance between labor and environmental interests. Better understanding the climate risks associated with private equity investments can help protect not only the environment, but also investment returns — ensuring a more sustainable future for retirees as well as the planet.

As the climate crisis impacts all of us, we can also engage on this issue by providing comment at pension fund meetings — after all, they are open to the public. And we can demand that our elected representatives take bolder climate-related actions. Aside from ensuring public pension fund investments are made more responsibly, we all have a stake in ensuring a healthier planet.

See the full article here .


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The University of Washington (US) is one of the world’s preeminent public universities. Our impact on individuals, on our region, and on the world is profound — whether we are launching young people into a boundless future or confronting the grand challenges of our time through undaunted research and scholarship. Ranked number 10 in the world in Shanghai Jiao Tong University rankings and educating more than 54,000 students annually, our students and faculty work together to turn ideas into impact and in the process transform lives and our world. For more about our impact on the world, every day.

So what defines us —the students, faculty and community members at the University of Washington? Above all, it’s our belief in possibility and our unshakable optimism. It’s a connection to others, both near and far. It’s a hunger that pushes us to tackle challenges and pursue progress. It’s the conviction that together we can create a world of good. Join us on the journey.

The University of Washington (US) is a public research university in Seattle, Washington, United States. Founded in 1861, University of Washington is one of the oldest universities on the West Coast; it was established in downtown Seattle approximately a decade after the city’s founding to aid its economic development. Today, the university’s 703-acre main Seattle campus is in the University District above the Montlake Cut, within the urban Puget Sound region of the Pacific Northwest. The university has additional campuses in Tacoma and Bothell. Overall, University of Washington encompasses over 500 buildings and over 20 million gross square footage of space, including one of the largest library systems in the world with more than 26 university libraries, as well as the UW Tower, lecture halls, art centers, museums, laboratories, stadiums, and conference centers. The university offers bachelor’s, master’s, and doctoral degrees through 140 departments in various colleges and schools, sees a total student enrollment of roughly 46,000 annually, and functions on a quarter system.

University of Washington is a member of the Association of American Universities(US) and is classified among “R1: Doctoral Universities – Very high research activity”. According to the National Science Foundation(US), UW spent $1.41 billion on research and development in 2018, ranking it 5th in the nation. As the flagship institution of the six public universities in Washington state, it is known for its medical, engineering and scientific research as well as its highly competitive computer science and engineering programs. Additionally, University of Washington continues to benefit from its deep historic ties and major collaborations with numerous technology giants in the region, such as Amazon, Boeing, Nintendo, and particularly Microsoft. Paul G. Allen, Bill Gates and others spent significant time at Washington computer labs for a startup venture before founding Microsoft and other ventures. The University of Washington’s 22 varsity sports teams are also highly competitive, competing as the Huskies in the Pac-12 Conference of the NCAA Division I, representing the United States at the Olympic Games, and other major competitions.

The university has been affiliated with many notable alumni and faculty, including 21 Nobel Prize laureates and numerous Pulitzer Prize winners, Fulbright Scholars, Rhodes Scholars and Marshall Scholars.

In 1854, territorial governor Isaac Stevens recommended the establishment of a university in the Washington Territory. Prominent Seattle-area residents, including Methodist preacher Daniel Bagley, saw this as a chance to add to the city’s potential and prestige. Bagley learned of a law that allowed United States territories to sell land to raise money in support of public schools. At the time, Arthur A. Denny, one of the founders of Seattle and a member of the territorial legislature, aimed to increase the city’s importance by moving the territory’s capital from Olympia to Seattle. However, Bagley eventually convinced Denny that the establishment of a university would assist more in the development of Seattle’s economy. Two universities were initially chartered, but later the decision was repealed in favor of a single university in Lewis County provided that locally donated land was available. When no site emerged, Denny successfully petitioned the legislature to reconsider Seattle as a location in 1858.

In 1861, scouting began for an appropriate 10 acres (4 ha) site in Seattle to serve as a new university campus. Arthur and Mary Denny donated eight acres, while fellow pioneers Edward Lander, and Charlie and Mary Terry, donated two acres on Denny’s Knoll in downtown Seattle. More specifically, this tract was bounded by 4th Avenue to the west, 6th Avenue to the east, Union Street to the north, and Seneca Streets to the south.

