Divestment at McGill: Reflecting on the Past and Looking to the Future

Emily Rowe

Student groups across Canada have placed intensifying pressure on post-secondary institutions to divest from fossil fuels in recent years. Late last year, McGill University announced its own plan to divest from all direct holdings in fossil-fuel companies in the Carbon Underground 200. This blog reflects on the years of advocacy that preceded this change, and looks ahead to the future of sustainable investing at McGill and beyond.

In a long-awaited move towards environmental sustainability, McGill University recently announced a pivotal decision to divest, selling off direct and indirect fossil fuel stocks, from all direct holdings in fossil-fuel companies[1] listed in the Carbon Underground 200 (CU200) — the top 100 global coal, oil and gas publicly-traded reserve holders.[2] This initiative, revealed as part of Phase Two in the university's socially responsible investment strategy, is set to commence implementation in 2024, with completion slated for 2025.[3] McGill’s new socially responsible investment commitments complements its broader sustainability goals, which include achieving carbon neutrality by 2040[4] and zero-waste campuses by 2035.[5] Notably, this move follows over a decade of tireless advocacy from McGill community members urging the board and its Committee to Advise on Matters of Social Responsibility (CAMSR) to divest.[6] This announcement is a significant step forward for the university, showcasing responsiveness to the pressing climate crisis, long-standing advocacy and the developing trend of divestment commitments from academic institutions.  As McGill joins the ranks to become the last major university in Montreal to make such a valuable commitment,[7] it’s timely to reflect on the significant history of advocacy that led to this moment, and what the commitment means for the future. 

Advocacy in Canada: Positioning McGill’s Divestment Calls Among Other Institutions 

By committing to divest from fossil-fuel companies, universities signal a principled break from supporting industries directly linked to environmental harm. The post-secondary divestment campaign aims to persuade universities to sell existing fossil fuel-related stocks, bonds, and funds, and refrain from future investments in the sector.[8] The movement’s goal is twofold: to apply financial pressure, compelling the industry to shift towards renewable energy, and to challenge the cultural permissibility of fossil fuel extraction.[9] Efforts at other Canadian universities, like the University of British Columbia’s divestment of its $1.7-billion endowment fund from fossil fuel investments following a hunger strike by its students in January 2020, have spurred action towards sustainable development.[10] Similarly, Concordia University pledged a complete exit from the fossil fuel industry by 2025 in November,[11] while the Université du Québec à Montréal (UQAM) united in unanimous consensus to fully divest from fossil fuels.[12]  

Overview of Past Calls for McGill to Divest  

In the midst of a global surge towards environmental consciousness, the noise for McGill University to divest from fossil fuels has finally reached a crescendo. While more than 100 U.S. institutions and 10 Canadian universities have already committed to partial or full divestment,[13] McGill, until recently, stood resolute in its hesitation. Just two years ago, the McGill board of governors rejected calls to rid its $1.4-billion endowment of investments in fossil fuels,[14] despite receiving approval from the university senate and student groups. This failure prompted Professor Gregory Mikkelson, a renowned environmental ethics scholar, to tender his resignation in protest. Speaking to his decision to step down, Mikkelson stated in a phone interview with CBC, “The first two times, in 2013 and 2016, they were already defying the strong basis for divestment in natural science, social science and the humanities — in other words, the kinds of research universities do.” McGill's principal at the time, Suzanne Fortier, defended the board’s decision, citing the complexity of emission reduction and the institution's commitment to an extensive carbon footprint reduction plan.[15] Nevertheless, critics at the time argued McGill’s stance contradicted the overwhelming support for divestment from various university stakeholders.[16] 

Despite McGill’s initial resistance, April 2020 witnessed a step in the right direction with the Board of Governors endorsing eight socially responsible investing measures.[17] Impressively, by April 2023, two years ahead of schedule, McGill reported attaining all performance targets, slashing the carbon footprint of equity holdings by 49 percent since 2019.[18] The university’s commitment to impact investments and the Fossil Fuel Free Green Century Fund — funds not invested in companies that “extract, process, refine, and transmit coal, oil, or gas; burn fossil fuels to make electricity; or possess carbon reserves”[19] — signals a transformative shift, challenging its historical hesitancy towards divestment.[20] These statistics underscore McGill’s evolving stance, reflecting a broader trend within some academic institutions where responsible investing, sustainability and other ESG factors are integrated into institutional ethos and financial strategy.[21] 

What McGill’s Divestment from CU200 Means  

McGill University’s awaited commitment to divest from all direct holdings in fossil-fuel companies listed in the Carbon Underground 200 is a transformative step in its socially responsible investment strategy. This strategic move, with Phase 2 set for completion in 2025, stands out among the eight commitments recently approved by McGill’s Board of Governors.[22] According to McGill’s Statement of Investment Policy, the university aims to sustain a carbon footprint at least 33 percent below the emissions generated by companies in its listed benchmarks.[23] Maryse Bertrand, Chair of McGill’s Board of Governors, emphasized McGill’s leadership in sustainable investment, stating, “[f]rom expanding our decarbonization target to divesting from direct CU200 holdings, McGill is proud to be leading sustainable investment across Canada’s university landscape.”[24] The commitment also addresses broader sustainability goals, allocating 10 percent of the McGill Investment Pool (MIP) to sustainable investment strategies aligned with the United Nations Sustainability Development Goals by 2029.[25] McGill's comprehensive approach, including a fossil-fuel-free fund for donors and improvements to its United Nations Principles for Responsible Investment (UNPRI) score, affirms a favorable position for sustainable investment practices among Canadian universities.[26] 

Ongoing Debate: Is Divestment as Impactful as Claimed? 

