The University of Michigan Endowment Fund: Divesting from Fossil Fuels

by: Andrew Hoffman

Publication Date: September 9, 2020
Length: 16 pages
Product ID#: 1-764-030

Core Disciplines: Social Impact, Strategy & Management, Sustainability

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Teaching Note

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This case analyzes the University of Michigan (U-M) Endowment Fund’s capability and potential responsibility to divest from fossil fuels. Similar educational institutions, such as the University of California system, had cut fossil fuels from their portfolios, posing the question of whether U-M President Mark Schlissel would be able to do the same amid the university’s stakeholder pressures.

The university endowment managed $12.4 billion through 235 investment managers operating independently. A central question in the case is whether agents of a public university can shift to make more socially responsible investments while still delivering the desired revenue. President Schlissel had committed to carbon neutrality, but the university was still far from achieving the goal.

Teaching Objectives

After reading and discussing the material, students should:

  • Understand principles of responsible divestment and investment.
  • Recognize the complexities of university endowment divestment from fossil fuels, especially from different stakeholder perspectives at the University of Michigan.
  • Analyze a publicly-funded university’s social responsibility to the community.
  • Compare and contrast key similarities and differences in organizational structure and regional political pressure between the endowment funds at the University of Michigan and the University of California system.
  • Examine the implications of investing and divesting.