On Nov. 8, 2018, the Board of Trustees voted to begin divesting from fossil fuels.
On Nov. 7, 2019, just one day before the divestment decision’s first anniversary, sophomore Karsten Beling sent an email to the Whitman community about a Board of Trustees Thank You Letter Party to be held at the Outhouse.
The event planned to celebrate the anniversary of Whitman’s commitment to divestment by writing letters to board members, thanking them for their decision and asking for more transparency in the process of divestment.
Beling said that Whitman has not yet finished divestment.
“Oh, did you think Whitman actually divested from fossil fuels?” the email read. “Nah, the board of trustees just committed to the task of divestment on November 9th.”
2019 alum Nathaniel Larson suggests that Whitman’s divestment decision may in fact raise more questions than it produced answers. In an op-ed he wrote for The Wire in Feb. 2019, Larson recalled the day Whitman’s divestment decision was made.
“After six years of conversations, debates, and protests involving students, faculty, staff, alumni, the administration, and, of course, the Board, the decision had been made: Whitman College was going to divest,” Larson said. “In the applause after the vote, it seemed that everything was settled. But what popped into my head were questions: What does divestment really mean for Whitman? How, after six years, did we arrive at a unanimous decision? And: What happens now?”
In response to beliefs that Whitman had announced a finite process of divestment, Chief Financial Manager Harvey explained that “it’s more complicated than that.”
The Statement on Divestment from Fossil Fuels, released by the Board on Nov. 8, 2018, “directs the college to begin reducing ownership in fossil fuels, and puts Whitman on a path to divestment from fossil fuel investments.”
However, the Board of Trustees also acknowledged their fiduciary responsibility to the school in a statement which has informed Whitman’s divestment progress thus far.
“This [divestment] decision … reflects the belief that it is possible to move toward divestment from fossil fuel investments in ways that do not harm the college’s long-term investment returns and honors the fiduciary responsibilities of the Board of Trustees,” the statement reads.
First, Whitman must contend with the changing definition of what fossil fuel divestment entails.
Junior Adam Rooney explained the complexity of understanding fossil fuel divestment.
“Defining ‘total divestment’ is tricky because of the interconnectivity of companies,” Rooney said. “For example, companies can own stock in other companies and buy out other companies that might then be connected to the fossil fuel industry.”
The Whitman College Board of Trustees’ Statement on Divestment from Fossil Fuels identifies the Carbon Underground 200 list of global coal, gas and oil reserve owners as the primary indicator of Whitman’s divestment progress.
“Whitman College will not invest in any new funds that at the time of the investment include securities in any companies in the Carbon Underground 200,” the statement reads. “The Board of Trustees will receive an annual report on the status of any investments held—both private equity and marketable securities—that continue to invest in Carbon Underground 200 companies, along with a status report on the college’s efforts to secure either active or passive investment alternatives to replace these funds.”
The Carbon Underground 200 is an index of the top publicly-traded fossil fuel reserve holders globally, however they are not a static list of reserve holders.
Harvey explained the challenges of using The Carbon Underground 200 in maintaining consistent divestment.
“There’s an independent organization that identifies who the Underground 200 is and that definition’s going to change periodically,” Harvey said. “All of a sudden we could have a manager that is in the Underground 200 with some exposure that we didn’t last year, and then we’ll have to address that.”
Harvey further explained the difficulty of maintaining consistent divestment progress, especially within actively managed marketable funds.
“[Whitman’s investment in the Carbon Underground 200] can change from year to year because managers can change who their investments are with,” Harvey said. “Most of our portfolio is actively managed and none of [the managers] promise … that they will not have fossil fuel exposure in the Underground 200. We’ll have to monitor that every year, and then make decisions based off of that.”
Harvey also addressed why Whitman decided against immediately divesting from non-marketable private funds, which are contractual commitments to be held for a specific period of time.
“We have a series of investments in a company called Yorktown, and Yorktown is considered what’s called a private equity manager,” Harvey said. “It’s a contract where we agree to invest, and the investment is typically 10 or 12 years long… We need to wait for those contracts to end, so that’s where the bulk of our exposure is right now.”
Harvey described the potential ramifications of pulling out of the investment early.
“We looked, and if we went to just try and sell Yorktown on what is called the secondary market, we might lose 35 or 40% of the value, so that’s not a good financial decision,” he said.
Despite the challenges of divestment, Whitman has made progress toward their divestment goals.
A Nov. 9, 2019, divestment update issued by the Board of Trustees shows that total portfolio exposure of Whitman’s endowment to the Carbon Underground 200 dropped from 0.92% to 0.51% between June 2018 and June 2019. The update describes some of the measures that lead to the decrease in fossil fuel investment.
“The College made several new investments to investment managers that do not currently have or intend to have exposure to the Carbon Underground 200 companies. This included approximately $25 million in fossil-fuel free indices and committing $10M to a sustainability focused private equity fund,” the update reads.
More recently, President Kathy Murray provided a divestment update in a Feb. 26 email issued to the community.
“As part of the college’s divestment commitment, the Investment Committee approved an initial move of $12 million from a current international manager with Carbon 200 Underground exposure to a new international manager without those fossil fuel investments,” Murray’s email read.
Harvey discussed the motivations behind the decision.
“We have a really large, about a $36 million, investment with [the international manager Murray referenced],” Harvey said. “We first went to them and said ‘we would like to no longer have fossil fuel investments’ and they said no … This year we started a process of searching for an alternative manager.”
Harvey explained that the nature of the fund meant that immediate divestment from the manager was “the wrong time from a market timing perspective … From a fiduciary standpoint we made the decision we would start moving out of that manager over three years rather than all at once.”
Despite the challenges of the divestment process, Harvey is optimistic about the long-term effects of the Board’s decision to move towards fossil fuel divestment.
“I think our investment committee thought that long-term it was a good fiduciary decision… long-term the economy has to change and… diversify away from fossil fuels,” Harvey said. “We’re trying to do the right thing long-term.”
Rooney, who describes himself as “tangentially involved with divestment,” explained his understanding of Whitman’s divestment plan.
“When we talk about Whitman’s divestment, I think we’re talking about fossil fuel divestment with the aim of reducing carbon emissions by accelerating the adoption of renewable energy,” Rooney said. “[We’re] putting public pressure on companies that are currently involved in fossil fuel extraction to invest in renewable energy… It’s hard for me to say, but it seems like divestment is well underway.”
Harvey expressed the challenges of balancing fiduciary commitment and moral obligations.
“There’s no easy answer [as to balancing fiduciary and moral commitment], and that’s why we struggled with [the divestment decision] for quite a few years … there are so many issues out there that one can raise and if we attempted to adopt every one of those issues it would be very difficult to manage the portfolio,” Harvey said.
“We felt, and the Trustees felt, that this issue was so universal and so threatening to the world that it rose to the level that … it’s really an existential threat,” Harvey added. “We also know that our divestment isn’t going to change any of that, but it’s a symbolic statement and we hope it helps educate other people.”
Rooney suggested that Whitman’s divestment commitment can act as the catalyst for other meaningful change.
“We should think about how we as a college—meaning all students, faculty, and staff—financially support and benefit from fossil fuel industries,” Rooney said. “It seems hypocritical to pat ourselves on the back for divesting and then turn around and buy products coming from those companies. I’d admit that this isn’t exactly what’s happening, but we should be more aware of waste and consumerism.”
“The evolution of divestment could eventually mean discouraging and reducing carbon-intensive practices on campus,” he added.