Trustees at American University voted on Friday to keep the fossil fuel-related investments held in the school's $550 million endowment fund.
The decision was a major disappointment for a student-led campaign to push U.S. universities to divest their fossil-fuel assets. Four percent of American University's endowment is invested in fossil fuel companies.
The Washington, D.C.-based university said it "focused on the singular question of whether divestment would have a significant effect on investment returns," the board of trustees said in a statement. It said its financial advisers "could not provide assurance that the effect of divestment would not be insignificant," thereby determining the board's decision.
The vote comes on the heels of a lawsuit filed by students against Harvard University to compel that school to get rid of its fossil-fuel investments, alleging that they harm future generations by contributing to global warming.
The divestment movement has enjoyed wins and suffered losses over the past few months. In May, Stanford University, one of the most prestigious and wealthiest in America, announced it would drop coal company holdings from its $18.7 billion endowment fund. In September, the University of California opted to maintain its investments, a decision echoed by other schools, including Harvard.
The campaign at American began two years ago, say supporters, who touted it as "one of the leading campaigns nationally" that guided other campuses to start similar movements. Earlier this week, amid frigid weather and pouring rain, an estimated 300 students at American rallied for fossil fuel divestment.
American seemed like fertile ground for such a movement. In recent years, the school had moved away from electricity sourced from fossil fuels and said it has committed to becoming carbon neutral. It installed solar panels on campus, built garden rooftops, and fueled buses with biodiesel. It recently announced it would purchase 50 percent of its power from solar energy generated at a project in North Carolina.
"We made the argument that divestment is the moral thing to do," said American University senior Deirdre Shelly, a campaign advocate. "We want the school to put its money where its mouth is. If you're not going to source from fossil fuels, why would you invest in them?"
American estimated divestment would double its annual management fees from $1.1 million to $2.2 million, and instead favored creating a green investment fund and engaging shareholder advocacy.
(Reporting By Robin Respaut; Editing by Peter Galloway)