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(01/17/19 10:59am)
In recent months, we have become aware of concerns that divestment might present a risk to financial aid. Divest Middlebury would like to state publicly that the accessibility of our institution is a top priority for our group. We are a climate justice organization that stands for racial, gender and economic equity. Financial aid is a priority of our group as a whole and also of personal importance to many of our organizers. In writing this op-ed we also hope to stress the economic benefits of divestment and reaffirm our commitment to our fellow students. Arguments that pit financial aid and environmental justice against each other are unfair and inaccurate. These arguments ultimately put the burden for climate inaction on Middlebury College’s most vulnerable students.
There is ample evidence that divestment from fossil fuels is a financially savvy decision. In the official referendum ratified by the student body, SGA and the faculty, Divest Middlebury asked the Board to pledge to divest all holdings in the top 200 publicly traded fossil fuel corporations over a five-year time period. This extended timeline would allow the college’s investment managers to divest holdings in a controlled way, ensure low financial risk, and reinvest in more profitable and sustainable industries.
[pullquote speaker="" photo="" align="center" background="on" border="all" shadow="on"]There is no evidence that divested financial institutions experience increased losses.[/pullquote]
In 2010, MSCI, a prominent provider of stock market indices and analysis, created two investment indices of the largest 9,500 corporations, one that included fossil fuel investments and another that did not. Over the next five years, the fossil-free portfolio averaged an annual return .97 percent higher than the index including fossil fuel corporations. If $1 billion had been invested in the fossil free index in 2010, it would now be worth $2.24 billion, whereas its counterpart would be worth $2.13 billion. In 2017, fossil fuels were also the second worst performing sector in the S&P 500 stock market index, losing four percent compared to market gains of 19 percent. The Rockefeller Brothers Fund, a fortune that made its money in the fossil fuel industry, recently published a report stating that the Fund’s success has shown that fossil fuel divestment “can be done without causing harm to the overall performance of your investment portfolio.” These sentiments are shared by the nearly 1,000 other institutions that have pledged to divest. A recent analysis by investment strategist Jeremy Grantham found that there was no evidence that divested financial institutions experience increased losses. Similarly, another study demonstrates the potential financial penalties for not divesting, suggesting that New York State pension funds have lost $22 billion by staying invested in fossil fuels.
Stranded assets theory confirms the financial risk of not divesting: continued investment only exposes portfolios to risk, since marketed valuation of fossil fuel corporations is contingent upon the burning of 942 gigatons of carbon reserves. Fossil fuel corporations cannot approach their market valuation without ignoring the Paris Climate Agreement, which restricts future carbon emissions to 800 gigatons. Failure to divest puts our endowment at unnecessary risk of the carbon bubble caused by stranded assets. Furthermore, when other institutions of higher education have divested, donations have significantly increased. For all of these reasons, we believe that divestment is the fiscally responsible action.
Even in the unlikely case that Middlebury loses returns due to divestment, losses should not impact financial aid. Investments in the top 200 publicly traded fossil fuel companies make up 0.6 percent of Middlebury’s endowment, with 5 percent of the endowment having exposure in the entire fossil fuel industry. Currently, 25 percent of Middlebury’s endowment goes toward financial aid. In the case of any loss due to discontinued exposure to the fossil fuel industry, risk would be spread evenly across the endowment. It is unlikely that fossil fuels outperform the rest of the market and all alternative investments, yet even if fossil fuels outperformed the other 95 percent of investments by 10 BP points (.1 percent), the impact of not being invested in the fossil fuels industry would be $55,000 from our total endowment. This would result in a total loss of $13,750 from financial aid, a minimal loss in comparison to millions our school commits to financial aid each year. In the past, Middlebury has not cut its institutional commitment to funding financial aid in years of poor endowment performance. For this reason, individuals who argue that financial aid should be the first thing to be cut reveal much more about their own priorities than the priorities of the college or the divest movement.
