In 1977, the North Carolina General Assembly created an endowment fund. The fund was established to create financial stability for the University, allowing it to be less dependent on unpredictable sources of revenue such as state appropriations. An investment fund was also established to support the endowment.
Oversight of the fund is provided by the fund’s Members Board and its Board of Directors. Their primary role is to oversee the allocation of the fund’s portfolio and monitor overall performance. As of June 2018, the total value of the fund was just over $1 billion. Their portfolio ranges from real estate to private equity investments. A significant percentage is invested in the energy and natural resources, some of which is invested in fossil fuel companies.
NC State touts itself as a groundbreaking institution in the field of sustainability and innovation, yet it invests in industries from the 1800s known for their contributions to climate change. While the true proportion of the total fund invested in the fossil fuel industry is not publicly available, the investments are broken down by sector, with 6.3 percent invested in “Energy and Natural Resources,” and only 0.36 percent explicitly invested in renewables, according to the UNC Management Company’s 2017 annual report. While the finances of the decision to invest in fossil fuels may make sense on paper, NC State has an obligation to divest from industries that don’t support its values.
NC State has a small separate portfolio that follows what is known as an ESG strategy. (ESG stands for environmental, social, and governance). It works as a socially and environmentally responsible investment strategy. As of June 2018, this fund was outperforming the University’s main portfolio, boasting 20 percent growth versus 12 percent as of 2017 according to an article published in Bloomberg.
As evidenced by this separate fund, environmentally responsibility is a financially sound decision. NC State divesting from the fossil fuel industry would thus be a small, feasible, and financially sound step towards the sustainable future they claim they are working towards.
For more information about NC State’s Investment Fund:
https://foundationsaccounting.ofa.ncsu.edu/investment-fund/
Joseph Taylor is a fourth-year studying environmental science and plant biology
