Daniel Wallace

Divestment
Word count: 671

In order to publically admonish abuse of civil rights In the 1970s and 80s, over 155 universities across
the United States sold their stock in companies cooperating with Apartheid in South Africa. Today, there
are nine universities willing to do the same for the environment.

Manhattan College is not one of those universities. Vice President of Finance at MC, Michael Masch, did
not deny that the school has funds invested in companies that release significant amounts of carbon
emissions into the atmosphere.

“We have a very conservative investment policy here,” said Masch. “We actually invest in commonly
traded stock indexes.”

Index funds, such as Vanguard and Fidelity, are investment brokers which invest their clients’ funds
across a wide variety of companies within particular stock indexes, such as Standard and Poor’s 500 or
NASDAQ. Returns from index fund investments are based on the average performance of the index.

In the S&P 500, 40 of the 501 companies listed by the index, including Chevron, Exxon Mobil, and Hess,
are directly involved in the exploration and production of natural gas and oil. If the energy companies
that burn these fossil fuels are included in the count, there are over 80 stocks- or 16 percent of the
index- that emit or contribute to significant levels of carbon in the atmosphere.

In the 2013 fiscal year, MC had approximately half of its $72 million endowment in domestic and
international stocks, according to a financial disclosure statement provided by Digital Assurance
Certification, LLC.

If the entirety of the endowment devoted to stock indexes was invested in the S&P 500, of which 16
percent of stocks are nonrenewable fuel producers or energy providers, then approximately $5.6 million
of the endowment would be invested in such companies.

Activist groups such as 350.org want to change that by leveraging the financial power of universities
across the nation against the companies that they determine to be most harmful.

It’s called divestment, which the website describes as an economic, political and social tool meant to
challenge the multitrillion dollar industry responsible for extracting, processing, and using fossil fuels on
a scale that they have determined is destructive.

Wearepowershift.org is another activist website affiliated with the divestment movement. According to
the website they call “on mission-driven institutions to divest from the dirty, dangerous fossil fuel
companies that have caused climate catastrophe in their ruthless pursuit of profit.”

Activist groups contend that the financial impact of a mass exodus of universities from the fossil fuel
energy market will send a clear message to companies that change is needed. Instead of fossil fuels,
activists encourage investment in alternative energy firms.
Ethibel Sustainability Indexes is an index of companies that are required to meet parameters of
environmental sustainability in order to be listed.

Although such ethical indexes exist, MC does not have funds in any such index.

“Index funds make sense because you’re never going to outperform the market, because it’s based on
the performance of the market as a whole, but it means that you won’t do worse,” said Masch. “It’s one
of the reasons we haven’t adopted a social investment policy.”

Skeptics of the divestment movement, however, argue that the fossil fuel industry performs too well in
the market. Fossil fuel stocks are particularly attractive now, when countries like China, India and Brazil
are industrializing at rates that ensure long-term demand for fossil fuels.

Institutions such as College of the Atlantic, as well as cities such as San Francisco and Seattle have made
commitments of varying degrees to divest the money they have in fossil fuels. There are hundreds of
other universities with student activist groups that protest their schools’ investment policies.

Divestment also means forfeiting any voice that an investor might carry as shareholder of a company,
according to professor of economics and former financial officer at Citi Bank, S.M. Piraino.

“The endowment is a resource, not an instrument to impel social or political change,” said Drew Faust,
president of Harvard University, in a statement to the school community about divestment.