Dive Brief:

• Georgetown University, in Washington D.C., will divest from fossil fuel companies within a decade, it announced Thursday. 
• Its board of directors adopted a policy directing the private institution to continue to back areas related to renewable energy and energy efficiency while freezing new endowment investments in companies and funds that focus on the exploration or extraction of fossil fuels.
• Georgetown joins a growing list of U.S. colleges and universities that have moved to untangle themselves from the industry amid environmental concerns. 

Dive Insight:

Georgetown cited a recommendation from its Committee on Investments and Social Responsibility as the reason for divesting from fossil fuel companies. The university said in its announcement it plans to divest from the public securities of fossil fuel companies​ by 2025 and from private investments by 2030.

The transition from fossil fuels will help the university prevent "the most dangerous effects of climate change," Michael Barry, the university’s chief investment officer, said in a statement.

But beyond potential environmental fears, research has shown that investing in fossil fuel companies may no longer be a wise financial bet. A 2018 study from the Institute for Energy Economics and Financial Analysis found that "global stock indexes without fossil-fuel holdings have outperformed otherwise identical indexes that include fossil fuel companies."

The study continues: "Fossil fuel companies once led the economy and world stock markets. They now lag."

Recently, too, the Wall Street Journal cited a forecast that profits of the 28 oil and gas firms in the S&P 500 would drop nearly 43% in the final three months of 2019 compared to the same period a year prior.

Several prominent universities and systems have elected to stop investments in fossil fuels. 

The University of California System made its $13.4 billion endowment "fossil free" at the end of September, according to two officials who wrote an op-ed explaining the decision in the Los Angeles Times. 

The system's $70 billion pension would "soon be that way as well," wrote Jagdeep Singh Bachher, its chief investment officer, and Richard Sherman, chair of the UC Board of Regents' Investments Committee.

The pair wrote that the decision was not necessarily motivated by activists, but rather that investments in fossil fuels were "too risky" and that they potentially imperiled "generating strong returns for UC's diversified portfolios."

Harvard University Faculty of Arts and Sciences​ also recently voted to support the institution divesting from fossil fuels, The Harvard Crimson, the campus newspaper, first reported. Because Harvard has the largest endowment in the world at nearly $41 billion, a decision to separate from fossil fuel companies would be closely watched, The Washington Post noted.

The president, Lawrence Bacow, told the Crimson he would bring the proposal to the Harvard Corporation, a university governing board, for consideration.

While the UC system was able to move quickly, other institutions, similar to Georgetown, have set up longer-term plans for shifting to renewable energy.

Middlebury College, in Vermont, said last year that it would gradually phase out endowment investments in fossil fuels, until it divested entirely within 15 years. This reversed the college's position from 2013, when protesters had demanded it divest from its holdings. The college's president at the time, Ronald Liebowitz, said its governing board, given its fiduciary responsibilities, could not "look past the lack of proven alternative investment models."