Will Kochtitzky ’16 makes the case for divestment as Neil Leary and Stephen Hietsch look on.
by Tony Moore
In anticipation of an upcoming visit by Bill McKibben, a vocal proponent of divestment, the student group Reinvest Dickinson brought the fossil-fuel-divestment debate to a wider audience at Dickinson on Thursday, April 4, with a focused discussion on whether Dickinson should divest its endowment from fossil-fuel companies.
On the heels of meetings on the subject with the Board of Trustees and others who oversee the college’s endowment, the discussion, Responsible Investing for a Sustainable Future, gave students and college administrators the opportunity to debate the issue and attempt to strike a balance between social responsibility and sustained financial health.
“Although some of the topics discussed today can be emotionally charged and polarizing,” said Reinvest Dickinson’s Andrew McGowan ’16, who opened the discussion, “each panelist came here to advance this conversation.” He then gave the United Nations’ Principles of Responsible Investment definition of “responsible investing,” which to many lies at the heart of the debate: "An approach to investing that explicitly acknowledges the relevance to the investor of environmental, social and governance factors and the long-term health and stability of the market as a whole."
The event was then turned over to the panel—Will Kochtitzky ’16 of Reinvest Dickinson; Neil Leary, director of the Center for Sustainability Education; Stephen Hietsch, associate vice president for financial operations and auxiliary services; Sebastian Berger, assistant professor of economics; and Alice Handy, president and founder of Investure, the company that manages Dickinson’s endowment.
“Investment means more than what we do with the endowment. We view it in much broader terms.” Hietsch explained the “triple bottom line” in terms of running Dickinson’s endowment: financial, social (including the funds spent on educating and preparing students to be engaged citizens) and environmental (campus sustainability initiatives, reducing carbon footprint and educating students on related issues).
“We are looking to achieve the maximum possible return to do the things we seek to do as an institution. But we do have other considerations beyond economic returns that we seek to achieve with the investment of those resources. We try to seek a balance between these three bottom lines. If we were to concentrate too much on one of these areas, it might be to the detriment of one of the other areas.”
“The U.S. depends on fossil fuels for 86 percent of its energy needs. … Now we have to spend one barrel of oil to get five barrels of oil out of the ground. [In the past, it took one barrel of oil to extract 50 barrels of oil.] … Obtaining these scarce fossil fuels gets riskier and riskier, such that the frequency of large-scale environmental disasters is increasing. … As an ecological economist, I conclude that we are dangerously dependent on a rapidly declining resource and the hidden economic, ecological and moral costs contradict our professed humanitarian ideals and probably outweigh the benefits.”
Via Skype, Handy explained that the college's investments are in comingled funds (with 13 other institutions), which would make divesting and staying with Investure, which serves only nonprofits, nearly impossible because individual stocks can't simply be plucked from these comingled funds. Divestment of any portion of the investment would require buy-in from the entire group. She noted that the Dickinson portfolio has outperformed the S&P 500 over time by about 1 to 2percent annually.
“We all know we are international leaders on sustainability in higher education; there's no question about that. To me, this means Dickinson College needs to seriously consider divesting the endowment from fossil fuels to help call national attention to global climate change. … Divesting the endowment from fossil fuels would be a symbolic act that would not only call national attention to climate change but also show students how Dickinson can further align its practices and values.”
“There seems to be more and more agreement that if this planet warms by 2 degrees centigrade or more, that poses pretty substantial risks to a variety of things: from food security, human health, fisheries, and different kinds of ecosystems. We should be doing everything we can to avoid exceeding that 2-degree threshold. … Regarding the endowment and divestment, my concern over the next several years is: What are we doing about our emissions? What are we doing about our energy use? How are we going to find a way to pay for [our pledged] reductions?”
Leaning toward divestment, and echoing a point raised by students from Students for Social Action and Earth Now in attendance, Berger said, "There needs to be consistency in what we preach—what Dickinson College holds up as its values—and what we do in terms of our investments."
Citing a Chronicle of Higher Education article: “If all institutions of higher education were to combine their endowments, their investments in the fossil-fuel industry would represent less than one half of 1 percent of the total investments in the fossil-fuel industry. So divestment would therefore not have any impact on the industry itself. I prefer to look at things such as symbolic actions as important, but here at Dickinson we teach a practical education, and we try to teach you to do things in a hands-on way, so I'd like to focus on things we can do here on campus instead of attacking the problems by divesting the endowment.” According to another Chronicle article, Hietsch pointed out, the cost of divesting to a school the size of Dickinson would be $81 million over a 20-year period. “That's the equivalent of 1,400 full scholarships here at Dickinson. If these numbers are correct, and we choose to divest, we'd need to be prepared to say, ‘What are we going to be willing to give up?’ ” He noted also that $16 million in the endowment is currently invested in sustainable industries, while $5.1 million is invested in the top 200 fossil-fuel companies from which 350.org is advocating divestment.
“At this stage, I'm agnostic on the question of divestment from the fossil-fuel sector and am very interested to see how the conversation evolves. For me, what's important in this is, is this an effective way to drive that larger change that I was talking about? Of avoiding putting 550 billion tons of carbon in the atmosphere? The open question is, ‘Is this an effective strategy by which public pressure can be brought to bear?’ I don't know. I tend to think that more direct action, such as what Dickinson is trying to do, driving down its own emissions and greenhouse gases ... seems to make more sense, but I'm interested to learn more about this and am interested in what people have to say.”
Published April 9, 2013