Last year UVM’s Board of Trustees accomplished a 13.9 percent return on the school’s endowment, placing them in the top 10 percent of universities based on size demographic.
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But student organizations like Student Climate Culture and Vermont Student Environmental Program want to affect our school’s investments.
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UVM’s investment subcommittee (ISC), a small committee that makes recommendations to trustees, has historical success for high return.
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This indicates that the ISC makes good predictions in a field that is highly unpredictable.
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With this in mind, why do our campus environmental organizations want to divest from fossil fuels? They shouldn’t want to, and here is why.
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The basis of fossil fuel divestment is to impose moral values on the ISC for the purpose of social change.
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But this is not their job. An investment committee is an amoral organization, they are a tool for making money for their school, not for making social change.
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Endowment investments should not be seen as a university operation. In fact, some schools do not personally handle their investments.
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Instead they entrust companies like Investure, a firm that partners with colleges such as Middlebury, Trinity and Dickinson, to handle their portfolios.
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Even if politics was the business of investment committees, the board still shouldn’t divest.
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Divestment is an idea made popular by the campaign to divest from South Africa for racial segregation during Apartheid.
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By removing investments from South Africa, divestees hoped to pressure South Africa into policy change.
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So did it work? Not exactly.
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Billions were disinvested from South African companies, but that had little to no impact on their economy.
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In fact, South Africa’s value increased following divestment and businesses made billions as their stocks were bought back.
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So what does this have to do with fossil fuels? $12 million of the UVM endowment is invested amongst more than 40 energy companies.
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This is pocket change for a company whose net worth could exceed billions of dollars.
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So any divestments we make would do little to pressure such companies.
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Causing significant change on our own isn’t the point of the divestment campaign. The idea is to get investors together so they can make an impact. Even if this happens, divestment still may not matter.
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In the 1980s universities and other investors banded together to divest billions from South African business but it failed.
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Many South African businesses were still attractive investments, so other investors bought the stocks that were sold.
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Fossil fuel companies also make for attractive investments.
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As ISC chair Samuel Bain said, fossil fuel companies were one of their “better performing sectors,” of the endowment portfolio.
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The fact that the ISC recommended continued investment in fossil fuel companies suggests that they have faith in fossil fuel investments for the near future.
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For those of you who find value in the divestments campaign as a way to improve the school’s image, think about two things.
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First, endowment exists for the purpose of supporting UVM, a university that produces environmentally conscious students.
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By this our board is supporting the future of environmentalism. Second, you support fossil fuels every day.
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Petroleum is used to deliver food to campus, it’s used to make milk jugs, computer parts, guitar strings and bicycle tires.
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Not to mention your precious electricity that is most likely a product of coal, the dirtiest of all fossil fuels.
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Unlike businesses at the time of apartheid, fossil fuels provide a product that everyone relies on, every single day.
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Instead of backing fossil fuel divestment, students should be more focused on reducing their own fossil fuel consumption.
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Even better, students could think of ways to reduce the carbon footprint of our University, instead of trying to enact change in a way that is ineffective and may hurt our investments.
