Princeton University's endowment is reversing its commitment to divest from publicly traded oil and gas companies, just four years after pledging to exit such holdings as part of a strategy to achieve a net-zero portfolio.
In a statement released on Monday, Vincent Tuohey, President of the Princeton University Investment Company, known as Princo, confirmed that the board-mandated decision to divest from thermal coal and oilsands companies remains in effect. However, the broader divestment from all publicly traded fossil fuel companies will no longer be pursued.
Rationale Behind the Reversal
“It’s not obvious that Princo’s initial approach has moved the endowment meaningfully closer to net-zero, nor is it obvious that major energy companies will be out of bounds for a net-zero endowment,” Tuohey stated. He added that the energy sector will play a “significant role” in the clean-energy transition, suggesting that excluding these companies could hinder the endowment's ability to support the shift toward sustainable energy.
The decision comes amid financial pressures facing the university. Princeton’s president warned in February of economic challenges, noting that the institution can no longer rely on strong endowment returns at a time when political threats to its finances are increasing. The endowment, valued at US$36.4 billion as of June 2025, generates approximately 65% of the college’s operating revenue, making it one of the most endowment-dependent universities in the United States.
Performance Concerns
In recent years, Princeton’s endowment returns have lagged behind those of its peers. According to data compiled by Bloomberg, the fund’s three-year annualized return as of June 2025 was the lowest among Ivy League schools at 4.3%. Its 20-year annualized return tied for second with Brown University.
Tuohey emphasized that the reversal will provide “greater flexibility in managing an endowment whose resources are critical for financial aid and scientific research – including climate research – at a time when our sector is under financial strain.” He noted that self-imposed constraints on investment strategy can have outsized impacts on the school.
Market Context
The decision also reflects the strong performance of the oil and gas sector. An S&P index of oil and gas production companies, including major players like Exxon Mobil Corp. and Chevron Corp., has gained 75% over the past five years. This robust performance likely influenced Princo’s reassessment of its divestment strategy.
Tuohey, who took over the fund in 2024 following the retirement of Andrew Golden, acknowledged that the initial approach may not have been the most effective path to achieving net-zero goals. The school newspaper, the Daily Princetonian, first reported the investment decision.
While the reversal marks a significant shift in Princeton’s climate-related investment policy, the commitment to divest from thermal coal and oilsands remains unchanged. The university continues to face scrutiny from environmental advocates who argue that fossil fuel investments contradict its climate research and sustainability objectives.
