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Barnard College

Calls to divest Barnard College’s endowment from fossil fuel companies seemed to put the institution’s values on a collision course with its financial responsibilities -- until it found a compromise.

That compromise doesn’t call for Barnard to divest from all companies extracting, processing or selling fossil fuels, an approach activists have pushed for at the college and many others. But it wouldn’t leave the college’s policy on investing in such companies unchanged, either.

Instead, a task force recommended that Barnard divest from fossil fuel companies that deny climate science or that attempt to undermine climate change mitigation efforts. The idea appears to be unique among fossil fuel divestment efforts at colleges across the country, according to experts, who have not seen it tried elsewhere. It could also serve to balance the college’s need for investing flexibility against students’ desire for Barnard to put its money behind its institutional values.

Barnard leaders have another set of hopes for the strategy: they want to put scientific integrity on a pedestal while pulling money from bad actors and rewarding companies that follow best practices.

“The thing that was most compelling to us on the task force was our mission -- supporting academic integrity, evidence-based research,” said Robert Goldberg, Barnard’s interim president, chief operating officer and chair of the Presidential Task Force to Examine Divestment. “The attraction of the recommendation we chose was a little bit to shift the narrative and also to differentiate companies in the industry.”

Fossil fuel divestment debates have played out at campuses across the country, with some likening them to past efforts to force endowments to divest from tobacco companies or apartheid South Africa. Some institutions have decided to prevent their endowments from investing in fossil fuel companies. Others have banned investments in specific parts of the industry, like coal. Some have chosen not to divest.

A divestment campaign came to Barnard in the fall of 2012. Then late last year, Barnard established a task to weigh its options.

When the task force released its recommendations Dec. 7, it called for Barnard to divest from companies mining coal and tar sands, which are considered particularly harmful to the environment. And then there was the headline recommendation to divest from fossil fuel companies that deny climate science.

“A more nuanced approach is potentially a more impactful approach,” Goldberg said. “It’s not that we’re going to stop advocating, but I think we’re all sort of comfortable about where we came out and what was right for the college.”

Trustees have yet to approve the recommendations, although they are expected to do so in March.

The group spearheading the broader Fossil Free movement,, hasn’t seen any other institutions emphasizing climate science denial as a disqualifier for endowment investments. Barnard’s move sends a powerful signal, according to Lindsay Meiman, communications coordinator.

“What’s so unique about it is that it specifically calls out companies that deny climate science,” Meiman said. “While many of them now recognize that climate change is happening, I think defining that denial is really crucial.”

That raises the question of how, exactly, Barnard will determine which companies are denying climate change science. The divestment report outlines possible criteria for defining climate change denial based on work from the Union of Concerned Scientists.

Under such criteria, Barnard would vet companies on their actions to renounce misinformation on climate science and policy -- looking at whether they made accurate and consistent public statements or are affiliated with industry groups spreading misinformation. It would also look at whether companies planned for a world without carbon pollution by making commitments to reduce net emissions and publicly supporting the 2015 Paris Agreement on climate change. Other evaluation criteria include policies companies support and whether they disclose climate risks to their own operations and infrastructure.

The divestment report hypothetically ranked eight companies. Under the rankings, Barnard would divest from five companies, including ExxonMobil, and add another, Shell, to a divestment watch list. It would maintain investments in two companies, ConocoPhillips and BP. The screening could be expanded to cover the top 200 energy companies, the report said.

Specifics of the strategy aren't set in stone, though. The task force recommended a group of students, faculty, staff and trustees work with investment officers to create a full vetting process and criteria.

Of course, the potential for Barnard’s decision to impact the wider energy industry can be questioned. The college’s $287 million endowment pales in size next to energy industry companies. ExxonMobil alone has a market capitalization of nearly $370 billion.

Further, only 7 percent of Barnard’s endowment portfolio was exposed to fossil fuel investments as of June 30, according to the college’s divestment report. The report also notes that divestment doesn’t necessarily impact a company’s stock price -- it means selling shares to other investors who will determine a purchase price.

But the divestment move is more about joining a larger body of institutions making similar decisions, Goldberg said. Barnard counted 36 American colleges and universities that had committed to partial or full fossil fuel divestment as of June.

