See also, counterpoint by Miles Pope '09: Endowment must be used for education, not politicization.
Two weeks ago Bowdoin’s administration publicly expressed its views on divesting the endowment from fossil fuels in a statement to the Orient. President Barry Mills and Senior Vice President for Investments Paula Volent argued that although only 1.4 percent of the endowment was invested in the top 200 fossil fuel firms, divestment would have cost the school $100 million dollars.
These numbers are alarming, yet it is strange that the administration provided a figure for estimated losses from divestment without publicly releasing a study to back up its numbers. Students should not take the administration’s numbers at face value and should continue to advocate for more information on the feasibility of divestment.
Ultimately, divestment is one more way to address climate change, and better information on this issue would clarify whether it deserves continued student support.
There are several incongruities in the administration’s position on divestment. Like most large institutions, Bowdoin invests its endowment through individual funds, each with managers who oversee day-to-day trading, rather than investing in financial instruments like stocks and bonds.
According to Volent, 25 percent of Bowdoin’s funds would have to be reinvested if divestment were to be adopted.
First, the investment office did not disclose which fossil-free index it chose for its study. It likely could have studied one of its higher-performing indices. In addition, it is unclear whether the best way to divest would be, as the investment office study assumes, to simply substitute funds exposed to fossil fuel firms with a fossil-free index. If 25 percent of Bowdoin’s current funds would be affected by divesting from the top 200 fossil fuel companies, 75 percent of Bowdoin’s other funds would not be exposed. It would seem as though Bowdoin could switch the endowment to these high performing funds which are not socially responsible per se, but are also not exposed to fossil fuels.
Secondly, the administration claims 1.4 percent of the endowment is invested in fossil fuels. However, endowment holdings presumably fluctuate constantly as fund managers oversee day-to-day trading. Is the 1.4 percent figure an average of fossil fuel holdings? Additionally, depending on the market, couldn’t much more of Bowdoin’s endowment be invested in fossil fuels in the future?
Bowdoin’s administration could answer students’ questions about divestment by releasing the calculations behind their reasoning.
If the administration is not forthcoming with a public statement that more precisely describes how it predicted Bowdoin would lose $100 million through divestment, students may assume the data is not being released because its methods are questionable.
The reason activists across the country are campaigning to divest college endowments from fossil fuels is that divestment is a way to do more to address climate change. If major universities and colleges across the U.S. divested their endowments, more companies would feel obligated to increase sustainability initiatives and the U.S. would be closer to enacting comprehensive climate change legislation.
But if we reach an impasse on divestment—which unfortunately seems imminent—let’s not lose sight of the most important goal: our commitment to the environment. If divestment doesn’t work out, maybe we could look into creating a carbon neutral endowment, as Scott Budde ’81 suggested in a recent letter to the Orient.
Bowdoin could also set up an endowment fund that specializes in sustainable investments, allowing alumni to give to Bowdoin in order to spur growth in sustainable businesses. Bowdoin could also speed up implementing some of the proposals in its carbon neutrality plan to bring the campus closer to being carbon-free.
One proposal is to create a 2,000 kW solar photovoltaic (PV) installation on land acquired at Brunswick Naval Air station, but the project has been postponed for up to 10 years based on expected solar PV prices.
It’s not time to give up on divestment. Students should continue to advocate for better information on the implications of divestment and how exactly Bowdoin manages its endowment.
Nevertheless, let’s keep the divestment issue civil, transparent and constructive so we can still come together and do more to address climate change in the coming years at Bowdoin.
Ben Richmond is a member of the Class of 2013.