The Climate Justice Collective (CJC) is a new student group dedicated to increasing awareness of climate issues and pushing St. Olaf to divest its endowment from fossil fuel companies and reinvest those funds in socially responsible corporations. Formed Feb. 20, the group evolved from what used to be Divest St. Olaf, a student organization that also pushed for divestment.
St. Olaf’s endowment currently stands at about $520 million and around 8.4 percent of endowment assets are invested in energy companies, according to Assistant Vice President and Chief Investment Officer Mark Gelle. In 2016, St. Olaf had invested over a million dollars in ExxonMobil, Chevron and Schlumberger, respectively, though Gelle said that current investments look substantially different.
“If this school is truly interested in what the planet needs, it will divest.” – Isaac Nelson ’21
“Investing money in fossil fuel companies not only supports them financially but also morally,” CJC member Isaac Nelson ’21 said. “It is important that St. Olaf divests from fossil fuels because it sends a message that we do not support an industry that jeopardizes the wellbeing of future generations and the planet in exchange for short-term profit.”
Divestment from fossil fuel companies has gained traction since the early 2010s. In 2014, The Guardian reported that 837 institutions and individuals have committed to divesting their assets from fossil fuel companies. Sixteen colleges and universities have divested, including Unity College, University of Dayton and Stanford University, according to the University of Wisconsin-Oshkosh website.
Although the divestment movement has become more popular in recent years, in a video memo released Feb. 28, 2013, President David Anderson ‘ described some logistical problems St. Olaf would face if it attempted to divest.
“The endowment doesn’t own any stocks directly,” Anderson said. “It invests with fund managers who then deploy the funds in a portfolio of companies. So as a practical matter, disinvestment would be pretty hard to accomplish, especially when the amount is so small relative to the amount of the overall size of the endowment.”
Anderson also questioned how effective divestment would be as a means of bettering the environment.
“Disinvestment would not result in one molecule less of carbon being emitted into the atmosphere,” Anderson said. “And the plain fact of the matter is that we use fossil fuels in our daily lives to run the College. We sent 550 students off campus during interim to 28 study-travel programs, and none of them got there on bicycles or drifted over there on a helium balloon.”
Despite this attitude, some, like American environmentalist Bill McKibben, believe that divestment can have a real impact on fossil fuel companies. In an article in The Guardian, McKibben cited that Shell Oil Company, Peabody Energy and the Goldman Sachs Group Inc. have all reported that the divestment movement can have or has had negative material consequences for themselves and the fossil fuel industry at large.
In 2013, St. Olaf’s endowment stood at about $364 million, and less than one percent of endowment assets were invested in fossil fuel companies, according to Anderson.
Gelle said that it is difficult to determine exactly what percent of St. Olaf’s current $520 million endowment is invested in fossil fuel companies, as many of the companies St. Olaf invests in deal with both fossil fuels and renewable energy.
One of CJC’s primary concerns about St. Olaf’s current investment policy regards the College’s January 2018 hiring of the investment firm CornerStone Partners – St. Olaf no longer publicly discloses its various investment managers or specific investments because CornerStone Partners considers this information proprietary.
Making the investments visible “is the only way that you can make sure those investments are ethical,” CJC member Abby Becker ’21 said.
While St. Olaf’s investment managers are not publicly accessible, they are accessible for the St. Olaf Investment Committee, the group charged with maximizing the returns on endowment investment. The group analyzes current investments in part through an Environmental, Social and Governance (ESG) lens, according to Vice President and Chief Financial Officer Jan Hanson. ESG considerations may include climate change, water management and health and safety policies, according to an article published by Forbes.
Gelle and Hanson both said the Investment Committee’s sole access to St. Olaf’s investment managers is justified. They believe the Investment Committee is committed to taking into account ESG considerations and the concerns of the student body. They also think St. Olaf has benefited in various ways from the hiring of CornerStone Partners.
While Gelle did not comment on how much money St. Olaf has invested in any specific fossil fuel company, he did say that St. Olaf is currently invested in every company on the S&P 500 index. This means that St. Olaf is currently indirectly invested in Exxon Mobil, Chevron, ConocoPhillips, Schlumberger and other large fossil fuel companies.
Gelle wrote in an email that in December 2016, St. Olaf had invested over $1.3 million in Chevron, $1.2 million in Schlumberger and $1.1 million in ExxonMobil. Current investments have changed since then, Gelle said.
If the Investment Committee were to choose to divest, it would be a difficult task, Gelle said. Many of St. Olaf’s partnerships have long investment periods, some up to 16 years.
Gelle said it might be possible for St. Olaf to get out of these investments by hiring a manager who is willing to short sell their stocks, but that would be outside of the typical decision making of the Investment Committee.
“Under the Admissions tab on the St. Olaf website it says ‘Oles are the people the planet needs,’” Nelson said. “If this school is truly interested in what the planet needs, it will divest. We believe that St. Olaf has a responsibility to its past, present and future students to do so.”
