Home > ESG > Tufts University to End Direct Investments into Coal and Tar Sands

Tufts University to End Direct Investments into Coal and Tar Sands

The school will also invest up to $25 million with climate impact funds. 

By Sarah Min


Tufts University joins the growing number of colleges that have pledged to end direct investments into coal and tar sands companies. The decision comes after a review from an internal school sustainability committee. 

A list of 120 of the largest energy firms will be banned by the $1.9 billion endowment, the university said Wednesday. At the moment, the school has no direct investments into the excluded companies, though the list will be reviewed and updated every year.

Over the next five years, Tufts says it also plans to invest up to $25 million into climate impact funds. A minimum of $10 million will be allocated by the school. The other $15 million would come from matching donor contributions to the endowment that are earmarked specifically for climate change. 

The investment team will also pressure its money managers to incorporate environmental, social, and governance (ESG) considerations into their investments. 

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The changes are part of the school’s broader efforts to reduce its reliance on fossil fuels. A committee of students, faculty, and staff called the Responsible Investment Advisory Group (RIAG) developed and proposed the investment changes to the board of trustees last year.   

“It is our hope that our actions and our voice, in combination with peer universities and others, will cause investment managers to accelerate their shift from fossil fuel investments to portfolios with more sustainable investments,” Robert R. Gheewalla, trustee and RIAG chair, said in a statement.

An online dashboard will also be created to report on the endowment’s progress. The school plans to revisit its climate change investments in two to five years. 

Several prominent universities have made carbon-related commitments in the past year. The University of California system said it was free of fossil fuels after unloading $1 billion in assets. Georgetown said it will dump public oil and gas stocks over the next five years. 

Fossil fuel investments are highly polarizing investments. On campus, student climate activists have lambasted endowment exposure to coal and tar sands, considered the “dirtiest” fossil fuels. Meanwhile, environmental pressures on portfolios have grown for investors at the same time that the energy sector has declined. 

Extracting oil from tar sands in huge resource areas like northern Alberta is difficult, and has drawn fire from environmentalists who oppose the expansion of the Keystone XL pipeline. President Joe Biden recently killed that expansion, a decision critics say the White House may come to regret when oil prices tick upward once more. 

More institutional investors are pledging to hold asset managers accountable for ESG investments. Last year, the investment chiefs of eight of the largest Canadian pension plans demanded investors and companies disclose their ESG performance to the allocators. 

Related Stories: 

University of California Now Fossil Fuel Free, Cornell Votes to Halt Carbon Investments

Georgetown Is Latest University Pledging to Unload Fossil Fuels—Someday

Cambridge University to Divest from Fossil Fuels by 2030

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Home > News > Pensions > House Includes Pension Reform Plan in COVID-19 Relief Bill
Pensions

House Includes Pension Reform Plan in COVID-19 Relief Bill

The provision would beef up the PBGC and provide a boost for multiemployer and single-employer plans. But it would also freeze COLAs.

By Michael Katz


The House Ways and Means Committee has included a pension reform provision in a COVID-19 relief bill that would create a special financial assistance program to help multiemployer pension plans and extend amortization periods for single-employer plans.

The Butch Lewis Emergency Pension Plan Relief Act of 2021, which is included in the bill, would create a special financial assistance program under which cash payments would be made by the Pension Benefit Guaranty Corporation (PBGC) to financially troubled multiemployer pension plans so they could continue paying retirees’ benefits. The money would be provided to PBGC through a general Treasury transfer.

Multiemployer pension plans eligible for the program would include plans in critical and declining status, and plans with significant underfunding that have more retirees than active workers in any plan year beginning in 2020 through 2022. Additionally, plans that have suspended benefits and certain plans that have already become insolvent would also be eligible.

The plans would have to apply for the special financial assistance, and, if approved, the payment made by PBGC would be in the form of a single, lump sum. The amount of financial assistance would be equal to the amount required for the plan to pay all benefits due during the period beginning on the date of enactment and ending on the last day of the plan year ending in 2051. Plans would also be required to invest the amounts in investment-grade bonds or other investments as permitted by PBGC.

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Under the legislation, a multiemployer plan could also retain its funding zone status as of a plan year beginning in 2019 for plan years that begin in 2020 or 2021. A plan in endangered or critical status would not have to update its plan or schedules until the plan year beginning March 1, 2021. This is intended to provide a plan with flexibility and minimize the administrative burden from the economic and financial turmoil resulting from the pandemic.

A plan in endangered or critical status for a plan year beginning in 2020 or 2021 could extend its rehabilitation period by five years. This is intended to give a plan more time to improve its contribution rates, limit benefit accruals, and maintain plan funding.

The proposed legislation would also increase the PBGC multiemployer plans’ premium rate to $52 per participant starting in calendar year 2031, and it would be indexed for inflation.

In addition to relief for struggling multiemployer plans, the bill also provides financial help for single-employer pension plans. Lawmakers say interest rate and market volatility during the pandemic mean plans need more time to amortize funding shortfalls. The current legal requirement is to amortize funding shortfalls over seven years; however, the provision would allow this to be done over 15 years.

The proposed legislation also calls for a cost of living adjustment (COLA) freeze. Under current law, various qualified retirement plan limitations are indexed for inflation. For 2021, the annual contribution limit for defined contribution (DC) plans is $58,000, the annual defined benefit (DB) limit is $230,000, and the annual compensation limit is $290,000. The legislation would freeze these limits starting in calendar year 2030.

The addition of pension reform into the COVID-19 relief bill was praised by the Teamsters union.

“The financial distress many of these plans are facing is beyond the control of retirees and workers,” Teamsters General President Jim Hoffa said in a statement. “While multiemployer pension plans have been buffeted by economic turbulence over the decades, the situation has been seriously exacerbated by the current pandemic.”

However, the addition of the proposed reform was panned by the National Taxpayers Union, a nonprofit taxpayer advocacy group, which said it would add tens of billions of dollars to the COVID-19 relief bill. It also said that because the need for pension reform predated the pandemic, it doesn’t belong in a COVID-19 relief bill.

According to the official estimates from the Joint Committee on Taxation, extending the amortization for single-employer plans will cost nearly $23 billion over the next 10 years. Estimates for the cost of multiemployer plan relief are not yet known and will be provided by the Congressional Budget Office (CBO).

Related Stories:

Time Runs Out for Multiemployer Pension Reform in 2020

Outlook Improves for Multiemployer Reform in 2021, 2022

Senators Urge Pelosi to Include Pension Fix in Next Stimulus Package

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