October 25, 2018

Talk at Middlebury Should Focus on Solutions, Not Divestment

Middlebury College is making headlines once again as divestment activists use the institution’s sustainability goals to move it towards divesting its endowment from fossil fuels. Last week, Middlebury President Laurie Patton wrote an email to the school’s students, faculty, and staff announcing that the college’s board of trustees would be working on a series of efforts to improve its environmental footprint, including asking the school’s endowment manager to “address the composition of [Middlebury’s] endowment with respect to fossil fuels.”

This conversation is a familiar one for Middlebury, having already had a large debate about divestment six years ago. What’s also familiar is the resounding ‘no’ that has followed each call to divest. In 2013, Middleburg environmental studies professor and divestment “movement” founder, Bill McKibben, declared war on fossil fuel investors, calling for schools and pension funds in his home state to divest. Middlebury College responded to this call with a hard pass.

In the firm words of former Middlebury President Ron Liebowitz,

“Given its fiduciary responsibilities, the board cannot look past the lack of proven alternative investment models, the difficulty and material cost of withdrawing from a complex portfolio of investments, and the uncertainties and risks that divestment would create.”

Another blow came for McKibben when, in 2015, McKibben’s home state of Vermont also rejected divestment. The Green Mountain state dismissed calls to divest its state pension fund from fossil fuels for the third time in two years. The committee that oversees Vermont’s $4 billion fund voted unanimously to continue investing in the energy industry, citing the financial risks of divestment for its pensioners.

According to Vermont State Treasurer Beth Pearce,

“The evidence that I’ve seen to date tells me that there is a loss to the fund [if we divest], and it’s substantial. And as a fiduciary, I’m compelled to recommend against divestment.”

Pearce continued, stating that while she supports efforts to mitigate climate change, removing the fund’s fossil fuel assets would cost the pension fund a staggering $9 million each year – a risky decision for the 48,000 Vermonters who rely on the pension fund for retirement benefits.

In addition to the financial risk, divestment does nothing to support the environment.  Middlebury President Laurie Patton has committed herself to guiding Middlebury through new and ambitious environmental goals since stepping into the role in mid-2015. As the email notes, trustees “strongly affirmed their belief that climate change is one of the most profound challenges facing our world today, and that future generations depend upon effective action and education in the present.” The fact remains that divestment is not that kind of decision. As there is no climate impact or tangible consequence for targeted companies, partaking in the ‘movement’ is merely symbolic.

Moreover, the response from Vermont was in no way singular – pension funds and universities around the country and the world have rejected this shortsighted movement as ineffective, citing their obligation to students, pensioners and taxpayers as well as real solutions that support the environment. Ultimately, the consequences of divestment fall on the people it is ‘supposed’ to help, with no discernable impact on the companies being targeted by the policy – companies that are also investing in technology to provide the energy we rely upon in a sustainable, environmentally conscious manner.

6 years ago, Middlebury agreed that their students deserved more than symbolic posturing — divestment was not worth the risk. Since the facts have not changed, neither should the conclusion reached this time around.