The Content of our Character

On Aug. 28, each member of the Middlebury community hoping for a statement from the College concerning the divestment of our endowment from fossil fuel companies received what they had desired. However, the news contained in the email sent out by President of the College Ronald D. Liebowitz wasn’t what many people were hoping to hear: Middlebury College will not be divesting its endowment any time soon. I have little doubt that this decision comes as a surprise to many of the individuals who have been following and pushing for the movement to divest, but that fact should make us no less inclined to believe that the College dropped the ball.

The email sent out by Liebowitz and its accompanying fact sheet cite important points pertaining to the financial nature of our endowment that form the basis of the argument underlying the Trustees’ decision not to divest. The first concerns the purpose of the endowment. Primarily, our nearly $1 billion endowment is meant to serve as “a trust that exists or the benefit of current and future generations.” The endowment helps provide a certain percentage of a current year’s operating expenses ($52 million, or 18% of the FY2014 budget), and its growth and returns ensure that it can meet the rising costs of running a college like Middlebury.

Second, the endowment is managed by an independent investment firm, Investure, that works with 150 independent managers to invest the $10 billion portfolio of funds belonging to Middlebury and 12 other colleges, universities, and foundations. This aspect adds an element of complexity to the investment of our endowment – divestment would not only require an overhaul of the way that Investure has structured its portfolio, but the consent of the other 12 consortium members.

We’ll consider the final point to concern the uncertainty that the administration says would accompany divestment. Given the “lack of proven alternative investment methods,” efforts will instead be directed instead towards making “positive differences” including developing a set of “Environmental, Social, and Governance principles” to guide future review of the College’s investment portfolio, creating ESG guidelines to help monitor investments and operations, and directing more of the endowment toward ESG ventures.

The President assures us that these measures will help alleviate many of the same harms that proponents of divestment claim our stakes in fossil fuel companies cause – and they very well may. However, positive action in one area of our conduct does not, and cannot, simply make up for inaction or morally wrong action in another. As far back as the Greeks, ethics has asserted that our characters are crafted by virtue of our actions. Middlebury gets a lot right in terms of environmental stewardship, and may continue to do so in the future. However, even the most stringent “ESG principles” won’t be able to wipe the blemish off our collective character that comes from our contentment with our morally flawed investment practices, regardless of the degree to which those practices may be dictated by the imperfect markets they operate in.

Yet at the same time, those practices have done exactly what the College has wanted them to do – i.e., to help ensure that the quality of a Middlebury education is as high as it can be. In that sense, I do not think the College has failed, in fact, far from it. But the fact that there is some large degree of dissonance between the pragmatic and moral aspects of the way we handle our money should set off some red lights, and it certainly has already. Red lights, however, can only go so far.

The main reason the Trustees have decided not to divest is the lack of a viable alternative. For as much as we hear about creativity and innovation here on this campus, this sounds an awful lot like settling to me. But we, the students, don’t have to settle for that answer and should instead take it as a challenge – one to show the administration that we don’t have to settle for the way things are and that divestment can be not just viable, but profitable. This is where the typical environmental factions can’t do it alone.

To all of you Economics students taking the new finance courses this year: put those skills to the practical test and slap on your resume that you provided your school’s administration with a profitable, sustainable investment strategy. New First-years: start coming up with solutions to these problem now because you can probably learn stuff hundreds of times faster than I can. Down the road, future generations of students like us won’t care how much the endowment grossed in FY2014. What will be valuable to them is the character of the place they will call home for four years.