February 14, 2013

President Says Divestment Debate at Cornell Is “Divisive”

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In an interview with The Sun on Monday, President David Skorton responded to student demands to divest the University’s endowment from the fossil fuel industry. Skorton urged caution, noting that Cornell cannot sacrifice its financial health in pursuit of social causes. Still, he embraced the use of divestment as a useful tool in general.

David Skorton: There are four things I’d like to get across about [divestment]. One is, I think at times divestment is a tool that can be used; I do. I’m not talking about [divesting from fossil fuels] right now; I’m talking about divestment in general, because there are people who think divestment is never a good idea … I encouraged a selective divestment from Darfur, and we did that. So the first thing is, I don’t have a position like divestment is something you should never touch.

Secondly, I really believe that — as much as possible, within the limits of not hurting the campus, in terms of the returns — having the endowments invested in socially responsible ways is a really good idea. I think that’s true for my own personal investments as well.

Thirdly, this is a really complex issue and … I doubt if we’re going to have a broad consensus on this on campus. I think this is going to be a very divisive issue, a complex issue … There are a lot of different issues to this.

I think the campus will generally agree that social responsibility ought to be taken into serious account while investing. I think people will agree with that. I think even people who believe that certain maneuvers are the wrong maneuver will agree that having an ethos of social responsibility is important. Secondly, I think people will agree that development of renewable fuel sources and changes in the way we do things in the United States, to make it more likely that we can utilize renewable fuel sources — I think people will agree about that. I think there will be somewhat of a consensus, maybe a little bit less, that anything we can do as a country to be less dependent on foreign sources of energy [is positive] … for geo-political reasons. And the thing I do not think we will have a broad consensus on is that complete divestment from the fossil fuel industry will be the way to go. I actually don’t know what the right answer is; I really don’t.

But I believe that this is how we shouldgo about it: I think we should encourage the investments in renewable fuels and sustainable energy sources, companies, energies, ideas, products, processes as long as we are meeting some generally accepted criteria for the vitality of the investment. I think I would not be in favor of investing in a certain area because it was socially responsible if the return on investment was likely to be extremely lackluster. The whole field  of socially responsible investing is making sure that doesnt happen … I think the way to go forward is to learn about it more, all of us …

We’ve already agreed that investment professionals are going to emphasize searching for — not just passively waiting, but searching for — investment opportunities in renewable energy. And then secondly, we’re going to continue to discuss this: I want the students to make their case, put out their points of view … I think it’s important [that] regular interaction occur on this. I can’t predict which way this will occur but I doubt we’re going to have complete divestment from the fossil fuel industry …

The endowment has to serve two purposes that are quite different: One, it has to be robust on returns we’re counting on in the short-term … At the same time, it’s something for the far future, the far horizon — the investments for the far horizon have a different criteria.

Original Author: Sun Staff