For the last several years, climate change activist Bill McKibben has been traveling the country encouraging colleges to stop investing their endowments in the fossil-fuel sector. But it looks like that message is a tough sell at Middlebury College, where McKibben is a scholar-in-residence.
In his letter, Liebowitz touts Middlebury's existing environmental initiatives, which include the first-in-the-nation environmental studies program of which McKibben is a part. But Liebowitz also explains that Midd's nearly $1 billion endowment covers about 18 percent of the school's operating expenses. He describes the “fiduciary responsibility” of the school’s Board of Trustees to manage that fund with the bottom line in mind.
“If it is to continue to fund operations at comparable or increasing levels in the years ahead, the endowment must grow through new gifts and, especially, through the returns it earns on its investments,” he writes.
In 2005, Liebowitz adds, the trustees from Middlebury and 12 other schools pooled about $10 billion from their endowments and hired an investment firm to manage the portfolio. Over the last year, the firm has reported that Middlebury was investing anywhere from 3 to 5 percent of its endowment in the fossil-fuel sector at any given time.
If the school were to divest, the letter says, the investment firm would have to reinvest more than half of the $10 billion portfolio, requiring consent from the whole consortium. Better, it concludes, to let the investors do their thing.
“It is unlikely that any of the 150 fund managers who today invest Middlebury’s endowment in their commingled funds would adopt a policy of fossil-free investing," Liebowitz writes. "Whether or not they hold such investments today, investment managers who are incented to maximize their returns do not wish to limit their investment choices. This is the answer to the often-asked question of why Middlebury, or any institution with a large endowment, cannot easily divest an endowment of fossil-fuel stocks.”
The school's position is ironic given that divestment is McKibben's rallying cry. The climate action rock star has been promoting fossil-fuel divestment through 350.org, an organization he formed with several Middlebury students. For the last five years, the group has been rallying cities, schools and other entities across the nation to withdraw their investments from energy companies. Along the way, McKibben has accumulated almost 98 thousand Twitter followers, penned an article for Rolling Stone and gotten himself arrested while protesting the Keystone XL pipeline in front of the White House.
350.org’s goal hasn’t been so much to cripple Big Oil’s finances as to damage the industry’s reputation — just as divestment from organizations doing business in South Africa helped shame that country into ending apartheid.
Colleges and universities have been a particular target of McKibben’s efforts, due to both their cultural clout and the energy of their students. According to a separate website 350.org has created for the campaign, six schools have committed to divesting. Two are in Vermont: Sterling College and Green Mountain College. Five other schools in the state are hosting divestment campaigns.
“It makes real sense for young people to be leading this charge,” McKibben told Seven Days reporter Kathryn Flagg last year. “I’ve got another 25 years, if I’m lucky, on this planet. But if you’ve got 60 or 70 staring you in the face, it behooves you even more to make sure the planet isn’t going to hell for the last 40.”
Gregory Dennis graduated from Middlebury in 1974. As part of a pro-divestment rally on the campus in May, he delivered a speech calling on the trustees to divest from fossil fuels the same way they did from companies doing business in South Africa in the 1980s.
Dennis voiced his support for the dialogue Liebowitz has created around the issue. He laid blame for the divestment decision on the trustees.
"I see divestment as a litmus test for how green a college really is, and I'm sorry that the board of a college I love is on the wrong side of history here," says Dennis, who resigned his spot on the class’s reunion committee as a small act of protest.
Greta Neubauer, a student organizer in the college's divestment campaign, wasn't surprised by the decision. After presenting their case to trustees last year, she says, they didn't hear back from the board members all spring.
Though Neubauer is appreciative of the school's existing environmental initiatives, she doesn't see them as a replacement. Divestment, she says, is a tool for taking away the fossil-fuel industry’s political and social license. The board's decision, she says, "is really more about Middlebury than contributing to this national movement."
This week, Neubauer says, the student-led campaign is preparing a point-by-point response to the school's decision.
As for the school, the statement from the president yesterday asserts that it is on a course toward sustainability. The trustees have committed the campus to becoming carbon-neutral by 2016, and made almost $14 million in on- and off-campus clean-energy investments. Now, it is seeking LEED Gold certification for new and renovated buildings.
This isn't the first time in recent memory that the college has put its weight behind an energy company. In March, it endorsed the construction of a natural gas pipeline that Vermont Gas wants to build through Addison County — to the consternation of students and town residents.
Acknowledging the dissenting arguments at the time, Liebowitz released a statement defending the project on the grounds of "the economic needs of the communities around us, or the lack of sufficient alternative sources of comparable energy in the near term.” His statement concluded that the pipeline would “contribute to the economic welfare of the region.”
But in response to the school’s decision yesterday, the 350.org cofounders — not including McKibben — wrote a public letter to Liebowitz and the trustees. In it, they argue that a divestment from fossil-fuel companies could, in fact, lead to a larger endowment. They also remind the school that McKibben has pledged to donate $50,000 from the Sophie prize he’ll be receiving this fall to help the college divest.
“Though many colleges and religious denominations have already divested,” the letter from the Middlebury alums and 350.org cofounders says, “we always knew that the richest institutions would be the toughest.”