Will Smith College lose money if it divest from fossil fuels?
The administration estimates that a fossil fuel free portfolio would fail to beat the market average in the short term. However, these estimates are based on the underlying assumption that fossil fuel assets will make the same rate of return in the future. In addition, past returns do not guarantee future results, especially given the finite nature of fossil fuel resources. Through divestment, Smith College can maintain the fiduciary integrity of our endowment by selling unstable fossil fuel assets.
Won’t it affect financial aid?
Understandably, concerns about the potential impact of divestment on financial aid have been raised by students. In response to these concerns, it is important to understand that divestment would not likely impact the endowment in the first place. In the unlikely case that endowment returns would be compromised by divesting from fossil fuels, it would be hoped that the Advisory Committee on Resource Allocation would exhaust all possible avenues of cutting expenses before consciously deciding to cut financial aid. As mentioned earlier, preemptively divesting from the financial risk that fossil fuels pose will bring long term security and certainly outweigh any short term losses that would be incurred by divesting.
Why should we divest from fossil fuels when we still use them on campus?
Reducing our fossil fuel use on campus is very important. In fact, the college already has a commitment to the Sustainability and Climate Action Management Plan (SCAMP), which is a pledge to be carbon neutral by 2030. However, the social and environmental responsibility of Smith College should also be reflected in its investments, which aren’t part of SCAMP.
Smith cannot call itself “carbon-neutral” if it is still invested in fossil fuels. It is naive to think that campus sustainability efforts will be enough to have an impact on the impending climate crisis, or that our investment policies do not shape how Smith College influences the world. Smith College is profiting from the destruction caused by fossil fuel extraction and climate change. If Smith is interested in taking a strong stand in favor of sustainability and environmental justice, the institution must reject profiting from this destructive industry, as it has done in the past by divesting from the Sudanese genocide, Big Tobacco, and apartheid South Africa.
How will it affect communities dependent on the fossil fuel industry?
Right now, fossil fuel companies are destroying landscapes, degrading air and water quality, and causing social instability in the communities where they extract fossil fuels. People who live there are figuring out solutions, such as investing in infrastructure, entrepreneurship, environmental recovery, and alternative energy. This movement will help push towards programs that are holistic in their approach, for example, creating jobs as they shut down coal plants, which will incentivize creative change.
What are we going to reinvest in?
Divest Smith College hopes that if Smith College chooses to divest from fossil fuels, it will invest in companies that promote sustainability and uphold social and environmental responsibility in their business practices, but ultimately, fiduciary responsibility and investment decisions lie with the Investment Committee of the Board of Trustees. We hope that the Committee on Investor Responsibility, if reinstated, will identify candidates for divestment or reinvestment in their recommendations to the Board of Trustees, based on the collective values of the Smith community.
Why should the endowment be political?
The endowment is inherently political. By investing over $130 million in the fossil fuel companies, Smith is making a statement that our institution supports the harmful practices of the industry that result in community and environmental destruction, while simultaneously perpetuating climate change. In the past, Smith recognized the political statements made by our assets and divested from companies supporting the Apartheid South Africa regime during the 1980s and the Sudanese government in 2007.