Smith approves new investment strategies amid pressure to divest from fossil fuels 

  • Students from Divest Smith College gathered behind Sealey Hall on Oct. 19, 2017, to demand that the college divest from the fossil fuel industry. Gazette Staff/Bera Dunau

Published: 10/25/2017 2:35:43 PM

NORTHAMPTON — Smith College’s board of trustees has approved a set of recommendations that it says will support the college’s commitment to environmentalism and social change, as well as the health of its $1.8 billion endowment.

The changes are due in part to a sustained effort by Smith students, faculty and alumni that continued right up to last weekend’s board meeting with a protest on Thursday.

The recommendations approved Saturday do not mean Smith is divesting from fossil fuels, which make up 6.2 percent of its endowment in indirect investments. The trustees instead voted to increase “impact investments” meant to generate both financial gain and social or environmental change, to favor certain funds and fund managers who have adopted those same principles, to avoid any future direct holdings in coal and to increase transparency on issues like the endowment’s fossil fuel exposure.

“Taken collectively, these actions send a clear signal of Smith’s strong and ongoing interest in environmentally responsible investing — and investment options — in support of its enduring mission: educating women of promise for lives of distinction and purpose,” Smith President Kathleen McCartney and trustees Chairwoman Deborah Duncan said in a joint statement.

College students across the country and region are calling on their schools to completely divest from fossil fuels as part of the fight against climate change. Smith students staged a rally Thursday calling for trustees to do just that, and student activists at Mount Holyoke and Amherst colleges have also organized similar campaigns. Student campaigns at the University of Massachusetts were successful in pushing officials to announce last year that the university’s endowment would sell off direct fossil fuel investments, and Hampshire College decided in 2011 to divest from fossil fuels.

Faced with such pressure, colleges have several options, should they choose to make changes. One is to change the investment plan for all new monies received and generated from current holdings. Another is to sell any fossil fuel holdings, fully divesting the endowment of those investments.

The student group Divest Smith College said in a statement that it was proud of its contribution to the process.

“While these recommendations are certainly a step in the right direction and we recognize all of the work that has gone into them, our goal remains the same as always: full fossil fuel divestment,” the statement said.

Sustainable push

Student, faculty and alumni activists have been pushing Smith trustees to entirely divest for several years. After Divest Smith College activists requested that the school shift to a sustainable investment fund in 2014, the board approved a $1 million investment in a sustainable global equities fund. Divest Smith College also asked the board to reinstate its advisory committee on investor responsibility, and since it was reinstated in 2015 the student group said it has consistently had one of its members sitting on that committee.

The endowment recommendations approved over the weekend came out of that advisory committee on investor responsibility, which relied in part on a 2017 report from the college’s Study Group on Climate Change.

The board of trustees’ recommendations don’t necessarily mean that the college’s 6.2 percent fossil fuel exposure will decline, though, and the board has only pledged to avoiding direct holdings in coal going forward, according to college spokeswoman Stacey Schmeidel.

Instead, the board’s decision includes a commitment to increase impact investments — defined in a press release as “those intended to generate measurable social and environmental change alongside a financial return” — from $9.5 million to $30 million “over time.” The trustees did not specify what that time period would be.

The board also voted to continue increasing its investments in funds committed to environmental, social and governance principles — so-called ESG funds, which already make up 16 percent of the college’s endowment.

“Favoring investments that support the development of alternative, cleaner sources of energy will encourage similar types of investment opportunities,” college officials wrote in a statement.

Pooled investments

College officials also said they will continue to work with the firm Investure to accomplish those goals.

Student activists at Smith have criticized Investure in the past, however, accusing the firm of being unwilling to prioritize divestment. Barnard College dropped Investure when the college decided to divest from energy companies that deny climate change, as did Rockefeller Brothers Fund when it divested from fossil fuels, according to Bloomberg. Bloomberg reported that Investure pools customers’ money together and does not allow them to exclude particular investments.

In its statement, the college said that around 80 percent of its endowment assets are held in commingled funds, which means that the college “does not have control over which companies are included — or excluded — in any particular fund.”

“We want to emphasize the importance of holding the Investment Committee and Investure accountable for these commitments and plan on following up periodically to ensure that progress is occurring as promised,” Divest Smith College said.

The board of trustees’ fourth and final recommendation was that the investment committee work with Investure to provide regular reports on how much the endowment has invested in fossil fuels, and on metrics gauging the company’s success in implementing the board’s recommendations, according to the press release.

“The fourth recommendation is very exciting for us because the lack of access to information about the actual fossil fuel exposure has been an obstacle for anyone working to push for change,” Divest Smith College said.

The board’s advisory committee on investor responsibility will monitor the progress of the trustees’ latest actions, which will be implemented over a two-year period. When asked whether the trustees would still consider students’ calls for the college to fully divest from fossil fuels, Schmeidel referred back to the college’s statement on the issue:

“It is unlikely that a request to consider the same topic would be considered before the two-year implementation phase is complete.”

Dusty Christensen can be reached at dchristensen@gazettenet.com.




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