To the Editor:
We’d like to correct five mischaracterizations of divestment in the op-ed written by Kristian Lunke ’16 (“A financial argument against divestment,” Feb. 25, 2015).
1. Divestment is not an all-at-once proposition: Advocates of divestment understand that it will be incremental and progressive. We want the College to take leadership, to send a clear message about the urgency of weaning ourselves from fossil fuels, but to do so through careful and responsible re-investment, as other institutions have done. We advocate an immediate commitment, not a hurried, wasteful implementation.
2. Past performance is no guarantee of future results: It is highly unlikely that historically high returns on fossil fuels will continue into the future. Major investment houses like Goldman Sachs are issuing negative reports on coal and cautious reports on other energy products. Some historical reconstructions of fossil-free portfolios show that divestment might lower endowment returns, but others conclude that it might increase future returns. The real issue is the future; if 80 percent of oil, coal and gas reserves stay in the ground, as they must to avoid climate catastrophe, those companies will inevitably lose value. Waiting to act increases the risk of significant losses from these “stranded assets.”
3. Nobody is recommending “middling green alternatives”: Such an approach would make no sense. The endowment should continue to be invested in a diversified portfolio of companies with impressive growth trajectories, including the rapidly expanding renewable sector but excluding 200 oil, coal and gas companies.
4. Technical difficulties associated with the College’s divestment structure can – and must – be surmounted: Lunke asserts that it will be difficult to divest our sizeable number of indirect investments, and that we would have a hard time finding top-rate advisors to manage our huge endowment. However, things change rapidly in the world of high finance. Even Cambridge Associates, whom he cites (from a 2013 decision), is gaining expertise in this field as more institutions divest. In June 2014, they advised, “Whether an institution chooses divestment is highly dependent on its mission and policies.” Further, in November 2014, it was reported by the Swarthmore College daily newspaper, The Daily Gazette, that Cambridge Associates “announced that it would actively assist institutional investors in implementing fossil fuel divestment,” a decision that Swarthmore College’s divestment movement considers a major victory. The more colleges that divest, the cheaper and better the options will become.
5. The most vulnerable in the Williams community need not suffer: Lunke aims to strike fear in readers by suggesting that divestment will cause further cuts in financial aid and staff salaries. However, these are choices that College administrators consciously make. It is our job – all of us who make up the Williams community – to insist that the burdens of the future, whatever their cause, be equitably distributed.
Finally, Lunke stresses the difficulties and cost of divestment while acknowledging the College’s obligation to take action. Since when have technical or financial difficulties trumped finding a way to do the right thing? We can and must do better.
Signed Tara Miller ’15/Divest Williams