Dear President Liebowitz, the College administration, and the Board of Trustees,
Thank you for your transparency in your statement regarding divestment and the Board’s internal processes and preliminary proposals. We appreciate the time you have dedicated and your willingness to collaborate with us as we work to divest our endowment of fossil fuels. While an increased commitment to socially responsible investment principles is a step in the right direction, it is not the end of this debate.
Liebowitz claimed that a number of critical questions regarding the College’s decision on divestment remain unanswered and asked whether divestment would have a practical impact. Past divestment campaigns targeting the apartheid regime in South Africa and the tobacco industry helped to stigmatize powerful forces wielding undue influence against the public good. In the 21st century, divestment provides an opportunity to remove the social and political license that allows the fossil energy industry to profit by passing on the costs of its pollution to future generations.
Liebowitz also asks if divestment is the most effective way to address reducing greenhouse gas emissions. This should not impact our decision. The fight against global climate change will require massive shifts in the economy, personal habits and public policy. Divestment is one tactic among many that will hasten this shift.
What impact would divestment have on our returns? Growing evidence suggests that the impact, if any, will be positive. Impax Asset management determined that a portfolio that excluded fossil energy stocks would have outperformed the MSCI world index by an annual rate of 50 basis points over the last five to seven years. Even compared with an “active” investment strategy, a portfolio that excluded fossil fuel stocks in favor of renewable energy and energy efficiency equity would perform 41 basis points greater each year. The five largest oil companies delivered returns of 1.8 percent over the past year compared with the S&P 500’s 16 percent. Although Investure outperformed this index, it seems improbable that a significant part of that performance comes from the small portion of the endowment invested in the 200 largest fossil energy companies. The Financial Times reported last month that for the industry, “costs were up and returns were down – even with oil prices at more than $100 a barrel.” Goldman Sachs released a statement warning that the “window for profitable investment in coal mining is closing” while according to Deutsche Bank, “for big oil companies, the writing is on the wall. Shrink and liquidate over the coming five years, before it is too late.” If fossil energy stocks underperform the market at the peak of their profitability, how can we expect them to perform as the world transitions to renewable energy sources?
We recognize the complications posed by the co-mingling of our funds through Investure. But divestment is possible without severing this relationship. Active divestment campaigns exist at four of the six educational institutions managed by Investure, and five of its other clients have missions that contain explicit environmental or social justice commitments. If Investure is unwilling to serve its clients by allowing them to divest, we must ask ourselves whether we can consider an endowment over which we have so little say to be responsibly managed.
In response to Liebowitz’s final question regarding the potential for future calls for divestment from other industries, we challenge the administration to find an industry that operates in such direct contradiction to the mission and work of the College. Environmental stewardship is one of the college’s most explicitly stated and practiced tenants. The College’s mission statement includes a clear commitment to integrate “environmental stewardship into both our curriculum and our practices on campus.” The management of our endowment is integral to everything we do on campus, and its impact reaches far beyond the Green Mountains.
Middlebury has long been at the forefront of institutional sustainability, even before programs like recycling and composting were fashionable. The College has made bold commitments like carbon neutrality because it knows these kinds of steps are the only way to truly mitigate the worst effects of climate change. This innovation has attracted many students to Middlebury. We are proud to be members of a community that has been a leader in environmentalism, from the first environmental studies program in 1965 to the founding of 350.org in 2007. We cannot turn our backs on this legacy.
We ask the President, administration and Board of Trustees to continue exploring pathways to divest. We hope to keep working with the administration towards a community whose finances no longer contradict our mission of “integrating environmental stewardship into our curriculum and our practices on campus.” Martin Luther King Jr. wrote that “in this unfolding conundrum of life and history, there is such a thing as being too late.” As people continue to suffer from environmental injustice and the climate crisis grows more dire, we cannot afford to ignore reality. We cannot afford to be late. We must be early. We must push ourselves and our peers to take further action, even when the path presented is not the most convenient.
In short, we must lead. Middlebury has embraced this challenge in the past, and we must continue to work for a sustainable planet.
Submitted by DIVEST MIDDLEBURY