John Pike, for whom Pike Street is named, was the university’s architect and builder. It was opened on November 4, 1861, as the Territorial University of Washington. The legislature passed articles incorporating the University, and establishing its Board of Regents in 1862. The school initially struggled, closing three times: in 1863 for low enrollment, and again in 1867 and 1876 due to funds shortage. University of Washington awarded its first graduate Clara Antoinette McCarty Wilt in 1876, with a bachelor’s degree in science.

19th century relocation

By the time Washington state entered the Union in 1889, both Seattle and the University had grown substantially. University of Washington’s total undergraduate enrollment increased from 30 to nearly 300 students, and the campus’s relative isolation in downtown Seattle faced encroaching development. A special legislative committee, headed by University of Washington graduate Edmond Meany, was created to find a new campus to better serve the growing student population and faculty. The committee eventually selected a site on the northeast of downtown Seattle called Union Bay, which was the land of the Duwamish, and the legislature appropriated funds for its purchase and construction. In 1895, the University relocated to the new campus by moving into the newly built Denny Hall. The University Regents tried and failed to sell the old campus, eventually settling with leasing the area. This would later become one of the University’s most valuable pieces of real estate in modern-day Seattle, generating millions in annual revenue with what is now called the Metropolitan Tract. The original Territorial University building was torn down in 1908, and its former site now houses the Fairmont Olympic Hotel.

The sole-surviving remnants of Washington’s first building are four 24-foot (7.3 m), white, hand-fluted cedar, Ionic columns. They were salvaged by Edmond S. Meany, one of the University’s first graduates and former head of its history department. Meany and his colleague, Dean Herbert T. Condon, dubbed the columns as “Loyalty,” “Industry,” “Faith”, and “Efficiency”, or “LIFE.” The columns now stand in the Sylvan Grove Theater.

20th century expansion

Organizers of the 1909 Alaska-Yukon-Pacific Exposition eyed the still largely undeveloped campus as a prime setting for their world’s fair. They came to an agreement with Washington’s Board of Regents that allowed them to use the campus grounds for the exposition, surrounding today’s Drumheller Fountain facing towards Mount Rainier. In exchange, organizers agreed Washington would take over the campus and its development after the fair’s conclusion. This arrangement led to a detailed site plan and several new buildings, prepared in part by John Charles Olmsted. The plan was later incorporated into the overall University of Washington campus master plan, permanently affecting the campus layout.

Both World Wars brought the military to campus, with certain facilities temporarily lent to the federal government. In spite of this, subsequent post-war periods were times of dramatic growth for the University. The period between the wars saw a significant expansion of the upper campus. Construction of the Liberal Arts Quadrangle, known to students as “The Quad,” began in 1916 and continued to 1939. The University’s architectural centerpiece, Suzzallo Library, was built in 1926 and expanded in 1935.

After World War II, further growth came with the G.I. Bill. Among the most important developments of this period was the opening of the School of Medicine in 1946, which is now consistently ranked as the top medical school in the United States. It would eventually lead to the University of Washington Medical Center, ranked by U.S. News and World Report as one of the top ten hospitals in the nation.

In 1942, all persons of Japanese ancestry in the Seattle area were forced into inland internment camps as part of Executive Order 9066 following the attack on Pearl Harbor. During this difficult time, university president Lee Paul Sieg took an active and sympathetic leadership role in advocating for and facilitating the transfer of Japanese American students to universities and colleges away from the Pacific Coast to help them avoid the mass incarceration. Nevertheless many Japanese American students and “soon-to-be” graduates were unable to transfer successfully in the short time window or receive diplomas before being incarcerated. It was only many years later that they would be recognized for their accomplishments during the University of Washington’s Long Journey Home ceremonial event that was held in May 2008.

From 1958 to 1973, the University of Washington saw a tremendous growth in student enrollment, its faculties and operating budget, and also its prestige under the leadership of Charles Odegaard. University of Washington student enrollment had more than doubled to 34,000 as the baby boom generation came of age. However, this era was also marked by high levels of student activism, as was the case at many American universities. Much of the unrest focused around civil rights and opposition to the Vietnam War. In response to anti-Vietnam War protests by the late 1960s, the University Safety and Security Division became the University of Washington Police Department.

