Divestment group faces uphill fight at Penn
Other colleges have also been resistant to the fossil fuel divestment movement
October 17, 2013, 6:21 pm · Updated October 17, 2013, 10:50 pm·
Students at more than 300 college campuses are calling on their administrations to stop investing in fossil fuels, and the movement is starting to grow at Penn.
Despite pushback at Penn and several peer institutions, Divestment at Penn — a student group that started meeting early last semester — is continuing to call on the University to sell off its financial holdings in the fossil fuel industry.
The group, which has met regularly over the past several months, is in the process of drafting a formal divestment proposal, which it hopes to make public this semester.
With less than 10 core members, DAP has been noticeably slower to develop than other divestment campaigns at peer institutions, although students say the movement is gaining support throughout Penn’s environmental community. A Penn divestment petition hosted on 350.org, a global climate change website, has more than 250 signatures.
“As everybody starts to get more involved, the process is really encouraging,” said Arielle Clynes, an Engineering senior and DAP member.
Still, like similar campaigns in higher education, Penn’s divestment movement faces an uphill battle. Administrators, at Penn and elsewhere, have expressed skepticism over the cause, saying that fossil fuel divestment is a proposition with little to gain and much to lose.
At issue in DAP’s campaign is whether the University’s endowment should be used as a vehicle to express views on social issues.
“While there’s clearly concern about the impact fossil fuels have on the environment, I think there are other ways for the University to express concern about those issues short of divestment,” Executive Vice President Craig Carnaroli, who met with DAP members last semester, said.
Other Ivy League administrators have agreed with Carnaroli, arguing that divesting from fossil fuels would be harmful to their endowments and, by extension, to the long-term growth of their institution. Most recently, Drew Gilpin Faust, Harvard University’s president, wrote a letter to the Harvard community expressing doubt over the aims of a growing divestment movement at the university.
“I believe there are a number of more effective ways for Harvard both to address climate change and to enhance our commitment to sustainable investment,” Faust said.
Administrators and board members at Cornell University and Swarthmore College, two institutions that have had active divestment movements, have written similar letters in recent months.
When DAP members first met with Carnaroli last semester, many of the issues they raised were strictly environmental. Investing in fossil fuels, they said, was a moral evil, and divestment would send a strong message to companies whose practices harmed the environment.
Since then, said College junior and DAP member Sara Allan, the group has spent much of its time researching the financial side of divestment, looking into how selling off fossil fuel investments can impact an institution’s portfolio. Group members have spoken with R. Paul Herman , a 1989 Wharton graduate and the founder and CEO of HIP Investor, a sustainability ratings firm that creates fossil fuel-free portfolios.
Members of DAP now say they believe that Penn can restrict its holdings in fossil fuel companies without suffering economic losses. “What we know is that the financial community agrees that this can be done and that it’s not detrimental to the endowment,” Clynes said.
Russel McAvoy, an Engineering junior and DAP member, said the group is hopeful that its new two-pronged approach — emphasizing both environmental and economic concerns — will resonate with administrators. “We’re saying that because this is evil and that you can’t make money off of it, there’s no reason to do it,” he said.
Over the past year, there have been several small victories on the divestment front in higher education. The Harvard Management Company, Harvard’s investment arm, decided over the summer to bring on a vice president for sustainable investing; with that announcement, Harvard became only the second top college after Stanford University to have a full-time endowment employee devoted to sustainability.
Unity College, a liberal arts college in Maine which specializes in environmental science, announced in November 2012 that it had decided to divest from fossil fuels; several other small institutions have since followed suit.
But Penn’s endowment, valued at $7.7 billion as of June 30, is more than 500 times larger than Unity’s $14.5 million portfolio. As of June 2012, approximately 3.6 percent of the Associated Investments Fund — which comprises the vast majority of Penn’s endowment — was invested in natural resources. Penn does not disclose specific portfolio holdings, but administrators have acknowledged that there is “modest exposure” to fossil fuels in the endowment’s natural resource investments.
Carnaroli said he would be surprised if any elite institutions with multibillion-dollar endowments decide to divest in the near future, although he believes administrators are taking the issue seriously.
For their part, DAP members say they are not discouraged by the University’s early stance on the divestment issue. Once the group finishes drafting its formal divestment proposal, it will likely bring the issue to several campus groups directly — in particular, University Council and the Undergraduate Assembly.
“Throughout history,” Clynes said, “I think every divestment campaign has probably been a bit of an uphill battle.”