Get Creative, Not Quixotic

Global warming is likely the most serious environmental issue of our time. My concern is that divestment is a quixotic distraction. It will be ineffective in changing company behavior,impractical to implement given the investment vehicles in the endowment, detrimental to Pomona College’s operating budget, and distracting from taking truly effective actions.

Most of these companies more than adequately fund themselves through annual revenues. Our owning stock doesn’t fund them. Moreover, plenty of other investors around the world will be eager to buy up the shares we sell. There will be no discernible impacts on stock prices.

Based on my limited understanding, our endowment is invested in few, if any, individual stocks. Instead, the endowment is almost entirely invested in composite portfolios that various investment managers offer to their many clients as package deals. On average, these funds likely contain 10-15 percent fossil fuel stocks within diversified portfolios. These composite investments fund a very sizable portion of the college’s operating budget, and it would be seriously detrimental to try to unwind them, even if we could.

A better strategy would be to retain these composite investments but expand the funding of efforts to reduce our carbon footprint. To begin with, we should take a portion of the endowment and invest in renewable energy stock portfolios. We might also look at taking the dividends earned from the fossil stocks embedded in our composite investment vehicles and devoting some or all of those dividends to reducing our carbon footprint through on-campus investments. We should also start a pilot program to begin neutralizing the eight-plus tons of carbon that each student creates by taking at least two round-trip airline trips per year. We could do this by purchasing and immediately retiring California Carbon Allowances.

It’s time to get creative—not quixotic.

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