UPDATED: Sept. 26, 2017 at 5:23 p.m.

More than two years after Syracuse University announced it would divest from fossil fuel companies, the university’s chief financial officer said there is no evidence the endowment has suffered as a result of divestment.

Amir Rahnamay-Azar, SU’s senior vice president and chief financial officer, said in an email that SU’s $1.25 billion endowment has increased investment performance by 12 percent in fiscal year 2017. The endowment is a pool of money collected from donors that is invested in the stock market. The funds are then used for scholarships and academic programs on campus.

The university’s growing endowment, in the wake of its headline-grabbing decision to divest from fossil fuels, may be a signal to other schools that divestment is a viable option, experts said.

Part of the opposition to divestment is purely financial. Universities are worried endowments without direct investments in coal, oil and gas companies will lose money. The fact that SU’s endowment has made it through divestment unscathed offers one case study with positive results for worried financial managers.

“It’ll be interesting to see at places like Syracuse, if performance returns continue to do well. I think that does send a message across the board that this is one option,” said Brigid Peterson, an endowments and foundations adviser at Brown Advisory, an investment management firm.

The decision to divest put SU at the forefront of the movement in March 2015. At the time, SU was the first university with an endowment of more than $1 billion committed to removing direct investments in fossil fuel companies.

By the time SU made a formal divestment announcement, the endowment already was not directly invested in any fossil fuel companies.

SU remains one of about 50 universities that has taken any sort of investment stance against fossil fuel companies, according to divestment advocacy organization Fossil Free. SU is also one of just about 25 schools committed to divesting from the entire fossil fuel industry, not just from companies that extract coal and tar sands.

The university’s original announcement, though, only applied to direct investments. SU still has indirect investments in fossil fuel companies, through commingled funds, which are pools of money from several investors blended together and managed by a third party.

Research about post-divestment endowment performance offers mixed conclusions. Some studies found that divestment has little-to-no impact on returns. Other studies, including a June 2016 study from Arizona State University, found divestment can result in a 2 to 12 percent loss of the endowment’s value.

Chancellor Kent Syverud said in October 2015 that he did not expect the divestment decision to have a significant effect on SU’s endowment, but said it could slightly affect endowment in either direction.

Calling for divestment has been a tool deployed by activists for the past 50 years. It was used to fight the apartheid regime in South Africa and to choke tobacco companies’ profits.

More recently, divestment has gained traction on college campuses as part of the BDS movement, which aims to boycott, divest from and sanction Israel. Divestment movements helmed by climate change activists only started to become prolific on college campuses in the last five years.

When weighing whether to divest from the fossil fuel industry, universities have to consider that they stand to lose any future gains from fossil fuel stocks, which are typically seen as reliable investments with high returns, experts said.

“The trade-off a university has to make is if they divest from fossil fuels, they might have less money in the endowment for scholarships and to support the basic functions of the university,” said Ken Redd, director of research and policy analysis at the National Association of College and University Business Officers.

To mitigate those losses, some universities have stopped short of divesting from the entire industry and instead have opted to divest from coal companies only, which poses less risk.

Stanford University’s Board of Trustees, for example, said last year when explaining the decision to divest from coal but not the fossil fuel industry as a whole that oil and gas companies are “integral” to the global economy. Boston University, The University of California System and The University of Washington have taken similar action.

Climate change activists at each of these schools, which all have endowments of more than $1 billion, have since derided that decision.

SU announced it would divest from fossil fuels in March 2015 after a groundswell of student protests. Divestment was one demand of THE General Body, a coalition of student organizations that, in 2014, staged an 18-day sit-in to protest the administration. The announcement was met with optimism from protesters and pushback from a few donors.

“… there were some donors to this university who were not happy with us when that decision was made,” said Bea González, vice president for community engagement at SU, in December 2015.

When SU announced it would remove direct investments from the fossil fuel industry, it was unusual at the time. But Redd said just because SU has been able to stave off any losses from divestment does not mean other universities will have the same success. Some schools may not be able to replicate those results because each endowment is structured differently, he said.

Still, he said, SU’s increasing endowment may interest financial advisers at other universities.

“Other schools will want to talk to the board and the people running the endowment and ask what helped those returns,” Redd said.

CORRECTION: In a previous version of this post, Brigid Peterson was misnamed. The Daily Orange regrets this error.

Published on September 24, 2017 at 10:38 pm

Contact Rachel: rsandler@syr.edu