Illustration by Raya Deussen

LC set to divest from public fossil fuel funds by 2022

Following a student-led fossil fuel divestment petition, a subcommittee was formed in May 2017 to explore and make policy recommendations to the Lewis & Clark Board of Trustees. Nine months later, in Feb. 2018, trustees approved a plan and voted unanimously to divest from all fossil fuel investments in the endowment. According to the college’s Nov. 5 progress report, LC is now on track to divest from all public fossil fuel funds by Dec. 2022.

The divestment policy states that, by 2022, LC’s endowment “Shall not directly own any securities publicly issued by companies in the fossil fuel industry, specifically the largest owners of coal, oil, and natural gas reserves” and that, starting immediately, LC “will make no investments in any new fund that has exposure to fossil fuel companies.”

Between Dec. 2017 and 2018, LC reduced exposure to publicly traded fossil fuel holdings by 50% and focused on reinvesting this capital in correspondence with the college’s environmental, social and governance (ESG) policy. With these re-investments, 25% of the college’s endowment is now invested in sustainability-related funds, such as the water or renewable energy infrastructure sectors.

While the college must exit all public funds by the end of 2022, the same does not hold for private funds — the policy states that “The college will exit all private limited partnership investments holding fossil fuel companies as they mature, which will take more than five years.”

Between Dec. 2017 and 2018, the college’s investment in public fossil fuel holdings dropped from $6.6 million to $3.1 million, a 53% decrease. Yet, with private funds, the college’s investment value rose from $5.1 million to $5.2 million, a 2% increase. 

During this period, LC’s total investment in fossil fuels dropped from 4.9% to 3.8% of the endowment. As of May 2019, LC’s total endowment has a market value of $238 million.

President Wim Wiewel explained why LC’s private investments will take longer to divest from than its public holdings.

“(Private holdings are) not stock that is traded on the New York Stock Exchange or anything like that … we have to wait until that company goes public, or is bought out by another company,” Wiewel said. “Before that happens, you really cannot get out of the investment. Or if you get out of it, you would take a really big loss, because it’s not yet traded (publicly) … We decided from the beginning that we have to preserve the money because that’s what benefits the students.”

While moral considerations did influence the college’s decision to divest, it was the financial considerations that convinced the “hard-nosed investors,” according to Wiewel. New research indicated that divestment would increase endowment returns in the long run, with investments in fossil-fuel companies becoming increasingly less profitable. While fossil-fuel companies once led the economy, they now lag behind.

With rising climate concerns, green investment funds have become more common and profitable, according to Tom Mitchell, managing director of Cambridge Associates. After former Chief Investment Officer Carl Vance retired in the summer of 2018, Cambridge took over management of the college’s endowment. 

In a recent article in The Chronicle of Higher Education, Mitchell argued that investing in fossil fuels will become less profitable as demand declines over the next 20 years.

“If you’re just looking from a pure investment standpoint, you will find more profits in the growth potential of renewables and alternatives,” Mitchell said. “It’s been a great time to be divested, frankly.”

Around the country, students have seized on these financial arguments to divest and a growing number of high-profile institutions, like Middlebury College and the University of California system, have joined the movement. 

According to Helen Hitz ’21, the Associated Students of Lewis & Clark (ASLC) president, student-advocates have turned to LC for advice.

“We were recently reached out to by students at a different school, and they reached out to ASLC to see our tactics for how we got administration and the Board to divest from fossil fuels,” Hitz said. 

In the Association of Advancement of Sustainability in Higher Ed (AASHE)’s 2019 Sustainable Campus Index, LC ranked second in the “finance and investment” category and sixth in the “climate and air” category. In order to take a comprehensive approach to sustainability, the college is currently beginning the process of forming a new Climate Action Plan, since the last plan only went until the 2018-19 academic year.

Sustainability Director Amy Dvorak said that this plan will incorporate divestment, along with evaluations of campus facilities, environmental curriculum and transportation.

“We might try to (see) if we can switch people to taking a train or taking the bus, and there are some airlines that are looking at electrifying their fleets,” Dvorak said. “You can imagine with divestment how complicated that was, and that’s just one thing that we’re impacting.”

Talks about the new Climate Action Plan are ongoing. In the fall of 2020, the college will provide its next annual progress report on divestment, based on data from the 2019 calendar year.

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