Emerson endowment has fossil fuel ties

by Allison Hagan / Beacon Staff • March 30, 2017

Most colleges and universities in the United States are invested in fossil fuel companies— including Harvard University, Stanford University, and Duke University—whether students know it or not. Emerson is no exception.

Gloria Rivera, a junior visual and media arts major, is working to set the groundwork for environmental responsibility on campus through fossil fuel divestment—the act of reducing investment funds. Starting as a class assignment, she and two other students, Vivian Rebrin and Grace Madigan, began the semester researching the issue.

Rivera said they soon realized divesting from fossil fuels would be harder than anticipated.

Fossil fuel companies, like BP and ExxonMobil, are major contributors to climate change. According to the Environmental and Energy Study Institute, oil production alone is responsible for 42 percent of greenhouse gas emissions and the combustion of coal totals 32 percent.

Maureen Murphy, vice president for administration and finance, said the college has a $150 million endowment, a sum of financial assets donated to the college. Fund managers, who oversee trade activities, choose to invest the endowment in different areas, like stocks or real estate. All of these decisions are approved by the Board of Trustees, she said.

About 3-5 percent of earnings from investments are spent supporting the college’s budget for operations each year, and the rest goes back into the endowment, she said.

This risk-based strategy focuses on investment targets set by the Trustees, meaning that fund managers choose investments they think will most likely reach the desired profit, rather than what supports the college’s ethical mission, Murphy said.

The college has no active investments in fossil fuels, but it invests 7 percent of the endowment in these companies indirectly, she said. Divestment would be tough because the college isn’t actively invested in these fossil fuel companies.

“We don’t actively buy stocks or bonds in anything. We invest in funds that may, in fact, have a part of their portfolio in fossil fuels,” she said. “Today it could be invested, tomorrow that fund manager might get out of it.”

The college’s investments are indirect because the endowment funds are allocated in many different ways within a large investment portfolio, rather than invested in a particular company, she said.

Murphy said that students can work toward fossil fuel divestment by presenting her with criteria for selecting profitable and eco-friendly funds.

“Without that criteria, it’s hard to measure because there might always be some investment [in fossil fuel companies],” she said.

Jon Honea, an energy and sustainability professor and ecologist, said he encourages his students to focus on educating the community rather than leading a march toward divestment. There is a lack of dialogue on campus about the issue because it’s difficult for students to support something they don’t understand, he said.

“We have an ethical responsibility as institutions of higher learning to show a better, more responsible way [to invest] going forward towards the future,” he said.

After a meeting with Murphy about the endowment, Rivera said the group decided to concentrate on more accessible routes to divestment.

Despite initial setbacks, Rivera said the yet unnamed group has a plan to keep educating the community about fossil fuels. She said the group is starting a club to solidify the foundation for divestment so future students interested in the issue don’t have to start from scratch.

Similar clubs have been successful nationwide. Divest BU at Boston University succeeded in pushing the university to pledge to avoid fossil fuel holdings. The UMass Fossil Fuel Divestment Campaign at the University of Massachusetts led the school to becoming the first major public university to directly divest from fossil fuels.

“[Divestment] is something tangible we can do that can make a real change,” Rivera said. “I think that’s powerful for students.”

Rivera also said the group is working on a plan of action to encourage faculty members to go green using a new policy put forth by Human Resources.

In the past, faculty weren’t in control of how their retirement fund was invested, Rivera said. This new policy would allow faculty members to select from a group of investment opportunities with different levels of stability and risk, and Rivera said she hopes the group can add green companies to the list.

“We will continue to provide access to socially conscious investment funds, including at least one fund that avoids investing in companies engaged in the extraction, exploration, production, manufacturing or refining of fossil fuels,” said director of compensation and benefits Peter Owens in an email.

Honea said that by investing in fossil fuel companies, the college is contributing to climate change, which could lead to a trillion dollar disaster as soon as 2025.

“We’ll be facing a new climate regime that our infrastructure can’t handle,” he said. “Humans will survive, [but] the question is, how much it will cost?”

Fossil fuel investments are unfavorable long-term, Honea said. He said that once the carbon budget—the maximum amount of CO2 emissions before the global temperature tops pre-industrial levels—is exceeded, much of the company's’ net worth will be in fuels that are trapped underground by government regulation.

Amy Elvidge, sustainability coordinator, said she believes the market will soon move away from carbon intensive practices. But the college still has a responsibility to be a leader in divestment.

“Using your wallet to further causes that you believe in is a really powerful way to enact change,” Elvidge said.