“We are under no illusions,” Goldberg said. “What we’re hoping is that we’re joining a larger chorus of institutions that are taking some actions against the industry with respect to the damage that they’re doing to the climate and the impact of climate change. I think being part of the chorus, as we called it during our conversations, was important for us to do.”

The logistical and financial ramifications of Barnard’s decision can’t be ignored. Barnard isn’t currently in a position to directly manage the investment changes itself. Its endowment is managed by a third party, Investure, LLC. The Barnard endowment is invested in a consortium with 13 other Investure clients.

Another challenge is predicting what divesting would do to Barnard’s endowment value and its returns. The endowment might seem small in value against energy companies, but it is of significant importance to Barnard. It covers about 7 percent of the college’s operating budget, contributing $12.8 million in the 2016 fiscal year.

The energy industry has backed efforts to paint divestment as a costly strategy for colleges and universities. Divestment supporters have argued clean energy technologies can be more profitable and that fossil fuel companies are overvalued. But after running various scenarios, Barnard’s divestment task force concluded that it couldn’t predict future financial ramifications from divesting in fossil fuels but that its recommendations should not be put in place in a way that would undermine the endowment.

“We couldn’t find a financial reason to go to the board and say, ‘Don’t do this,’” Goldberg said. “We just don’t have the predictive power, and I don’t think anybody really does.”

Divesting from fossil fuel companies doesn’t necessarily hurt endowment returns, according to experts. It could possibly help performance, according to Paul Solli, chief strategy officer and partner at Aperio Group, an investment adviser based in Sausalito, Calif., that specializes in socially responsive indexing. It can also effectively send a message about climate change and lead to educational dialogues on campus, he said in an email.

But the act of constraining investment options can theoretically hurt returns, said Brad M. Barber, a professor of finance and the associate dean at the University of California, Davis, Graduate School of Management. One restriction may not be harmful, but they can add up quickly if more are introduced.

“All of a sudden you have an investment portfolio that is constrained so tightly,” Barber said. “Ultimately, these endowments are trying to generate returns for future generations of students. I think raising these issues as we think about managing those assets is a reasonable thing to do, but we also at the end of the day want to make sure these assets are invested with a financial responsibility that will serve future generations.”

The Barnard task force report specifically addresses that concern, saying that there should be a high threshold for industry disinvestments and that the fossil fuel decision should not be viewed as a precedent for other issues.

The divestment task force included students, staff, faculty and trustees. The inclusion of different groups likely helped prevent backlash from divestment hard liners, Goldberg said.

At least some divestment backers, meanwhile, appear to be hoping to break new ground in the struggle over climate change.

Two members of the student group Divest Barnard who were on the task force -- junior Evelyn Mayo and senior Camila Puig -- wrote an editorial in the Columbia Spectator when the recommendations were released, along with senior Christine Pries, a student government representative on the task force. They called the divestment recommendation “all-encompassing and flexible,” acknowledging that it would not be the easiest method of divestment but that it might have the most impact.

“Because this is the first time that these companies will be comprehensively assessed by Barnard, the global community will have access to information collected by the college that will publicly hold accountable destructive companies,” they wrote. “Institutions that are considering or have rejected divestment could look to Barnard’s approach, using the task force report as a resource. Divestment from climate deniers also recognizes that there may be value in differentiating the behavior of fossil fuel companies and assumes that investments in some fossil fuel companies will be infrastructurally necessary in transitioning to a clean energy economy.”

They later noted that students originally wanted more than divestment from climate-change deniers alone.

“Many members of the task force, however, were deeply swayed in favor of this method of divestment from climate deniers in defense of academic integrity,” they wrote. “As an academic institution, it is our responsibility to uphold the value of empirical, honest research.”

Divest Barnard emailed a statement from senior Helen Cane stating that it is a critical time for academic integrity in light of the recent presidential election and investigations into the fossil fuel industry.

“This is a time when academic institutions must take action to support academic integrity and science-based fact,” she said. “If Barnard divests from companies that deny science and impede climate action, it will lay the groundwork for others to follow suit by breaking ties with companies that impede urgent, science-based action on climate change."

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