By RACHEL HARRIS ’14
On Oct. 23, Fossil Free Wellesley urged the College’s Board of Trustees to consider three things: 1) to freeze any new investments in the fossil fuel industry; 2) to divest all holdings in the 200 largest publicly traded fuel companies within the next two years; and 3) to officially address the issue no later than Feb. 2014. Fossil Free Wellesley is not alone; over 300 college campuses across the nation, including Harvard, Vassar, Swarthmore and Bowdoin, are home to similar divestment movements, but the overwhelming majority of these efforts, including those at all four of the aforementioned institutions, have been met with resistance. Investment committees fear that the financial risks of fossil fuel divestment are just too great in these precarious economic times. Wellesley, an institution that relies heavily on its endowment to support its annual operating budget, would not be immune to these risks should the Board of Trustees pursue a path of divestment.
Members of Fossil Free Wellesley have highlighted that the goal of their movement is to stigmatize the fossil fuel industry into being accountable for the irreparable impact they’ve had on the environment. Given the global dependency on fossil fuels, I believe that by divesting stock from these industries, Wellesley will lose its voice in demanding greener energy initiatives from big oil. Currently, divesting stock will only result in the immediate buy-up by other investors. It is my opinion that a more responsible mode of action would be for Wellesley College to pursue engagement on the issue via proxy voting—that is, the process by which the shareholders of a company can vote on proposals pertaining to corporate management and governance. By maintaining its status as a shareholder in fossil fuel companies, Wellesley can both maintain financial security and join other institutions in demanding policy changes by these industries in favor of environmental protectionism.
At the Oct. 28 Senate meeting, Chief Investment Officer Deborah Kuenstner ’80 spelled out the financial risk of fossil fuel divestiture. Kuenstner reported that should the College pursue a path of divestment, the endowment could be affected by a loss of 1.75 percent—or $1.6 million annually. Given pre-existing budget cuts, the expenses associated with Wellesley 2025 and a reduction in financial aid allocations from 21 percent of the operating budget to 19 percent, the notion of divestment from any consistently positively performing stock appears irresponsible in present economic circumstances.
To its credit, Fossil Free Wellesley acknowledges that the group is not in favor of a divestment plan that would negatively impact the endowment in such a way that would threaten student financial aid. Wellesley is an institution that has prided itself on its competitive need-blind admissions process. The College would engage in a lose-lose situation if it divested and then lost both the ability to hold Big Oil accountable for its actions and the ability to provide great financial aid opportunities for prospective students. Nearby universities such as Tufts and Wesleyan have already been forced to adopt a need-sensitive admissions policy because of the economic downturn. Wellesley College should not become another institution that follows in these footsteps.
By engaging in proxy voting, Wellesley would pursue a path of engagement, which, given the present demand for fossil fuel stock, would have the potential for a far greater impact on the environment than immediate divestment from all fossil fuel stock would. Proxy voting has already forced some of the biggest names in the fossil fuel industry to adopt policies of clean technology and green energy. In the wake of the Deepwater Horizon oil spill in 2010, BP began pursuing research, development and commercialization of low-cost, sustainable and carbon-friendly energy alternatives such as biofuels at its Global Technology Center in California. Shell Oil Company has long been invested in 11 unique wind energy projects throughout North America and Europe, and since 2004 has maintained a partnership with Toyota in which Shell has developed cleaner gas-to-liquids fuel in Toyota vehicles equipped with emission reduction technology. ConocoPhillips and Chevron have put over $1 billion toward the development of environmentally friendly, solar-powered detection technologies of deep-sea oil reserves. ExxonMobil continues to explore the prospect of commercializing algae biofuels as a form of alternative energy.
Though there is no denying that our dependence on fossil fuels has had terrible effects on the environment, we also cannot deny the very crucial role the fossil fuel industry plays in the movement towards green energy. In the small chance that the withdrawal of Wellesley’s direct holdings in fossil fuel stock does trigger a mass divestment movement by other shareholders, then we will impede the very leaders in clean technology from continuing the necessary research to make green energy more practical and efficient for widespread commercial use. By joining in arms with other American institutions in continuing to put pressure on the fossil fuel industry to change its environmental policies, Wellesley can hope to see real results from its efforts in an already more environmentally conscious world.