In September 2018, the board of trustees voted to divest the $230 million endowment of fossil fuels investments, with a goal of Dec. 31, 2020 to achieve a 50 percent reduction in the exposure to companies owning fossil fuel reserves in the marketable portion of the endowment portfolio. This goal was reached in March 2020, nine months ahead of schedule. By June 30, 2023, SU will be fully divested from fossil fuels.
The purpose of this divestment case study is to share our experience with divesture, inspire others, and educate others on the importance of fossil fuel divestment.
Divestment is simply is the opposite of an investment. It is the process of getting rid of stocks, bonds, or investment funds that are unethical or morally ambiguous.
Environmental, social, and governance (ESG) criteria are the three key factors used to judge the sustainability and ethics of an investment.
Socially responsible investing (SRI) describes investments that promote positive social or environmental change. This can include investments in companies that are free from fossil fuel usage, give their employees living wages, etc.
For a detailed timeline depicting all divestment events at SU, see Detailed Divestment Timeline
Future suggestions by SSA members include:
Interview with CFO
Seattle University, Sept. 2018
Georgetown University, Feb. 2020
Creighton University, Dec. 2020
Loyola University Chicago, Oct. 2021
Oregon State University, Jan. 2017
Lewis & Clark College, Feb. 2018
Whitman University, Nov. 2018
College of the Atlantic, Mar. 2013
University of California System, Feb. 2015
Brown University, Mar. 2020
Cornell University, Mar. 2020
American University, Apr. 2020
Columbia University, Jan. 2021
Harvard University, Sept. 2021
The endowment value on June 30, 2018 was approximately $230 million.
On June 30, 2017, before SU commited to divestment, the endowment portfolio had an estimated 6.7 percent, or $13.6 million, exposure to securities of fossil fuel companies, as defined by ownership of fossil fuel reserves. These securities were owned indirectly through the university’s investments in funds managed by external investment managers.
This is not an either/or choice. We can and should address the concern about climate change through both our investing strategy and by addressing other areas where we are presently not acting sustainably. Future investments must be made to enable a transition away from these fuels, which is one reason that divestment and (eventual) re-investment is an appropriate response. Furthermore, it is not a bad thing for us to grapple with areas where we are not ethically consistent because only by reflecting on these inconsistencies is change possible.
We find it unlikely that donors expected the university to follow a completely amoral approach to investing and the university has already decided that social issues should be incorporated into its financial planning. This is why the SRI committee was created in the first place. In light of our mission, it is important for the university to consider more than just maximization of financial return.
At this time, it is more practical and less financially risky to direct managers to exclude a relatively small number of companies from their portfolios than it is to direct them to make specific investments in new, sometimes unproven technologies. Furthermore, while divestment and positive re-investment are not mutually exclusive—we would be surprised if our managers do not look carefully at clean energy—we recognize that we should first “do no harm” before transitioning into the positive investments that will help fund a clean energy future. Finally, there is presently significant social momentum behind the divestment movement, meaning that it is an action that can be taken in the near term. Planning a separate, practical re-investing approach could take years and is something that will be easier to do once the issue of divestment is resolved.