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Statement on Divestment

August 28, 2013

During the past academic year, a number of students, staff, faculty and alumni have urged Middlebury College to divest its endowment of companies in the fossil-fuel sector. This call, which is part of a national movement to reduce future greenhouse gas emissions, has sparked a thoughtful and, at times, impassioned dialogue across our campus.

Since January, we have held two large public meetings on the question. In February, the Board of Trustees heard from a group of students advocating for divestment. Personally, I have met with and discussed the divestment proposal with scores of individuals and groups with a wide range of views on the issue. And I know many of my administrative, staff, and faculty colleagues have done the same. I can say with confidence that there has been no shortage of opportunity for people of all views on this issue to make their opinions known—and to learn from one another.

The discussion and the questions it has raised prompted the Board of Trustees and the administration to take a hard look at how we manage our endowment. In recent months, together with the Investment Committee of the board, we have reviewed the investment strategy of our endowment managers and analyzed our investment returns relative to other strategies and other institutions. We have modeled how our endowment would have performed if we had used other strategies and how it is likely to perform in the future under different scenarios. We have challenged our investment managers to explore alternative approaches. And we carefully have considered what impact a no-fossil-fuels investment strategy would have on Middlebury College, on corporate behavior, and, ultimately, on the use of fossil fuels and on the environment. And, importantly, we have asked ourselves what more we can do on our own campus and with our own resources to make a difference.

This debate has seen Middlebury at its best. The good faith shown by people on all sides of this question has been extraordinary. The discussion has raised awareness of our legacy of environmental leadership and caused us to look for new ways to extend that leadership into the future.

To find out more about Middlebury’s endowment and how it is invested, the possible impact of divestment, and the record of environmental stewardship and leadership Middlebury has set over the decades, I encourage you to read the fact sheet that accompanies this statement.

Ultimately, the call to divest raises a number of important questions that must be answered to the confidence of the trustees as they consider the College’s options:

  • What practical effect would divestment likely have? Would it cause companies to change their business models or behaviors? Would it lead to significant changes in public policy and reduce consumption of fossil fuels? Will divestment ever be more than a symbolic statement? Is it the most effective way to address reducing greenhouse gas emissions?
  • What impact would divestment likely have on future returns of the endowment? What additional costs might it impose? How might any change in the management of our endowment affect our ability to execute our core mission, maintain the quality of our curriculum, faculty, and small class sizes, and ensure that a Middlebury education is available to future generations of students of all means?
  • Would divesting from companies in the fossil-fuel sector open the door to future requests for the College to divest from other areas of the economy that some might find objectionable? What would be the threshold for tolerance of the College’s investments, and how would this be determined?

At this time, too many of these questions either raise serious concerns or remain unanswered for the board to support divestment. Given its fiduciary responsibilities, the board cannot look past the lack of proven alternative investment models, the difficulty and material cost of withdrawing from a complex portfolio of investments, and the uncertainties and risks that divestment would create.

Instead, we will focus on the positive differences Middlebury can make through its actions, in the best tradition of our institution. It is to that end that the College is preparing to take three actions:

First, the Investment Committee of the board, including its student members, will work to develop a set of stronger ESG (Environment, Social, and Governance) principles that we can apply to our investment portfolio, both to identify those companies and managers who invest with certain principles in mind and those who consistently do not. As part of this effort, we will intensify our ongoing review of the College’s investment portfolio.

Second, we will create ESG guidelines to help monitor investments and operations at our own campus in Vermont. We will issue periodic reports on our performance.

And third, we will increase significantly the amount of the endowment directed toward ESG investments, including those focused on clean energy, green building projects, and other efforts to reduce greenhouse gas emissions and benefit the environment. We will announce more specifics about this in the fall.

I believe these commitments are consistent with Middlebury’s mission and aspirations and will lead to concrete benefits for our community and beyond. And I look forward to the active support of many of you in implementing these proposals.

Ronald D. Liebowitz, President