by Helen Glorge ’23
“I feel like I should know more but I don’t,” Samantha Pittman '23 said, expressing a feeling on campus about what divestment means at Mount Holyoke.
When money is invested, it comes in the form of stocks and bonds generate income. Divestment is the direct opposite of investment and implies closing of stocks, bonds or investment bonds.
Universities and colleges, retirement funds and other institutions are largely funded by investments. In the case of colleges, funds are split up into the endowment and the operating budget. The endowment is the equivalent of a savings account and has money that is supposed to grow over time. The money is invested by an external managing company; these managers’ goal is to generate positive returns by investing money strategically so the endowment grows. All of Mount Holyoke’s endowment is in commingled funds, which spreads the money out through different businesses in order to “diversify” the portfolio. This makes the endowment safer in that it is less likely to disappear in an economic downturn, keeping the college from going under even if significant returns on the portfolio are made. Generally, investment managers don’t disclose which industries they are investing in, meaning we don’t know where any single Mount Holyoke dollar is invested. The value of our endowment as of 2018 is $777.7 million.
So, with this information, why divest? In order to help combat climate changes more catastrophic effects, it is necessary to decrease fossil fuel consumption. Asking companies to consider risks of climate change, a practice known as shareholder advocacy, is ineffective. Shareholder advocacy is the practice of influencing a company’s policies and behavior through voting and adapting the leadership of the company. However, shareholder advocacy loses its efficacy when shareholders’ intentions are to change a profit-motivated company to a climate-motivated company. This would require adjusting the fundamental corporate business model of a company. Divestment is left as the only option.
Divestment as campus activists are using the term means stopping further investments in the fossil fuel industry and divesting from fossil fuel companies. In most cases, this means reinvesting money into environmentally responsible alternatives. An effective strategy to divest the endowment will not lead to exposure to risks or a financial loss in return.
In recent Mount Holyoke surveys, 88 percent of students (2014), 92 percent of faculty (2016) and 96 percent of the SGA Senate (2017) supported divestment. Despite overwhelming support for divestment, the Board of Trustees and upper level administration have yet to divest.
On October 18, 2019 Smith College made the decision to divest from fossil fuels. The decision was both a result of Smith’s dedication to creating new sustainable investment opportunities, as well as Divest Smith College’s formal request in fall of 2019, with the promise to remain committed to contributing to climate-change solutions. Other colleges across the country which have committed to divesting include all of the University of California Institutions and Hampshire College, among others.
“It's time for Mount Holyoke College to divest and stand with students (who overwhelmingly support divestment), indigenous peoples and those on the front lines of climate change,” said Kayla Fennell ‘22, a Climate Justice Coalition (CJC) member. “Moreover, we know that divestment, in the long term, makes financial sense for our institution as well answering the higher moral call.”