Odegaard instituted a vision of building a “community of scholars”, convincing the Washington State legislatures to increase investment in the University. Washington senators, such as Henry M. Jackson and Warren G. Magnuson, also used their political clout to gather research funds for the University of Washington. The results included an increase in the operating budget from $37 million in 1958 to over $400 million in 1973, solidifying University of Washington as a top recipient of federal research funds in the United States. The establishment of technology giants such as Microsoft, Boeing and Amazon in the local area also proved to be highly influential in the University of Washington’s fortunes, not only improving graduate prospects but also helping to attract millions of dollars in university and research funding through its distinguished faculty and extensive alumni network.

21st century

In 1990, the University of Washington opened its additional campuses in Bothell and Tacoma. Although originally intended for students who have already completed two years of higher education, both schools have since become four-year universities with the authority to grant degrees. The first freshman classes at these campuses started in fall 2006. Today both Bothell and Tacoma also offer a selection of master’s degree programs.

In 2012, the University began exploring plans and governmental approval to expand the main Seattle campus, including significant increases in student housing, teaching facilities for the growing student body and faculty, as well as expanded public transit options. The University of Washington light rail station was completed in March 2015, connecting Seattle’s Capitol Hill neighborhood to the University of Washington Husky Stadium within five minutes of rail travel time. It offers a previously unavailable option of transportation into and out of the campus, designed specifically to reduce dependence on private vehicles, bicycles and local King County buses.

University of Washington has been listed as a “Public Ivy” in Greene’s Guides since 2001, and is an elected member of the American Association of Universities. Among the faculty by 2012, there have been 151 members of American Association for the Advancement of Science, 68 members of the National Academy of Sciences(US), 67 members of the American Academy of Arts and Sciences, 53 members of the National Academy of Medicine(US), 29 winners of the Presidential Early Career Award for Scientists and Engineers, 21 members of the National Academy of Engineering(US), 15 Howard Hughes Medical Institute Investigators, 15 MacArthur Fellows, 9 winners of the Gairdner Foundation International Award, 5 winners of the National Medal of Science, 7 Nobel Prize laureates, 5 winners of Albert Lasker Award for Clinical Medical Research, 4 members of the American Philosophical Society, 2 winners of the National Book Award, 2 winners of the National Medal of Arts, 2 Pulitzer Prize winners, 1 winner of the Fields Medal, and 1 member of the National Academy of Public Administration. Among UW students by 2012, there were 136 Fulbright Scholars, 35 Rhodes Scholars, 7 Marshall Scholars and 4 Gates Cambridge Scholars. UW is recognized as a top producer of Fulbright Scholars, ranking 2nd in the US in 2017.

The Academic Ranking of World Universities (ARWU) has consistently ranked University of Washington as one of the top 20 universities worldwide every year since its first release. In 2019, University of Washington ranked 14th worldwide out of 500 by the ARWU, 26th worldwide out of 981 in the Times Higher Education World University Rankings, and 28th worldwide out of 101 in the Times World Reputation Rankings. Meanwhile, QS World University Rankings ranked it 68th worldwide, out of over 900.

U.S. News & World Report ranked University of Washington 8th out of nearly 1,500 universities worldwide for 2021, with University of Washington’s undergraduate program tied for 58th among 389 national universities in the U.S. and tied for 19th among 209 public universities.

In 2019, it ranked 10th among the universities around the world by SCImago Institutions Rankings. In 2017, the Leiden Ranking, which focuses on science and the impact of scientific publications among the world’s 500 major universities, ranked University of Washington 12th globally and 5th in the U.S.

In 2019, Kiplinger Magazine’s review of “top college values” named University of Washington 5th for in-state students and 10th for out-of-state students among U.S. public colleges, and 84th overall out of 500 schools. In the Washington Monthly National University Rankings University of Washington was ranked 15th domestically in 2018, based on its contribution to the public good as measured by social mobility, research, and promoting public service.