Allegheny College invests money into the fossil fuel industry, which is alarming for some students who have formed a group called Divest Allegheny in response.
Beginning its efforts in February, the divestment committee hopes to end the college’s financial investments associated with fossil fuel efforts. This task is not so straightforward, as a majority of the college’s $160 million endowment is located in commingled funds. This means that divestment would cause the Board of Trustees to replace a majority of the endowment.
According to Nathan Malachowski, ‘14, divestment is the act of removing institutional investments from an industry, in this case the fossil fuel industry.
“For Allegheny College, this concerns our endowment of which a portion is invested in the fossil fuel industry,” Malachowski said.
According to Malachowski, the process would require freezing all new fossil fuel investments, divesting all direct holdings and unwinding commingled holdings.
Sue Gaylor, executive vice president of administration, explained that the Board has serious accountability in investment policy and obtaining results in the best interest of the college.
“That policy instructs the committee to invest funds only in lawful investments and in a manner that balances the need to maximize the college’s return, while minimizing its investment risk,” Gaylor said. “The policy does not ask or allow the Committee to consider social policy preferences in choosing investments.”
The Board’s current stance is with the existing policy, but because of talk of divestment, the Board is also listening to input from the community. In order to change the policy, a majority of the Board must determine divestment to be in the college’s best interest.
“Undoubtedly if the College were to consider fossil-fuel divestment, others would argue for divesting in other areas as well. So the Board would need to consider the question from that macro perspective first,” Gaylor said.
Divestment first began at Allegheny in the 1980s when tudents, staff and faculty organized themselves against the college’s investments in South Africa, a common political upheaval of the time.
Bruce Smith, professor of political science, participated in this movement. He recalled the red ribbons students and colleagues wore on their commencement gowns to symbolize their resistance against the college’s investment policy.
“Allegheny’s investment policy will not be encumbered by any social or ethical consideration,” Smith said of the policy presented 25 years ago.
It was continuous persistence from students and faculty that caused a change in the Board’s policy.
“Divestment had become a matter of the character of the college,” Smith said.
Divest Allegheny, an independent committee of students, is pursuing divestment more actively for a variety of reasons. The group hopes to join a growing global movement that stands in opposition to the unjust practices of the fossil fuel industry. Seven universities, 22 cities, two counties, 19 religious institutions and a variety of other foundations have committed to fossil fuel divestment as of today.
“If Allegheny acts soon, it can tie divestment into its climate neutrality goals of 2020,” Malachowski said. “Allegheny is in a transition phase in terms of growing its endowment. If Allegheny’s endowment grows significantly, so will our investments in the fossil fuel industry. The time to act is now.”
The committee feels that this is a major issue because it reflects on the image of Allegheny being a sustainable institution.
Allegheny’s goal is to, “prepare young adults for successful, meaningful lives by promoting students’ intellectual, moral, and social development and encouraging personal and civic responsibility,” according to the college’s mission statement.
“We believe that investing in the fossil fuel industry is in direct opposition with this goal. The social and climate injustices of the fossil fuel industry serve as direct threats to our opportunities and successes as future graduates.
Divestment from fossil fuels is about using our resources as students to ensure that our future will not be one defined by the fossil fuel industry,” Malachowski said.
The divestment committee has looked at possible avenues leading to divestment at Allegheny: sustainable equality, screened mutual funds, private equity, community financial development institutions, green revolving loan funds, green debt, public-private partnerships and direct investment.
Sustainable equity means sharing of public companies advancing sustainability or that meet environmental, social, and governance targets. Screened mutual funds are mutual funds that group sustainable equity investments. Private equity means Universities can invest in private sustainable companies, providing key financing to promising firms. Community financial development institutions are regional banks that invest locally and purposefully in underserved markets. Green revolving loan funds are funds set aside to increase on-campus energy efficiency, which leads to cost savings. Green debt is bonds from governments and corporations that fund sustainable projects. Public-private partnerships are when universities can team with governments and the private sector on large scale sustainability projects. Direct investment in real property means universities can own property, such as land or renewable energy plants.
Member of the divestment committee, John Rooney, ’14, believes divestment should be a component of the college’s climate neutrality goal.
“Divestment is a way for the college to make good on climate neutrality,” Rooney said.
This semester, the divestment committee focused on obtaining a campus presence to spread the word on the divestment movement and gain more involvement from the campus community.
“I think it has come a long way,” Rooney said of the divestment committee.
But there is still more to accomplish. Next spring, the committee plans to have bigger events concerning the topic and to continue weekly committee meetings.
Divest Allegheny meets on Wednesdays at 5 p.m. More information about what Divest Allegheny is doing can be found on their Facebook page.