Climate Risk And Prudential Fiduciaries: TIAA Vs TIAA-Divest

Urged on by faculty, students, and staff, the Cornell University Board of Trustees voted to halt new fossil fuel investments in 2022, after taking a serious look at the risk climate change posed to Cornell’s $6.9 billion endowment. Just a year earlier, environmentalists had launched their own inquiry into the retirement fund behemoth TIAA, which manages $1.3 trillion in assets, including $78 billion in fossil fuels.¹ Shocked by what they found, the environmentalists launched TIAA-Divest, making the moral argument against investing in fossil fuels given their destructive impact on our planet. TIAA pushed back, citing fiduciary duties. Not giving up, TIAA-Divest launched an inquiry into the meaning of fiduciary duties for a retirement fund in today’s “changed climate.”

TIAA’s fiduciary duties and fossil fuels

According to the Employee Retirement Income Security Act of 1974, a fiduciary shall discharge their duties solely in the interest of the participants and beneficiaries “with the care, skill, prudence, and diligence under the circumstances then prevailing…”