October 26, 2015

Trustees Hear Fossil Fuel Divestment Arguments

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“If shared governance is to have any real meaning, you must respect this unique, united decision and consider this matter seriously,” said Prof. David Shalloway, molecular biology and genetics, as he urged the Board of Trustees to divest the University’s endowment from fossil fuels.

Shalloway’s presentation at Friday’s Board of Trustees open session meeting marks the latest step in an effort towards divestment, a movement that began when the Student Assembly passed a resolution in February 2013 calling for Cornell to divest from the fossil fuels industry. Since then, all four other shared governance bodies have passed similar resolutions, and a letter in support of divestment addressed to President Elizabeth Garrett and the Trustees has garnered over 1,200 signatures in 10 days.

“This unanimity is unprecedented in Cornell’s history,” Shalloway said.

Shalloway was followed by trustee Donald Opatrny ’74, chair of the Investment Committee, who presented several points against divestment, and by a discussion where other trustees voiced mainly anti-divestment opinions.

The passed resolutions call for divestment over a 20-year period from the 100 coal and 100 oil and gas companies holding the largest fossil fuel reserves. These companies’ shares currently make up 0.5 percent of the endowment, according to Shalloway.

While the Office of University Investment previously claimed that Cornell would lose over $100 million dollars over the past 10 years had it divested, Shalloway said this statistic was not based on data from the past decade, but rather from market fluctuations between 2004 and 2013.

“It’s likely that divestment will earn, not lose, us money,” Shalloway said. “The same analysis, but for the real past 10 years, ending in 2015, shows that divesting would earn $47 million dollars.”

Additionally, Shalloway highlighted the harm climate change will have in the future and Cornell’s role in combating it.

“Hurricane Sandy gave us a $65 billion dollar taste of what climate inaction means,” Shalloway said. “We’re actually raising the level of Cornell Tech campus on Roosevelt Island and siting its buildings’ entrances on high ground, because 500 year floods are now 25 year floods in New York City. Our planet is its hottest in millennia, and we’re on track to exceed the safe maximum temperature by the time Cornell freshmen reach middle age.”

Shalloway urged the Board of Trustees to make Cornell the first Ivy League university to divest from fossil fuels.

“Indeed, it will require courage for Cornell to be the first to stand out from the pack,” Shalloway said. “But living up to our progressive tradition will bring rewards beyond fulfilling our duty.”

Shalloway’s arguments for divestment from an ethical and financial standpoint were followed by a presentation from Opatrny, chair of the Board of Trustees’ Investment Committee, which voted unanimously to recommend opposing any divestment action.

One of the greatest concerns relating to divestment is that it may make it more difficult to find quality third-party managers to run Cornell’s endowment portfolios. This could result in “significant underperformance as a consequence,” Opatrny said.

Additionally, the decision to politicize the endowment investment by letting environmental concerns overtake financial analyses may set a dangerous precedent, according to Opatrny.

“Should we decide there’s a marginal cost for taking this type of action, what’s the next step?” Opatrny said. “Other debates that exist are water, Palestine, Israel, Russia, food genetics, you choose. Where are we going to make that type of determination? I think it’s a fairly slippery slope.”

As Opatrny’s presentation concluded, the Board of Trustees segued into a discussion over the issue. Trustee Barbara Novick ’81 said she did not believe divestment is a viable option.

“Energy companies are the largest investors in alternative fuel, so if we divested from them, it’s sort of like cutting off your nose to spite your face,” Novick said. “They are going to be the future in the alternative side. I think this is interesting and interesting to talk about, but I don’t really think that the goal is going to be achieved by divestment.”

However, the Board of Trustees should do more than say no to divestment, Trustee Bruce Raynor ’72 said.

“Clearly, there’s not this sentiment today, here, to consider divestment,” Raynor said. “But, I think we need to listen to the faculty, who are such an important part of Cornell, and the students, who are such an important part of this University, and not say what we won’t do and say what we will do to take leadership on climate change. It’s not divestment. And I don’t think it’s just public relations.”