Divestment Can Pay Off
Harvard won't sell off its holdings in fossil fuel companies. But Stephen Mulkey explains why the small college he leads did so -- and is benefiting financially and educationally.
Doing what is right pays dividends. That is a lesson learned in the weeks and months following Unity College’s divestment from investment in fossil fuels.
In 2012, Unity College, an environmental college founded in 1965 by Unity, Maine-area residents became the first college in the United States to divest from investments in fossil fuels. With a modest endowment of $13.5 million, we could not afford to get this wrong. If divesting from investments in fossil fuels produced negative results for us, there would be no lifejacket at the ready -- we would sink, and fast. Far from possessing some special dispensation due to an economy of both the size of our student body and comparatively modest endowment of $13.5 million at the time, Unity had more to lose than large universities.
There was no drama in Unity’s decision to divest. Once our board members were satisfied that Unity’s fiduciary responsibilities would be met post-divestment, they unanimously supported the initiative.
If the warnings of naysayers turned out to be correct, this college would have far less cushion if things went wrong after the divestment than much wealthier institutions. In the ensuing months, however, I was surprised to read comments from some in higher education downplaying the significance of Unity’s decision to divest. They argued that they have far more to lose from divesting than an institution like Unity College, and disentangling their complex matrix of investments in order to do so would be a logistical nightmare akin to raising the Titanic.
A funny thing has happened since Unity College divested. Not only has this institution not lost money, but it has benefited from a positive series of unintended consequences.
The Rewards of Acting Upon an Ethical Imperative
Just weeks after Unity announced its decision to divest, our director of development, Martha Nordstrom, received a call from the Richard David Stutzke Foundation. The foundation, impressed by Unity’s divestment, offered a generous gift. That gift has since transformed into scholarships in perpetuity for students pursuing studies at Unity as part of its sustainable energy management and environmental policy, law, and society programs.
Foundation officials felt that Unity’s divestment demonstrated leadership and a commitment to the sustainability of the planet. We framed our decision as an ethical imperative related to the recognition that the burning of fossil fuels is driving the crisis of global climate change. Since Unity announced its decision to divest, more than 300 college and university campuses across the United States have seen the development of robust student movements encouraging divestment. Bill McKibben’s organization, 350.org, is leading this effort and encourages any who are interested in divesting to contact them.
An important aspect of our divestment is that we did not intend to use it as a political football. We have always intended to keep the focus on what is scientifically undeniable and point out the course of action we feel is justified. When considering whether to divest, our Board of Trustees discussed the political implications. Trustees unanimously voted to divest not as a monolithic group of liberal-leaning activists (they are not), but as a group of deeply engaged stewards of this college. The board agreed that our investments should be aligned with our values. All institutions of higher learning have a stake in this, regardless of their focus, given the consequences we all face from global climate change. There is no controversy regarding the need to mitigate global climate change, all academies of science recognize the existence of this problem.
Keep Politics Out of It
When advocating for divestment, disengage from possible political quandaries and stick to the facts. You must not allow others to turn divestment into a political act and struggle. The truth of it is that although Unity has an environmental mission, it has always been home to a diversity of political perspectives. In point of fact, caring about the planet is not a brand to be possessed by a political party, it is a timely value to be embraced by all of humanity.
At the risk of offering stereotypical characterizations, I would point out that we have students from conservative backgrounds who are studying to pursue careers in conservation law enforcement, while some sustainable agriculture and environmental policy majors are preservationists with a penchant for social causes championed by groups within the liberal spectrum. When making our divestment announcement , we did not characterize it as a choice between political philosophies, but rather a choice to proactively preserve the precious resources that students across the political spectrum care about.
Unity's divestment announcement has been well-received by its politically diverse college community, including alumni, some of whom have expressed an overwhelming sense of pride in their alma mater. This alone ought to be a call to action for development departments across higher education. Taking a stand on behalf of a world facing the ravages of global climate change is a winning position for advancement professionals, trustees, presidents and senior leaders across the spectrum.
Advancement Professionals Can Advocate for Change
Advancement professionals are in a position to advocate for their own institutions to divest from investments in fossil fuels. Their strength lies not only in their ability to point to the ethical imperative to do what is necessary and right in service to the ongoing renewal of civilization that is at the core of higher education, but to point out that doing so at this juncture makes good business sense.
The green economy is now overtaking the aged, lumbering giants of the dying fossil fuel industry. Divesting at this juncture will position institutions of higher learning to capitalize not only on the inevitable, the wholesale greening of the economy, but encourage the fossil fuel industry to start seriously transforming itself into an active participant. Most fossil fuel players know that carbon emissions must be reduced, probably sooner rather than later. The game afoot is to wring every last drop of profits possible before nightfall. By continuing the divestment movement within higher education, the fossil fuel power players will eventually lose their social contract to pursue business as usual. This will hopefully lead to major changes in service to a simple goal: ensuring that the fossil fuel reserves still available are not extracted and used.
If they are and business continues as usual, the science says it will be “game over” for this planet. The clock to get this done is ticking and advancement professionals in higher education can be change agents.
Financial managers may complain that divestment will be complicated and insurmountably onerous. However, it takes no more effort to manage a portfolio for minimum exposure to fossil fuels than it does to manage for maximum market return – and these two goals can coexist. Admittedly, markets are more complex today than in the time of divestment from companies associated with apartheid. Depending on your particular mix of investment tools, achieving an absolute zero fossil fuel return may be difficult. Presently we have achieved less than 1 percent exposure to fossil fuels for a majority of our holdings, and we are confident that our overall portfolio will generally not perform more poorly than the market average while holding true to our promise to divest.
Your institution must not be on the wrong side of this issue. A commitment to unimpeachable ethical standards is in keeping with the best impulses of the fund-raising profession. Also, when you make your arguments in favor of divestment, be sure to point out that since divesting Unity has not lost a dime on its investments.
I cannot comment on the reasons why Harvard University chose not to divest. What I can say is that Unity's decision to divest was both financially and morally rewarding. We believe that higher education should be focused on the renewal of civilization and sustainability of the planet regardless of a student's field of study.
Stephen Mulkey is president of Unity College.
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