In April, Yale University, which has one of the highest performing endowments in the world, announced that it would partially divest its endowment from fossil fuels, citing the financial risks of fossil fuel holdings. Yale’s decision fundamentally changes the conversation on divestment here at Swarthmore– in fact, Swarthmore’s endowment is modeled on that of Yale’s system of active external managers. Similar decisions from the University of Maryland and Syracuse University show that divestment is not only a powerful tool to take action as an institution for climate justice, it is also financially prudent, easy to accomplish, and increasingly popular. This report applies these other divestments and broader financial trends to Swarthmore’s endowment and lays out a plan for how Swarthmore can gradually divest over the next 5-10 years.
Since students and faculty began calling for divestment in 2011, our Board of Managers argued that divestment was impractical at Swarthmore due to our complex endowment structure that requires several investment consultants to aid in selecting approximately 70 managers. For years, this was a very real and significant, though not insurmountable, challenge for divestment at Swarthmore. Indeed, in 2011, when Swarthmore launched the first ever fossil fuel divestment campaign, there were very few companies offering options for fossil fuel free investment. The Board argued that while small schools with simple endowments might be able to divest, we could not do so at Swarthmore. Specifically, they said that Swarthmore took direction from schools like Yale, which pioneered the investment model Swarthmore uses, and that the handful of small schools who were divesting held no impact on Swarthmore’s financial decisions.
Today, however, the story could not be more different. Funds totalling over $3 trillion dollars have been divested from fossil fuels, from the Norwegian Sovereign Wealth Fund, the city of Washington D.C., and the Rockefeller Family Fund, which was built off the family’s oil fortunes. Leading universities including Oxford, Stanford, and Edinburgh have all divested. A growing chorus of financial and political leaders, ranging from former Shell Chairman, Mark Moody-Stuart and billionaire investor Tom Steyer to former Vice President Al Gore and UN Climate Chief Christiana Figueres ‘79 have advocated for divestment as a sound financial decision. Even investment bank HSBC, in a report to investors, advised divestment, warning that investors who stay in fossil fuels “may one day be seen to be late movers, on ‘the wrong side of history.’”
Read the full report below or download here.