Trustees make long-awaited divestment choice
After months of deliberation, the Board of Trustees adopted a set of policies regarding fossil fuel investments at their November meeting, updating the 1973 guidelines that previously informed their investment decisions. Brandeis students have been pressing the administration to divest from fossil fuels for several years and have continued to do so in response to the recent policy announcement.
In a Nov. 28 email to the Brandeis community, University President Ron Liebowitz outlined the new policies that will guide future investment. From now on, the University’s endowment funds will not be invested directly in “public or private companies or partnerships whose principal business is the mining of coal for use in energy generation.”
Investments that presently exist in “fossil fuel private limited partnerships (i.e., private limited partnership funds that make investments, the focus of which is deriving profit from the exploration and production of fossil fuels such as oil and natural gas) … will run off in accordance with the funds’ typical life cycles,” Chief Investment Officer Nicholas Warren wrote in an email to the Justice. These funds have an average life cycle of 10 years.
“The overall portfolio is mature, with many funds reaching the later stages of their life cycle. Therefore we expect it to slowly wind down over the next 5-7 years,” Warren wrote. This is specific to private limited partnership funds that invest with a focus on gaining profit from exploiting and producing oil, natural gas and other fossil fuel. As of Oct. 30, 2018, “fossil fuel private limited partnerships[’] [market value] [was] $63.3 million, which is 6.2 percent of the University’s just-over $1 billion endowment,” according to Warren’s email.
The Board’s Investment Committee and the University’s Office of Investment Management will “focus on finding investments ... in renewable energy sources and technologies focused on the reduction of greenhouse gas emissions and other causes of climate change” in the future. The OIM will notify all current and future investment managers about new investment strategies and climate change policy.
The University will not, however, divest from “commingled funds that contain fossil fuel investments.” In a Monday interview with the Justice and The Brandeis Hoot, Liebowitz explained that fund managers are hired to manage the University’s endowment and invest in groups of funds and stocks. According to Warren, 2.6 percent of fossil fuel holdings are in commingled funds. These will not be divested from because the Board feels that “to do so would be imprudent and place the financial well-being of our endowment in jeopardy,” according to Liebowitz’s email. In an earlier Oct. 28 joint interview with the Justice and The Hoot, Liebowitz said that divesting from these commingled funds would lower the quality of education and limit access for students of different socioeconomic statuses.
The University put forth the Brandeis University Climate Action Plan in 2016, which outlined a set of goals for the University’s emissions of fossils fuels in the coming years. In his email, Liebowitz highlighted that the Board continues to support the 2016 goal to reduce the carbon emissions from fossil fuels by 15 percent by 2020. Since 2015, Brandeis has reduced emissions by 12.6 percent. This exceeds the University’s goal for 2018, which was to have reduced emissions by 10 percent, according to the Brandeis website.
The 2016 task force established two main course goals related to reducing carbon emissions, according to an Oct. 17 BrandeisNOW article. The first phase was the reduction of emissions by 10 percent by 2018, and the University will pursue the second phase of its goal — “a 15 percent reduction of 2015 carbon emission levels by fiscal year 2020.” The University will continue to invest in energy efficient and sustainable measures.
The OIM is in the process of hiring a Climate Change Investment intern. According to the job posting Warren provided to the Justice, the intern will “work with the entire team across a broad array of research areas to assist in helping the office implement its climate change investment strategy.” This strategy seeks investments that will help transition from fossil fuels to more renewable energy sources, which includes technologies that focus on reducing greenhouse gas emission and renewable energy infrastructure.
Liebowitz’s email announced that a task force during the 2019–20 academic year will set further goals for reducing emissions beyond 2020. The task force will also discuss methods of reducing its carbon footprint, including changing the Brandeis community’s behavior and improving existing infrastructure for energy efficiency and conservation. Additionally, the Office of the Provost will emphasize giving research funds to faculty and researchers who work on issues related to climate change, per the same email.
Liebowitz emphasized the complexity of this issue and said that in completing policy changes related to divestment, the Trustees had to weigh the legitimate climate change concerns with the health of the University’s endowment. He thanked the students, faculty and staff who contributed to these discussions.
In three years, the Board will review these policies to see how effective they have been and to decide how to proceed in the future. According to Liebowitz’s email, the Board “is committed to reviewing and updating the University’s 1973 Statement on Socially Responsible Investing to reflect best practices.”
The student-led group Brandeis Climate Justice analyzed each of the the points in Liebowitz’s email in a document posted on their Facebook page. They criticized the University for waiting, saying the “climate crisis is too urgent to wait three years” and that “more action is needed.”
In a statement provided to the Justice, Prof. Sabine von Mering (GER) called the decision “a first step in the right direction” but admitted she “cannot help but also be disappointed.”
“Bold leadership is so urgently needed, given how time-sensitive this is, and how much the whole world is still headed in the wrong direction. As trustees of an elite university committed to social justice and scientific inquiry they missed a huge opportunity to take bold action and assume a true leadership position,” she wrote. Von Mering added that none of the new policies would have come to fruition if not for Brandeis Climate Justice’s work over the past five years.
—Andrew Baxter contributed reporting.