Dear Members of the Mount Holyoke Community:
We are grateful to everyone who has expressed an interest in the Mount Holyoke Board of Trustees’ examination of publicly traded fossil fuel holdings in our endowment. Throughout our deliberations on this matter, we have balanced our own concern for the environment, recommendations that we divest in order to send a strong message about climate change, and our fiduciary responsibility to ensure that we can effectively fulfill Mount Holyoke’s academic mission, which depends upon robust returns from our endowment.
Your input Is critical, now and always
First and foremost, please know that the Board of Trustees has listened carefully to, and heard, the ideas and concerns of the community, and we have taken them seriously. We understand that our ongoing dialogue with you is critical to future success in all facets of the institution. We value and are grateful for your insights and commitment to this, and other, critically important causes.
Climate change is real and is a defining issue of our era
The Mount Holyoke Board of Trustees strongly believes that climate change is real. It is one of the defining issues of our lifetime. Climate change is threatening people and ecosystems around the globe. As an educational institution, Mount Holyoke is committed to advancing science – and all knowledge – and to the importance of evidence-based argument. We believe that the College should lead by educating students and the broader community on the science of climate change as well as on the political, economic and social factors influencing it. We also believe that we have a responsibility to environmental sustainability, and to understanding our connection to multiple communities, locally and globally, both in terms of the people moving through the College and the resources it consumes.
Mount Holyoke is increasing its investment in sustainability
The College has intensified its focus on sustainability and will continue to do so moving forward. The Plan for Mount Holyoke 2021 outlines the College’s commitment to environmental sustainability and calls for a reduction in our environmental footprint, a strengthening of our environmental curriculum and the engagement of the broader community. To help us achieve the Plan’s goals, the Mount Holyoke Sustainability Taskforce will evaluate existing commitments, recommend ways to advance environmental sustainability on campus and identify opportunities for progressive action. The Miller Worley Center for the Environment will continue to advance a culture of sustainability and environmental awareness while preparing leaders to think critically, imaginatively and globally about the future of our planet.
Examining the endowment
The Board’s Investment Committee is charged with the oversight of our endowment. The Committee comprises financial experts, all of whom are alumnae deeply committed to the College’s success. The Committee has extensively studied the implications of divesting publicly traded fossil fuels, working closely with our investment advisors, Cambridge Associates. The Committee and the Board have also carefully monitored how peer colleges and universities have, in responses to similar divestment recommendations on their campuses, chosen to address climate change.
Members of the Committee, other members of the Board and Officers of the College have listened to recommendations from faculty and from members of the Student Government Association and the Climate Justice Coalition, all of whom have urged the divestment of our publicly traded fossil fuel holdings. We appreciate the advocacy and work of the student and faculty leaders with whom we have spoken, and those who share their viewpoints. We assure you that we have taken their recommendations very seriously. But we also know that solutions are rarely perfect and tradeoffs are often required.
A decision against divestment
After careful consideration and lengthy deliberations, we have voted unanimously as a Board against divesting publicly traded fossil fuel holdings from our endowment. Ultimately, we came back to our responsibilities as Trustees: to preserve and protect our endowment, which represents the cumulative generosity of many donors to support our academic mission in the many ways they have identified as being of shared importance. Funding 26 percent of our annual operating budget, our endowment is the cornerstone that enables us to provide an intellectually rigorous education for students of all backgrounds while strengthening our legacy of leadership.
Currently, the College has no direct investments in companies among the top 200 publicly traded fossil fuel companies. In fact, we have no direct investments whatsoever: every dollar in our endowment is invested in commingled funds (similar to mutual funds on the consumer side). What does that mean? Although only one percent of our total endowment, or approximately $7 million, is invested in publicly traded fossil fuel companies, a decision to divest would require the College to sell over one-third of its current endowment.
The College also invests a portion of the endowment in private partnerships. Fossil fuel holdings in this sector represent less than five percent of the endowment. Divesting both the public and private funds in our endowment with exposure to fossil fuel companies would require the College to sell approximately $337 million, or approximately one-half of the endowment.
Risking our endowment means risking our mission
Given the College’s limited financial exposure to fossil fuels, divestment would sacrifice the strength and stability of our endowment without, we believe, having the desired impact on the fossil fuel industry. The move also would likely reduce the investment returns on the endowment and therefore distributions to the College.
Putting our endowment at risk means putting our mission at risk. Nearly 80 percent of our students receive direct scholarship assistance, and this is made possible by our endowment. The endowment also funds many other mission-critical activities, including our ability to attract world-class faculty. It supports every aspect of the College’s operations, the Academic Centers, the Art Museum and Athletics.
Investing in clean energy and renewables
For quite some time, we have been directing Cambridge Associates to seek out substantial investments in economically attractive clean energy technologies, and in companies that present viable alternatives to fossil fuels. The firm is also actively engaging with every one of our investment managers to evaluate how climate change impacts our investments, and how the support of carbon efficiency and other environmental, social and governance factors affects our portfolios. We believe this approach will have a much broader and deeper impact on protecting the environment than the divestment of our fossil fuel holdings. It also will not require the abandonment of the proven benefits of our current endowment strategy or constrain subsequent growth opportunities.
In 2015 the College established a Green Revolving Fund (GRF) to implement energy conservation, renewable energy and other sustainability initiatives on campus that also generate cost savings. We recently approved an additional $100,000 investment in the fund. This commitment, coupled with other funding allocated, will make approximately $150,000 available in the coming year for green initiatives on campus.
The Trustees of Mount Holyoke College believe that the steps outlined in this letter will enhance the long-term viability of this institution that we all so deeply love, while establishing a long-term commitment to responsible environmental stewardship and a more sustainable future.
The Trustees of Mount Holyoke College