[pullquote speaker="" photo="" align="center" background="on" border="all" shadow="on"]Divestment represents an important action that Middlebury can take to condemn climate change, support the college mission statement, and protect students’ futures.[/pullquote]
It is unfair and insulting to use students on financial aid as an excuse for inaction and the perpetuation of injustice. Divestment represents an important action that Middlebury can take to condemn climate change, support the college mission statement, and protect students’ futures. We would like to point out that students of more vulnerable socio-economic backgrounds are statistically more likely than wealthier classmates to experience negative impacts from fossil fuel infrastructure and environmental injustice. We are here to learn the skills necessary to protect our families and home communities from climate change. Falsely using our education as an argument to continue investment in the same industry that is hurting us is both cruel and flawed.
In the end, discourse that frames divestment as being at odds with financial aid is fearmongering. We know that divestment and financial aid can go hand in hand and we are thrilled to stand for both. We regret that our fellow classmates may have felt nervous about the financial impacts of divestment and will happily participate in further conversation about concerns regarding this issue. As always, our movement is open to everyone, especially those most marginalized by the climate crisis. We will not allow our educations to be used as a rhetorical device with which to jeopardize our futures as we move towards climate justice together.
(10/04/18 9:59am)
This past Friday, Divest Middlebury took a major step towards our goal of finally aligning the college endowment with our mission statement. At 11:30 a.m., three students from Divest Middlebury arrived at Old Chapel to present the students’ position on fossil fuel divestment and the necessary steps the school must take going forward. Students gathered outside of the building to hear the presentation, intent on learning more about the movement that is currently gaining so much worldwide momentum. This day came as a result of years of effort by multiple generations of student and community activists; we are honored to build upon the work that initially created the Divest movement, and the influence of previous students’ activism has remained essential to guiding our cause forward.
Friday morning, three students met with the Board of Trustees to present the case for fossil fuel divestment on behalf of the student body. The presentation lasted 15 minutes and was met with applause and support from members of the Board. Trustees were engaged and curious; they inquired about paths forward and were supportive of the conversation. The sounds of chanting, singing and shouting from student activists surrounding the building added to the urgency emphasized in the presentation. Our movement is more than conversations behind closed doors, but a campus-wide issue; in fact, it was student power that made the presentation possible.
Last spring, the Middlebury student body demanded divestment through an SGA referendum in which 80 percent of students supported fossil fuel divestment with a 70 percent voter turnout, the largest in recent memory. Students pressed the Board to pledge divestment of all endowment assets that include any of the top 200 fossil fuel companies. This referendum brought the issue to the Board’s attention and showed them an irrefutable truth: divestment is a worldwide movement that addresses a crisis threatening members of our community at school, at home, and all over the globe. While divestment alone isn’t the solution to that crisis, it is a tactic that can fight it.
Middlebury students do not come from a single background unaffected by environmental struggles. We come from the coast of California, from mountains on fire, from decimated coal mining towns in Tennessee, from wetlands in Florida ravaged by development, from communities feeling the impact of super storms and hurricanes. We come as immigrants who have fled the impacts of drought and resource wars, as international students from Indonesia, Siberia, Mexico, Brazil, Zimbabwe, New Zealand and countless other impacted nations. Furthermore, the Middlebury community extends beyond students, encompassing low-income staff members impacted by changing weather in Vermont, faculty with the Vermont Gas Pipeline in their backyards and alumni and families scattered across this world. We come from farms without soil, from urban environmental justice areas clogged with power plants and oil trains and refineries, from communities torn apart by fracking and pipelines, from nations slowly going underwater.
Here in Vermont, Lyme disease rates are skyrocketing, summer programs at Middlebury are interrupted by heat waves and winters are getting both shorter and warmer. As a board member pointed out after the presentation, climate change is one of the most challenging problems our generation will ever face. Global warming is not a problem contained to the scope of traditional environmental thought. It is a crisis where oppressive forces intersect and augment—a crisis that disproportionately devastates already marginalized populations.
Middlebury currently owns $53.7 million worth of the fossil fuel industry. As such, the college lends its reputation for sustainability and its social credibility to an industry whose base economic model requires the continued burning of fossil fuel reserves.
Using our school’s name and money, the fossil fuel industry continues to feed climate change. The money that funds our education should not be used as a tool of the fossil fuel industry at the expense of the future. It is wrong to finance our education with a strategy that supports the destruction of our planet and our home communities.
