MIDDLEBURY — Though many past campus events surrounding the issue of divestment have been heated, Middlebury College students, faculty and staff were on their best behavior as they crowded in the McCullough Social Space on Tuesday evening for the college’s first panel discussion on the possibility of divesting the college’s endowment from fossil fuel and weapons.
College officials said the purpose of the panel was not to discuss global warming or the morality of investing in unethical companies per se, but rather to consider two questions: (1) What factors should the college’s trustees consider in determining whether and to what extent to place new restrictions on the deployment of the institution’s investable wealth? (2) What are the pros and cons of using divestment and/or other means to address climate-related concerns?
“Mindful as I am that the issues we will be discussing tonight are as serious as they are emotionally charged, I’ll try inject some humor up front by suggesting that this panel contain an up front warning: Viewer discretion advised,” moderator David Salem said in his opening remarks, to resounding silence from the audience.
“I say this not because I expect anyone in the room tonight to misbehave, but because I expect, and in some respects hope, that this initial forum on divestment will seem boring, if not hopelessly off point to some of you,” added Salem, a 1978 Middlebury graduate. “We are asking everyone on this panel to leave for another day the scientific challenges that are part of the global debate now under way about climate change.”
Salem, who pledged to maintain neutrality to the best of his ability but twice invoked his experience in the “money making” profession, said that Middlebury College would not have survived for two centuries without the trustees making smart and safe investment decisions to ensure that the institution would prosper for generations of students and faculty to come.
The audience first heard from Middlebury College Vice President for Finance Patrick Norton, who broke down the sources of revenue that fund the college’s $286 million annual operating budget, noting that 18 percent — or $50 million — comes from an annual distribution from the college’s $900 million endowment. By far the biggest source of revenue for the operating budget comes from student tuition and fees, which fund 67 percent.
Norton explained the college’s decision in 2005 to hand over management of a substantial portion of its endowment to Investure, a company that pools assets from its clients into a commingled fund. He also noted that his financial responsibility to the college was to ensure that it has the financial resources to give future generations of Middlebury students a quality education. Divesting from fossil fuels, which make up a “large portion” of investment space, could have implications for the future of the college’s endowment, Norton said.
Next up was Alice Hardy, the founder and president of Investure, who said that since her company uses commingled funds, 100 percent of her clients would have to want their portfolios divested from fossil fuels for it to become a reality.
“Our number-one priority is to support all of our clients so that we can all work together to make the world a better place,” Hardy said.
“One of the good things about capitalism is that with $900 million to spare, if we say we want something else, I'm almost certain that there will be somebody else who will fill that need and provide it,” interjected Middlebury Scholar in Residence Bill McKibben at a later point in the forum.
The panel also included college senior Charlie Arnowitz, president of the Student Government Association and an eleventh-hour concession to requests for a student voice at the table. Arnowitz was asked to present the results of a student survey meant to gauge student feelings on divestment.
“This is an issue that many students care deeply about, even if we don’t all agree,” Arnowitz said. “In my four years at Middlebury it’s almost certainly the central campus issue that’s inspired the most dialogue among students.”
The survey, which had netted responses from just under 50 percent of the student body as of Tuesday night, indicated that 63 percent of student respondents thought the college should invest in socially responsible companies, while 14 percent were opposed and 23 percent had no opinion; 38 percent supported divestment from arms and the top 200 fossil fuel companies; 10 percent prioritized fossil fuel divestment over arms divestment; 15 percent did not support divestment; and 25 percent had no opinion.
Arnowitz also stressed the need for continued student involvement as discussions about divestment continued.
“Students deserve unique consideration, and not just because 67 percent of the operating budget comes from our tuition and fees,” he said. “More than at other institutions, student opinions are a key legitimator of administrative decisions here.”
Mark Kritzman, a faculty member at the Massachusetts Institute of Technology, gave a PowerPoint presentation that used simulated investment models to demonstrate that there is a cost to socially responsible investments. He said restricting the college’s investments would have financial consequences.
“This is just logic,” Kritzman said.
The next expert, Ralph Earle, a clean energy venture investor and former assistant secretary of environmental affairs in Massachusetts, said that while he believed that climate change was the key social issue of our times, he did not believe that divestment would be an effective way to address the adverse effects of global warming. Of the three major divestment campaigns in the past few decades (apartheid, tobacco and Sudan) only divestment from apartheid had been politically effective, Earle pointed out, and in some cases divestment had led to unintended consequences.
Earle instead encouraged students to maximize their power as consumers by making highly public pledges to socially responsible products, and advocated shareholders using proxy voting as a way to change corporate culture and business models. He also stressed the need for change in Washington.
Last up was McKibben, whose climate action organization 350.org has divestment campaigns active in over 200 American colleges and universities. Salem asked McKibben, who founded 350.org with Middlebury students in 2007, not to focus on the merits of divesting from fossil fuels but on the steps he would recommend the college follow when investing.
McKibben recommended that the college pledge not to make any new investments in the 200 worst fossil fuel companies over the course of spring semester and then spend the next five years winding down its existing investments in fossil fuels and weapons companies. He added that since Middlebury has a long-term commitment to international relations, students had asked for divestment from weapons manufacturers, which could be done on the same terms.
It is not realistic to exclude morality from the conversation about investments, McKibben argued.
“Moral considerations are a part of this fight and have been from the very beginning,” McKibben said. “And one is reminded from David (Salem)’s excellent introduction that this is a thread that runs through this whole conversation.
“It’s a good thing to quote Thomas Jefferson,” McKibben said, referring to Salem’s earlier invocation of Jefferson as a prudent and responsible trustee of the University of Virginia. “And it’s a really good thing to remember that he was a morally compromised individual in all kinds of ways and that there were colleges that invested in slavery at that time and have spent the last few decades apologizing for that work. One understands that slavery and climate change are not the same thing, but one also might guess that 100 years from now, people might look back on our time with some of the same disbelief that people were not taking action against what was a clear and present danger.”
McKibben also presented a letter from billionaire hedge fund manager Tom Steyer, whom college officials had invited to attend the panel.
“I believe a fossil fuel-free portfolio is a good investment strategy,” Steyer wrote. “Looking to the future, the data on climate change makes it clear that something has changed, and as the rest of the world realizes this, fossil fuel stocks will come under increasing pressure.”
‘DO THE MATH’ EVENT
Steyer had attended a Sunday night event in Mead Chapel hosted by McKibben’s “Do the Math” campaign but had been unable to attend Tuesday’s event. Several hundred students, faculty and staff attended that event to discuss how the college could begin divesting from companies doing business in fossil fuels and weapons.
“Sunday’s event was spectacular and laid out the clear case for acting decisively on global warming that (Tuesday’s) panel tried to steer away from,” said sophomore Teddy Smyth, a leader of the student divestment campaign.
Smyth was pleased with the opportunity to speak with Investure founder Handy at Tuesday’s event.
“I am particularly excited about her agreeing to work with students from Barnard, Smith, and Dickinson colleges along with a professor at the Monterey Institute to research the practical details of divestment,” he said.
Moving forward, students hope to attend the February meeting of the college’s board of trustees.
The college has not scheduled the next step in the divestment discussion. But President Ronald Liebowitz has said that Tuesday’s panel would not be the last campus forum on divestment issues, and the college community seems eager to keep up the momentum.