The effectiveness of universities’ commitment to fossil-fuel divestment is an ongoing debate, with advocates underscoring its ability to exert political pressure while critics question financial outcomes. Supporters argue divestment serves as a catalyst to influence governments and corporations.[27] The social and financial significance of divestment acts as a form of stakeholder activism, pressuring corporations to adopt environmentally responsible policies and practices. Historically speaking, divestment movements have been incredibly influential in catalyzing “system ideological change in how environmental and social issues are addressed by institutions.” For instance, in the South African anti-apartheid movement of the 1980s, students, academic institutions, and religious groups pressured institutions to sever business ties with South Africa in protest of the government’s racist laws.[28] Eventually, governments around the globe conceded, passing economic sanctions on South Africa. In terms of financial effectiveness, there are mixed findings. A common argument against fossil fuel divestment is that this simply results in the exchange of stock ownership. Therefore, the ultimate goal of influencing a change in companies’ behaviour falls short when another shareholder takes the institution's place.[29]  

Conclusion 

McGill University's decision to divest from fossil fuels is a commendable step towards sustainability, showcasing leadership in responsible investing. Despite ongoing debates on divestment’s financial impact, this move highlights the university’s commitment to environmental responsibility. However, while acknowledging it as a positive step, it’s essential to recognize that further actions are required to comprehensively address the pressing challenges of climate change. 

Emily Rowe is a 2L McGill Law student interested in overlap between corporate and environmental law. Before law school, she graduated from McGill University with a Bachelors of Arts degree in Political Science. Thanks to Aidan Geary for her tremendous support on this blog post.

[1] McGill University, "McGill University divests from direct holdings in Carbon Underground 200 fossil-fuel companies; announces new socially responsible investment commitments" (15 December 2023), online: <mcgill.ca/newsroom/channels/news/mcgill-university-divests-direct-holdings-carbon-underground-200-fossil-fuel- companies announces-new-353601>.

[2] FFI Solutions, "The Carbon Underground 200" (last visited 2 February 2024), online <ffisolutions.com/the-carbon-underground-200-500/>.

[3] McGill University, supra note 1.

[4] McGill University, "Carbon Neutrality" (last visited 2 February 2024), online <mcgill.ca/sustainability/commitments/carbon-neutrality>.

[5] McGill University, "Zero-Waste at McGill" (last visited 2 February 2024), online <mcgill.ca/sustainability/commitments/zero-waste>.

[6] Elsie Yang, "Board of Governors to Decide on Revisiting Divestment", The McGill Daily (27 March 2023),online: <mcgilldaily.com/2023/03/board-of-governors-to-decide-on-revisiting-divestment/>.

[7] McGill University, “McGill University Board of Governors Community Session February 8, 2023” (last visited 2 February 2024), online <mcgill.ca/boardofgovernors/files/boardofgovernors/00.community_session_questions_and_responses_february_8_2023.pdf>

[8] Samantha McCabe, "Inside the student-led movements urging Canadian universities to divest from fossil fuels", MacLean's (29 October 2021), online: <macleans.ca/society/environment/inside-the-student-led-movements-urging-canadian-universities-to-divest-from-fossil-fuels/>.

[9] Ibid.

[10] "Students end hunger strike after UBC clarifies position on divestment from fossil fuels", CBC News (11 January 2020), online: <cbc.ca/1.5423505>.

[11] Canadian Press, ”Concordia University says it will divest entirely from coal, oil and gas by 2025”, CBC News (8 November 2019), online: <cbc.ca/1.5353808>.

[12] Franca G Mignacca, "Tenured McGill prof resigns over university's refusal to divest from fossil fuels", CBC News (14 January 2020), online: <cbc.ca/1.5426979>

[13] “QS World University Rankings: Sustainability 2024", Quacquarelli Symonds Limited (5 December 2023), online: <topuniversities.com/sustainability-rankings>.

[14] Benjamin Shingler, "McGill University to stick with fossil fuel investments", CBC News (24 March 2016), online: <cbc.ca/1.3505347>.

[15] Morgan Lowrie (for Canadian Press), "McGill University principal defends decision not to divest from fossil fuels after prof quits", CBC News (20 January 2020), online: <globalnews.ca/news/6435536/mcgill-university-principal-prof-resignation-divest/>.

[16] Mignacca, supra note 12.

[17] McGill University, "McGill’s Record so Far: 2019-2022" (last visited 2 February 2024), online <mcgill.ca/investments/mipendowment/socially-responsible-investing/2019-2022>.

[18] Ibid.

[19] Green Century Funds, "What is Fossil Fuel-Free Investing? - What Does Fossil Fuel Free Mean?" (last visited 2 February 2024), online: <greencentury.com/fossile-fuel-free-definition/>.

[20] Ibid.

[21] McCabe, supra note 8.

[22] McGill University, supra note 1.

[23] McGill University, "2023 SRI Commitments" (last visited 2 February 2024), online: <mcgill.ca/investments/mipendowment/socially-responsible-investing/initiatives>.

[24] McGill University, supra note 1.

[25] Ibid.

[26] McGill University, supra note 23.

[27] Mignacca, supra note 12.

[28] Anna Hardie, "The Effectiveness of Fossil Fuel Divestment: A Historical Analysis" (4 March 2022), Public Policy and Governance Review, online: <ppgreview.ca/2022/03/04/the-effectiveness-of-fossil-fuel-divestment-a-historical-analysis/>.

[29] Ibid.