After several months of deliberation, the Social Responsibility Committee (SRC) has unanimously voted to recommend Fossil Free Mac’s (FFM) proposal of a moratorium on the college’s direct private partnerships with oil and gas investments to the Board of Trustees.
The SRC, comprised of five voting members and three ex-officio members, issued an official report on FFM’s proposal and their final decision last week. The SRC’s recommendation specifically emphasizes two areas of importance regarding the school’s investments in the fossil fuel industry: the financial impact that divestment could have on Macalester’s endowment, and the morality of continuing to invest in oil and gas.
Fiscally, any change in the current investment strategy constitutes a risk. The college made more than $35 million from the endowment last year alone, and the SRC’s report includes Investment Office research estimating that roughly $2 million of the endowment’s annual yield comes from investment in fossil fuels.
Though they were not voting members of the committee, Vice President for Administration and Finance David Wheaton and Chief Investment Officer Gary Martin served as financial experts on the SRC and ultimately concluded that divestment was a feasible option for the college.
While the college currently profits from its investments in oil and gas companies, the group concluded that those investments and the income they bring in can be adequately replaced.
That said, it is impossible to gauge exactly how the moritorium will affect the endowment.
“We mainly focus on what we know from past experience and then try to project our evaluation of that experience into the future,” Wheaton wrote in an email to The Mac Weekly. “Pinning down the likely effect was [the committee’s] toughest question.”
Finances aside, the SRC was tasked with considering whether or not the proposed moratorium is in line with Macalester’s ethical values.
Even though the SRC concluded that divestment specifically is in line with Macalester’s commitment to sustainability, this decision will ultimately affect the way the college handles future investment issues.
“What this issue brought up is when, in general, the institution should take a stance on something financially,” Flerlage said. “How will this set a precedent for future issues or proposals?”
In his response to the SRC’s report, President Brian Rosenberg wrote that the Board of Trustees is developing a set of guidelines to determine “when and whether the college should take non-financial issues into account when making decisions about the investment of endowment assets, and, perhaps, other investment and purchasing decisions.”
For Rosenberg and the SRC, these guidelines must further develop Macalester’s definition of fiscal responsibility.
“A consistent investment policy… is important to the SRC,” SRC chair and physics and astronomy professor Jim Doyle said. “As we say in the report, though, there is an issue of to what extent the investment professionals should be constrained in their decisions.”
The Board will vote on the guidelines referenced by Rosenberg when they convene in May. However, prioritizing general social responsibility guidelines means that FFM will not be able to formally present their proposal to the Board until October.
“I think it’s fair that they want to set a broader guideline for how [the Board of Trustees] will consider proposals like this,” Hannah Shumway ’19, a FFM core member said. “While we obviously want our proposal to be considered as soon as possible, I understand their reasoning behind this.”
But not all FFM members share Shumway’s disposition. Jack McCarthy ’18, a four-year member of the organization, recalled the delays previous iterations of FFM experienced on the road to divestment.
“My worry is that [the guidelines] will delay action on our proposal now,” McCarthy said. “We shouldn’t wait until the whole framework is done and agreed upon to do this one thing.
“I want to trust the process, but I’m also skeptical that this is a delay tactic.”
For the next few months, FFM is going to focus on gathering feedback from students, staff and faculty about the campaign, the proposal and the SRC process.
FFM has also been keeping close contact with Board of Trustees members to both get advice on how to format their presentation in October, and to gauge their reaction to the idea of prioritizing socially responsible investing.
In McCarthy’s eyes, however, these endeavors are largely pedantic.
“[The Trustees] have no sense of urgency about this,” he said. “It’s been six years this campaign has been going on and honestly, people say they care about climate change… but none of their actions would indicate that that’s really the case.
“It shouldn’t have to take six years of consistent student activism to get them to start considering action,” he continued. “They knew from the beginning, they’re the ones who made these private partnerships and investments.”
The timeframe for divestment remains a pressing concern for FFM.
“Part of our responsibility is definitely to keep the pressure on [the Board of Trustees] and make sure that they know this isn’t something we’re willing to wait forever for,” Liv Scott ’20, another core FFM member, said.
“That’s the thing with reducing emissions and addressing climate change,” McCarthy added. “The longer we wait, the harder it is to actually change things.”
Likewise, the SRC’s report stresses the urgency of this matter – acknowledging that while Macalester’s divestment as an individual institution might not “impose significant economic pressure on fossil fuel companies”, an obligation to react to the changing global climate on any level possible remains.
However skeptical FFM is, the broader discussion on socially responsible investing can be an important one.
“I think it’s fair to say that the Fossil Free Mac proposal has served as an important catalyst for the work that the Board members are undertaking,” Rosenberg wrote. “It seems prudent to develop a set of institutional guidelines that will help bring some consistency to the consideration of such decisions in the future.”