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November 20, 2015

Columbia Advisory Committee Rejects Divestment

Columbia University’s Advisory Committee on Socially Responsible Investing released a new report today, rejecting Columbia Divest for Climate Justice’s proposal to the board of trustees, making Columbia the latest high-profile institution to reject divestment along the likes of MIT, Yale and Harvard. From the committee’s report:

“The more the Committee has deliberated over the possibility and the scope of a possible divestment recommendation, however, the stronger has become the feeling that divestment is too narrow a lens through which to consider Columbia University’s engagement with the climate change issue.” (emphasis added)

While Columbia Divest has demanded complete divestment from the world’s top 200 fossil fuel companies by 2020, the advisory committee instead suggested focusing on research, reducing the school’s carbon footprint and supporting renewable technology — an approach similar to that of MIT, whose announcement not to divest was released just last month.  Meanwhile, Columbia’s advisory committee concluded blanket and indiscriminate divestment does nothing more than offer a symbolic gesture. More from the report:

“A principal basis for the Committee’s decision not to support the CDCJ petition is that is calls for broad-cased divestment without regard to whether such divestment would affect the future behavior of any particular firm.  Divestment would be undertaken solely as a matter of symbolic speech.  The strategy draws no distinctions based on the conduct of the firms in question, even where differences in conduct materially affect the firm’s carbon burden.” (ACSRI Report, emphasis added)

This is not the first time divestment activists at Columbia have had their requests denied.  In 2013, Columbia Divest offered up a nearly identical proposal demanding full divestment and freezing any new investments in fossil fuels.  That petition was rejected on the grounds that “(1) that there must be broad consensus in the Columbia community, (2) that the merits must lie clearly on one side, and (3) that there be no feasible alternative to divestment.”

This time, it appears Columbia’s advisory committee has officially put an end to the question of broad divestment, explicitly stating how warped a strategy it really is. The report not only notes that the increased use of natural gas is “one immediate way of reducing the carbon footprint of energy production,” but also highlights that “the stigma of divestment is unlikely to lead the firms to turn away from their core business.”

Though Columbia’s investing committee rightly points out that an overly broad divesting policy makes little to no sense when considering lowering carbon emissions, the decision also makes no sense from a financial standpoint.  As DivestmentFacts.com has mentioned before, a study from Prof. Bradford Cornell analyzed the endowments from five prestigious universities—including Columbia—to see just how much money divesting would cost these schools.  He found that if Columbia were to divest, the endowment would lose more than $14 million dollars every single year and would have suffered an eight percent loss over the span of 50 years.  Since the endowment ultimately has the fiduciary duty to maximize financial returns to the benefit of students and faculty, divesting would directly contradict that mandate.

Bottom line: No matter how you slice it, divestment is the wrong choice for the financial health of endowments and for the environment. Glad Columbia got the message.