University of California sells $200 million holdings in coal, oil sands firms

Reuters News
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Posted: Sep 09, 2015 10:48 PM

By Rory Carroll

SAN FRANCISCO (Reuters) - The University of California's chief investment officer on Wednesday said it has sold off about $200 million of direct holdings in coal and oil sands companies, which he said were no longer good investments for the university's $98.2 billion fund.

Chief Investment Officer Jagdeep Bachher said slowing global demand, an increasingly unfavorable regulatory environment pose insurmountable challenges for coal mining companies.

The profitability of companies focused on developing crude from Canadian oil sands has also fallen amid low global oil prices, Bachher said, making those companies increasingly risky investments.

He said the university is in the process of factoring long-term carbon prices into its evaluation of electric utilities, noting that the industry itself utilizes somewhere a carbon price of between $40 and $70 per ton in its capital investment evaluations.

The University of California's move comes after the California state legislature last week passed a bill requiring its two large state pension funds - Calpers and CalSTRS - to divest from coal mining companies.

Stanford University and the University of Maine have made similar moves.

Unlike some formal divestment campaigns, there has been no official change in University of California policy with regard to coal mining or oil sands companies, spokeswoman Dianne Klein said. The university is free to purchase shares of those companies in the future if the market circumstances warranted it, she said.

(Reporting by Rory Carroll; Editing by Kenneth Maxwell)