See also, counterpoint by Ben Richmond '13: Administration should be more transparent on divestment issue.
While Scott Budde (“Administration’s ‘misinformed’ response to divestment raises more questions than it answers”) is surely correct that fossil fuel companies help cause serious environmental problems, this is not reason enough for Bowdoin to divest from them.
Bowdoin does more “good” by maximizing the resources it has: by promoting top-rate scholarships (including environmental) and educating undergraduates, than it would by diminishing its endowment—no matter how well-intentioned the causes may be. As President Barry Mills said, Bowdoin “is not a political action committee.”
It is exceedingly improbable that divesting from fossil fuel companies would improve the environment.
Bowdoin’s endowment constitutes a discountable fraction of total investments in companies that use or produce fossil fuels, and there is no evidence that Bowdoin’s divestment would lead a critical mass of other investors to follow suit.
By contrast, there is a real possibility that divestment could seriously harm Bowdoin’s finances. Mr. Budde states, but does not explain, his incredulity toward Mills and Senior Vice President for Investments Paula Volent’s claim that divestment from fossil fuel companies would result in a $100 million loss to the endowment. Budde makes the unsupported contention that there are alternative fossil-free investment strategies that Bowdoin could easily pursue.
But he does not address numerous issues that are critical to his case:
- Whether, as Volent maintains, those alternative strategies would require divestment from high-performing funds (as opposed to merely securities).
- Whether, as a 25 percent portfolio turnover suggests, those alternative strategies would have significant startup costs associated with them.
- Whether divestment would disrupt the portfolio’s balance, causing ramifications far beyond divestment from fossil fuel companies or entities with a direct stake in them.
For all Mr. Budde says, any one of these propositions could easily be true. And any one of them could imply enormous costs to the endowment.
Mr. Budde also neglects the precedential impact of Bowdoin’s making a politically-motivated divestment.
To be sure, it does not follow as a matter of logic that because Bowdoin divests from fossil fuel companies it therefore must divest from the other (innumerable) companies engaged in regrettable practices. But rhetorically, the precedent is powerful, and increases the probability of success in future pushes for divestment.
This may well warm the hearts of activists to the core, but it should give pause to those who see that in our economic system, institutions on a budget cannot serve the common good without dealing in the current financial market.
Finally, it is sometimes proper for colleges and universities to take political stands even on issues, such as the environment, that are of urgent importance to us generally but are well beyond the institutional interests of academia. But there should be a strong presumption against it.
Space for untrammeled freedom of thought is precious, and fragile enough that we should be reluctant to a point just shy of paranoia to do anything to legitimize the idea that universities are properly political-activist entities—entities whose interests are rarely served by untrammeled freedom of thought.
Obviously, the risk is remote that if Bowdoin decided to divest from fossil fuel companies its academic values would be subverted. But the point of a presumption is to override the judgments we’d otherwise make in circumstances where, in aggregate and over the course of time, those judgments pose a risk to something we hold dear.
This precisely describes the risk of creeping politicization of the academy when colleges and universities, however well intentioned, decide to enter politics.
In short, it is seriously unlikely that Bowdoin’s divesting from fossil fuel companies will do any good for the environment, and quite likely that it will harm the endowment.
Even without a presumption against the propriety of Bowdoin’s taking political stands this would be enough to conclude that divestment is improper.
With the presumption in place, the right course is crystal clear.
Miles Pope graduated Bowdoin in 2009.