January 12, 2021

Creighton Reverses Course, Plans Long Term Divestment

On the last day of 2020, Creighton University – a small Jesuit school in Nebraska – announced a reversal of its divestment policy and plans to phase out fossil fuel investments from its $587 million endowment.

This would not be the first time a university has made a gesture like this. However, it is important to note that schools who have made a similar commitment, have found that targeted divestment campaigns are far more challenging to execute than divestment proponents would have you believe.

Creighton’s Announcement

Back in September, Creighton University’s Board of Trustees passed a resolution to make changes to the school’s investment policy. The new investment policy specifically states that Creighton will sell off public securities of fossil fuel companies within five years and end holdings in private fossil fuel investments within 10 years. Meanwhile, the school will continue to research sustainable investment solutions.

Though the Board passed the resolution in September, they did not announce their decision until New Year’s Eve. Creighton President Rev. Daniel S. Hendrickson, SJ, Ph.D., in a statement said he has been reassured that the divestment decision will not make a negative impact on the endowment:

“This modified policy signifies our strong commitment to sustainable investing – and sustainability in general across the University – and, according to our investment advisors, it can be accomplished without a negative impact on the strength and overall performance of our endowment, which greatly serves the mission of the institution.”

But as seen through Georgetown’s recent experience, divesting is not an easy process.  Though the university announced its plan to divest back in February, the student newspaper recently reported that the endowment still holds significant investments in the fossil fuel industry, attracting much criticism.

Background on the decision

In early 2019, students at Creighton university rallied the university administration to entertain the idea of divestment.  Students passed a referendum calling for such a policy. Months later, the Administration officially rejected such plans, saying in a statement that it “does not align with our goal of a properly diversified endowment, and could negatively impact Creighton and our students. It is important that the University follows a disciplined investment approach in its endowment, with a broad diversification strategy designed to achieve long-term returns.”

Fast forward about a year later, and Creighton decided to reverse course. After a series of protests, Creighton University President Hendrickson announced the university would reduce its “investment exposure to fossil fuel companies” by 3.2 percentage points, or 5.7 percent of its overall investment portfolio.

President Hendrickson’s direct appeal to both students and activists alike was not fully received by the pro-divestment community. Many students and activists saw nothing less than full divestment as a feasible outcome to the ongoing divestment debate on campus. Nevertheless, the pressure continued.

Conclusion

Of the schools that have already made divestment decisions, many have come to realize the challenges of actually removing them from their portfolio. Investments are designed to be well diversified to help reduce risk and increase returns, which is why it can be a struggle to exit out of certain investments and develop alternate strategies.