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There are 7 comments on DivestBU Pushes for Green Endowment

  1. Interesting commentary here on all sides.

    As to President Brown’s remarks, I would say that the fossil fuel industry absolutely represents an “unambiguous and egregious harm that is fundamentally at odds with the stated mission of the institution.”

    The overwhelming body of peer reviewed scientific research shows that climate change and the steady rise in global average temperature is a direct result of humans pumping unprecedented levels of CO2 and greenhouse gases into the atmosphere via burning of fossil fuels. Rather than act in the interest of humanity, this industry chooses to continue their pollution, threatening the very existence of the planet and all species on it for short-term profits.

    While I appreciate President Brown’s fiduciary responsibility to BU, and the fact that it is not the endowment’s role to fix policy or environment, to stay invested and profit from such an industry while highlighting the University’s climate change related research and sustainability efforts in the public eye is irresponsible. It is at odds with the mission of the institution.

    Mr. Thompson put it best: “Any gains our endowment has at the cost of our future are, simply put, not sound investments.”

    DivestBU is on the right side of this debate. So long as the University remains invested in fossil fuels, it is part of the problem. I hope they choose to be part of the solution.

  2. Divesting from fossil fuel stocks is not as simple as many of the anti-fossil fuel voices think. Most/almost all endowments do not invest directly in stocks, but rather through co-mingled funds that provide the appropriate risk profile and diversification for the university (as well as top return performance, risk-adjusted). So, BU and other universities cannot simply hit “sell” and wash their hands of fossil fuels. And these funds are not ETFs or mutual funds that can be bought on your eTrade account.

    Unless an endowment wants to break relationships with top fund managers, wants to only invest in socially responsible funds or can invest through a separate account, a university cannot dictate the holdings of a fund, so long as the holdings are within the stated risk profile and strategy agreed upon and marketed by the fund.

    The primary responsibility of an endowment is to provide adequate and growing financial resources for current generations, while maintaining purchasing power for future generations. This is THE charge for endowment managers, not environmental activism.

    Furthermore, divesting from fossil fuel stocks will really have no impact on the financial well-being of those companies. It would be a more symbolic move than anything else. Savvy investors would be waiting and willing to pick up those stocks.

    1. Anon,

      While we don’t know where the BU endowment is invested, everyone advocating for divestment is well aware that most of the capital is in commingled funds. We know it will take time to divest, which is why we ask that it be done over a period of five years, not immediately. But we don’t think that BU would have to break its relationship with fund managers. After having spoken with a VP from Goldman Sachs, it is our understanding that if a client had over 20 million dollars in a fund, the fund manager would likely be willing to create a separate slightly adjusted fund to fit the client’s needs. And, again, while we don’t know how BU’s endowment is invested, I would imagine that the majority of the money is in a handful of large funds.

      And yes, the primary responsibility of the endowment manager is to grow the endowment. But there are exceptions to the rule, and we think the fossil fuel industry is one such exception. Frankly, an industry that kills people to make energy, like, say, an industry that owns people to make cotton, is simply not an industry worth investing in. That the industry does not have malintent, and that both continents and perhaps decades span the space between industry and injury does not change the moral calculus we should be wrestling with.

      A bit to justify the urgency around this issue: The International Energy Agency says that to avoid 2C of warming we need to stop building all new fossil fuel infrastructure in the next four years. If we fail to keep warming below 2C, we will likely kick off feed-back loops that will take warming past 2C to 4C, where the World Bank (who in the past has defended the fossil fuel industry, and is not in any way an environmental advocacy organization) says we have no reason to be confident that human civilization can adapt. It would rocket past 4C to 5.6C, which is the difference between mid-20th century and the global average temperature throughout the last ice age when there was a glacier where we now sit. And then past 5.6C to 6C by the end of the century, when it is estimated that the global carrying capacity could drop to just 1 billion people. Of course, these are very rough estimates, but I’d like never to find out if they are right or not.

      We also are not so sure divestment would conflict with the charge of the endowment manager to grow the endowment. As any first year finance student knows, and as we all learned in 2008, past performance is not an indicator of future returns. It can only take so many more super storms, super floods, and super droughts before the American people decide they want to live a different way. And while we won’t transition immediately, it will become immediately apparent to investors that pipelines and power plants will not run long enough to get out of the red. Exxon’s assets would then truly become toxic in every sense of the word. Some investors are already awakening to this risk. Reports about the risks have started coming from more mainstream institutions like HSBC and the World Bank. It would be prudent for BU to step ahead of the crowd so as not to be caught in this bubble.

      In summary, divestment is possible (albeit hard), right, and responsible. I believe that’s sufficient to make my case. A lot of people, though, wonder if it is also an effective means to a greater end. You are right, Anon, in that it will not directly effect the bottom line or behavior of the industry (Though I do hope that it will give investors pause when they consider the long-term profitability of the industry and its ability to overcome the growing climate movement). My generation, and the lives of billions, depend on our ability to enact aggressive federal (and in-turn international) legislation, like a carbon tax, and soon. But, as we are all aware, the political space for this does not yet exist. The divestment movement allows us to grow a climate movement on college campuses which is sort of home turf for my generation. And it enables us to have important conversations about what it means to allow these industries to operate the way they do. Hopefully after we divest we will be able to move our new-found power off campus and get that legislation we need.

      A turning point in the civil rights movement was Freedom Summer, when southern organizers brought down students from the north on buses to register as many African American voters as possible. To that end, the students did a pretty terrible job – very few African Americans registered to vote – but their presence illuminated to their families back home and to the rest of the nation what was going on down in Mississippi. A nationwide dialogue was started which was able to propel the movement forward. And to this end the immediate effectiveness of voter registration was entirely irrelevant. For us to start a similar conversation is so much more than simply symbolic – it’s strategic, and it’s a matter of life and death.

      1. comparing the fossil fuel industry to slavery? moral calculus and actual calculus don’t quite jibe. A bit disengenuous to mix slavery and civil rights with what you consider the moral methods to fuel your car and heat your house.

  3. We are a group of alums from different schools and regions that support the heroic effort of current college students who are courageously acting on behalf of the future of the world community. We encourage you to reach out to the alumni community to strengthen your numbers and gain more support. Post your stories with us on Facebook at Alumni Supporting Fossil Fuel Divestment.

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