On Friday, we told our Board of Trustees that continued investment in the fossil fuel industry is unacceptable. We must end our support for this industry — both for justice and for the future. We are confident that the Board will align Middlebury’s endowment with the College’s values of sustainability, community, and global leadership. After the presentation, Divest Middlebury received an email confirming that the Board is considering paths forward and will be releasing an official statement by the January 2019 Board meeting. To the Middlebury student body — thank you for your support. To those suffering from climate change and other injustices — we see you and we stand with you.
This article was submitted on behalf of Divest Middlebury.
(02/15/18 1:43am)
Middlebury’s Board of Trustees invests our billion-dollar endowment in a fashion that resembles a clandestine mission, code-named Operation Profit. We know little about where our money is invested, the global impact of these investments appears purposely obscured, and the college community of faculty, staff, and students has zero input on investment decisions. We only know that Middlebury’s endowment includes $60 million worth of stock in fossil fuel corporations due to years of campaigning for this basic information.
As a coordinating committee member of Divest Middlebury, I drove across the East coast to document the destruction of Operation Profit. I walked on blown-up mountains, visited impoverished communities living at the base of power-generating stations, and observed lakes blackened with coal slurry. As an Environmental Policy major, I was well aware of these acts of eco-genocide. However, witnessing the impact of Middlebury’s ownership of $60 million in fossil fuel investments and $750 thousand in coal assets specifically brought me to tear.
These investments hurt not only the places I visited, but contribute to injustices across the globe. Climate change, while produced primarily by wealthy nations, disproportionately harms those in the Global South, especially people of color, women, and those living in poverty. How could my beloved “carbon neutral” institution justify its ownership of any fossil fuel project? By defending these unjust investments, Middlebury has failed to listen to the 81% of students who believe environmental, social, and governance must be taken into account for our endowment, the 1000 students who have signed a divestment petition, or the more than 100 students who demanded divestment outside the Fall board meeting. Face to face with the repercussions of Middlebury’s decisions, I was ashamed to be associated not with the college community, but with those trustees who implement Operation Profit despite clear opposition.
Divest Middlebury’s sole demand since 2013 has been to “divest all endowment assets, both directly held and commingled, that include any of the top 200 publicly traded fossil fuel companies.” Back in 2013, divestment would have made Middlebury a true environmental leader and sent a strong message to peer institutions. Instead, the trustees voted to remain owners of the fossil fuel industry, lending the college’s moral license and reputation for sustainability to corporations who profit off climate injustice.
When the trustees voted not to divest in 2013, they were able to hide behind a curtain of uncertainty. What would happen to our endowment returns? How would divestment work with our current money manager, Investure? These were legitimate questions at the time, but global institutions have repeatedly decided that divestment is not simply a moral imperative, but vital to their endowments’ financial security.
To date, 813 institutions with a combined divestment of $6.01 trillion agree that fossil fuel corporations will not reach current market evaluations without warming the Earth by 6 ̊C. As worsening extreme weather ravages the globe, low-lying areas face rising waters, tropical diseases continue to spread, and water supplies become increasingly stressed, governments will stop the burning of fossil fuels. The market for dirty energy will disappear, causing reserves currently valued at trillions of dollars to become worthless.
Peer institutions have acknowledged these stranded assets. Barnard College’s trustees unanimously committed to divest and have left Investure. The Rockefeller Foundation — the founders of ExxonMobil — divested and left Investure. Colby College became the first NESCAC school to divest. Even New York City and State decided to divest, causing billions to leave the industry and sending the endorsement of the world’s financial capital to the divestment movement. Every week, new Boards of Trustees determine that fossil fuel divestment is morally and fiducially responsible, it’s about time Middlebury does the same.
Divestment will eventually occur. But the question is, will it be too late? President Patton, Chair Parizeau, Mr. Provost, Mr. Truscott, and others, will you forgo your last chance to send a clear message that Middlebury demands a transition to a post-carbon economy? Will you forgo the opportunity to sell ownership in an industry whose current market evaluation is contingent upon the burning of all fossil fuel reserves and the irreversible alteration of Earth’s climate? It is too late for Middlebury to be a leader on divestment, but I hope that Middlebury’s noteworthy contributions to environmental stewardship will not be overshadowed by the moral outrage and fiduciary irresponsibility caused by your indefensible loyalty to Operation Profit.
Visit go/divest and join us Sunday 8 to 9 in Hillcrest 103 to get involved.