The university's 3,200 professors, librarians and program directors began voting Monday on a motion calling on the university's board of governors to stop making new investments related to fossil fuels and sell all existing holdings within five years.
The results, which are expected in about two weeks, won't be binding, but a Yes vote would force the board to consider the proposal.
If successful, the school would join more than a dozen university and college campuses across North America, including Montreal's Concordia University, that have used their significant investment portfolios to wade into the climate-change debate.
"Divestment is one of a number of tools the climate movement is using to try to transform the energy system from one reliant on producing greenhouse gases to one that's based on clean energy," forestry Prof. George Hoberg, who is championing the referendum, said in an interview Monday.
Investments related to oil, gas and coal companies currently make up about 10 per cent of the university's endowment fund, which is worth almost $1.3 billion.
Students voted last year overwhelmingly in favour of divestment.
The university responded with a responsible investment policy that set out five conditions that must be met before divestment of any industry would be considered, including evidence that such a measure would be effective and would not harm the school's financial interests.
The university said in a statement that a successful referendum vote would trigger a review by the board of governors.
Last month, Concordia University became the first Canadian university to implement fossil-fuel divestment, though only on a limited basis. The divestment policy applies to a $5-million so-called sustainable investment fund, which represents a fraction of the school's endowment of more than $130 million.
Student groups have started fossil-fuel divestment campaigns at more than two dozen Canadian schools and more than 200 in the United States. The strategy is modelled after a movement in the 1980s to divest from companies connected to South African apartheid.
The board of governors at Halifax's Dalhousie University, which invests about $20 million of its $486-million endowment in oil, gas and coal, rejected a divestment proposal last November.
A report prepared by the board's investment committee concluded divestment is purely a symbolic measure that "would not constitute an effective response to climate change."
McGill University's board rejected a fossil-fuel divestment proposal in 2013.
The University of Toronto has a divestment policy that dates back to the apartheid era, which sets out a process to remove endowment funds from specific industries. It was last used to sell off investments related to the tobacco industry in 2007.
A student group has submitted a plan to divest the endowment fund of stocks related to 200 energy companies. A committee of professors is reviewing the proposal, which could end up at the school's board of governors by the end of the year.
Milan Ilnyckyj, chair of the group behind the Toronto campaign, acknowledged a single university has little power to influence the fossil-fuel industry, but he said that will change as more campuses join the movement.
"Universities, collectively, have extremely large endowments in the hundreds of billions of dollars," he said.
"The more large institutions that say, 'We don't think it's prudent to be investing in the fossil-fuel industry,' the more it will raise questions in the minds of everybody else."
Todd Pettigrew, a professor and former board member at Cape Breton University in Sydney, N.S., said he once supported the idea of an ethical investment policy, but he suggested it wouldn't be easy to implement.
"A lot of these big companies are involved in a whole lot of things besides just petroleum. A lot of these companies are in a lot of different energy areas, some of which are perhaps more ethical than others," said Pettigrew.
He suggested a better approach might be to consider individual investments on a case-by-case basis rather than putting in place a blanket policy.
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