April 4, 2013

Skorton: Cornell Will Not Divest in ‘Immediate’ Future

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The University has no plans to divest a large portion of its endowment from the fossil fuels industry in the “immediate foreseeable future,” President David Skorton said at a Student Assembly meeting Thursday.

Skorton said Cornell remains committed to sustainability and that he urges students to continue discussing environmental concerns.“This is going to be a long-term conversation between us,” Skorton said, adding that divestment will remain a topic of discussion within not only Ithaca but also across the nation.

Skorton’s response came as a disappointment to some students, who have appeared before the Board of Trustees, spoken at the Student Assembly and hand-delivered letters to Skorton asking the University to divest. Supporters of divestment have argued that the University has a responsibility to invest in sustainability and said the financial risks of divestment have been exaggerated.

On Thursday, however, Skorton described the decision to divest from fossil fuels as “high stakes,” citing “the risk we would put the campus under” if the University were to divest.

He added that students can expect the University to make a “very serious effort” to move more of its investments into sustainable energies in the future.

Cornell’s Chief Investment Officer A.J. Edwards previously said to The Sun that divestment would have a “material impact on the return of the endowment and its contribution to the operating budget of the University.”

Additionally, Edwards has said that while the expected rate of return on investments in the energy sector is one of the highest of all of the asset classes the University invests in, investments in alternative energy strategies have rarely produced returns that meet Cornell’s risk and return requirements.

But students have said that by investing in sustainable resources, the lost revenue due to divesting from fossil fuels will be balanced.

However, in response to those who say that there is no or minimal risk to the endowment, Skorton said that he “is not convinced by [the] data.”

“It’s important to note that collectively, nobody invests as much on research on sustainability as the fossil fuels industry,” he said.

More than 20 student organizations have hand-delivered letters to Skorton asking the University to pursue divestment, according to Anna-Lisa Castle ’13, former co-president of Kyoto NOW!, a climate justice organization. Additionally, in a resolution passed in February, the S.A. asked the University to divest by the end of 2020 and reinvest 30 percent of divested funds in sustainable enterprises.

Skorton also said that more than 10 percent of the University’s operating costs are drawn from returns on the endowment. If the endowment shrinks, the University may have to cut budgets, increase tuition or do both to make up for the lost revenue, according to a document on the University’s Cornell NOW! website.

Skorton, however, did not entirely discredit the idea of divestment during the S.A. meeting.

“I do think [that] occasionally, under very certain circumstances, divestment of a portion of the portfolio is a reasonable thing to do,” he said.

After the S.A. meeting, Ulysses Smith ’14, vice president for diversity and inclusion and incoming president of the S.A., said that he understood the University’s rationale, even if it was not what he wanted to hear.“What we need to do now … is really advocate for investment in sustainable and renewable resources. We need to invest enough so that divestment from fossil fuels is possible without causing significant harm to our operating status,” Smith said in an email.

Like Smith, Rebecca Macies ’14, co-president of Kyoto NOW!, said she respected Skorton’s decision, even if she did not agree with it. “[Skorton] has been very receptive to us throughout the whole process, and we really appreciate that. We will continue speaking to him and trying to continue this conversation into the future,” she said.S.A. CALS Representative Sarah Balik ’14, who co-sponsored the resolution asking the University to divest, said she wished she could have heard more concrete details about the University’s investments in sustainable energy at the meeting.“I would have liked to have heard tangible steps that would be working towards not only responsible investment, but also a little bit of a move toward divesting from irresponsible sources,” Balik said.Others were less satisfied with Skorton’s message. Julia Fiore ’13, a member of Kyoto NOW!, said she believes divestment is an obtainable goal for the University. She added that the University will continue to hear from her and other student groups.“Over the timeline we gave them, I think would be very reasonable to fully transition out of our investments in the fossil fuel industry,” Fiore said.

Kelsey Erickson ’13, another member of Kyoto NOW!, said she appreciates that Skorton and Edwards have met with her organization, but she said she is “disappointed that [Skorton] has dismissed divestment as being too risky.”

“I understand that [Skorton] feels obligated to act in the best interests of the students by maintaining a healthy endowment to ensure financial aid, but he should feel equally obligated to take every action in his power to maintain our planet,” Erickson said. “I commend Cornell’s Climate Action Plan and the many strides that Cornell has made towards greening our campus, which is why I believe its a shame the fossil fuel industry is undermining their progress.”

Alexa Davis contributed reporting to this article.

Original Author: Tyler Alicea