The Pomona College Board of Trustees voted not to divest from funds that include fossil fuel equities, despite the efforts of the 5C Divestment Campaign. President David Oxtoby announced in an e-mail sent on Sept. 24 that the Board of Trustees made their decision because of financial concerns based on the findings of a report made by the college’s primary investment consultant, Cambridge Associates.
Pomona will retain its fossil fuel investments in separately managed accounts as well as commingled funds, Oxtoby wrote.
Pomona’s Committee on Social Responsibility (CSR) requested in April that the Investment Committee of the Board of Trustees prepare a report examining how divesting from commingled funds would affect the college’s endowment. The CSR also recommended that the college divest from fossil fuel investments held by separately managed funds within five years.
“Far from being a minimal cost, Cambridge’s projections show that divestment would in all likelihood result in a total decrease in the endowment’s performance over a 10-year period of about $485 million,” Oxtoby wrote in his e-mail. “This loss of growth in the total endowment, caused mainly by the need to withdraw from the best actively managed commingled funds, would result in an estimated $6.6 million loss in annual spendable income for such things as financial aid, faculty and staff salaries and program support.”
Commingled funds, in which a client does not have control over its investment strategy, constitute more than 90 percent of the college’s endowment, the Cambridge Associates report states. Divesting from fossil fuel holdings would require the college to withdraw entirely from the commingled funds.
In the case of separately managed accounts, though, the report explains that “the College has direct ownership of the underlying securities, and can therefore have an influence on strategy, including screening certain securities.”
For example, the college has arranged with several managers of such accounts to screen out tobacco stocks.
While the report said that Cambridge Associates is still in the process of discussing divestment with managers of separately managed accounts, the Board of Trustees decided not to divest from separately managed funds. Divestment from these funds would cost the college an estimated $9 million in the next decade, Oxtoby wrote.
“It also remains unclear that divestment would have anything more than a symbolic impact in fighting climate change,” Oxtoby wrote in the e-mail. “Although symbolism does matter, it is hard to make the case that it would be worth the significant cost to future Pomona students.”
While his letter mentioned possible impact on financial aid and faculty and staff support, Oxtoby said that the college did not identify the specific cuts that would have to be made to offset the cost of divestment. For example, the college did not determine whether divestment would have specifically impacted financial aid, he said. “We basically thought that this was such a significant cut that it would have an impact on the college’s mission,” Oxtoby said.
The campaign for divestment at the 5Cs began last November, when the Claremont Colleges Divestment campaign launched a petition for the college to freeze all fossil fuel investments, joining a national movement initiated by environmentalist Bill McKibben.
The Associated Students of Pomona College passed a resolution in April supporting divestment, which 78 percent of 895 students voted to endorse.
Jess Grady-Benson PZ ’14, a lead organizer of the Claremont Colleges Divestment Campaign, said that she is “very disappointed and frustrated” by Pomona’s decision.
“We felt that there really wasn’t enough interaction between the full board and our campaign and our team,” Grady-Benson said. “We never had the opportunity to present before the entire board and it seemed as though the decision-making process was really focused on the financial side of things, rather than the moral, ethical, and environmental arguments for divestment.”
Patrick Pelegri-O’Day PO ’15, another leader of the divestment campaign, responded to the argument that divestment is only a symbolic act.
“We divest for our institutional integrity, so that Pomona College can carry its words and its values, or its professed values, into meaningful action,” he said. “We also divest to lend greater momentum to this already powerful, now international, movement that these campus movements have helped to create.”
He argues that Oxtoby overlooked the long-term consequences of climate change. “If we’re talking about inter-generational equity, climate change is the issue, because it’s the most impactful.”
Grady-Benson said that the students have not yet made plans for how the campaign will address Pomona’s decision not to divest.
“We can promise that we’re not going anywhere, and we definitely plan to continue conversations with Pomona’s administration,” she said.
Meanwhile, the campaign is now focusing on addressing divestment with Pitzer College where they will be speaking to the Board of Trustees Oct. 11.
“We’re really happy about Pitzer because they are creating a more open participatory process,” Pelegri-O’Day said. Whereas the students were not able to address the full Board of Trustees at Pomona, at Pitzer they will be.
“We’re very hopeful that the Board will take positive steps toward action at that time,” Grady-Benson said.