Swarthmore Endowment Will Not Divest from Fossil Fuels

Board of managers upholds 1991 policy to seek financial results, not social objectives.

Swarthmore College’s $2 billion endowment said it will not divest from fossil fuels, despite a fasting protest by students and faculty, and a student referendum calling for divestment that passed with overwhelming approval.

“Any policy change that shifts the focus from attaining the best long-term financial results would then require fundamental changes in both the asset allocation and the investment managers who serve the College, and would place that performance at risk,” said Salem Shuchman, chair of the Swarthmore’s board of managers, in a letter to students and faculty. “As with other policies of the board, it may be revisited from time to time, but there is no current plan to do so.”

In April, a referendum initiated by a climate activism student group called for the board of managers to remove a clause from its investment guidelines that required the investment committee to manage the endowment to “yield the best long-term financial results, rather than to pursue other social objectives.”

The board has cited this guideline, which was introduced in 1991 following divestment from Apartheid South Africa, as a reason not to divest its fossil fuel company holdings. The referendum passed with 87% of students voting in favor of it.

Shuchman indicated that because the endowment was much smaller 27 years ago—approximately one-sixth of the size it is today—divestment was less complicated back then. He said there are currently more than 100 investment firms managing the endowment, and all but one have commingled funds. 

The endowment today “dwarfs all other income sources for the College, and there is no identifiable replacement for those funds,” he said, adding that the board “must consider our broader mission in determining any action that would potentially limit the performance of the endowment on which we are increasingly reliant.”

Shuchman also said that although the policy originated in 1991, it was reaffirmed in 2013 and 2015 after “considerable deliberation” by the board.

“In that deliberation, the board considered its responsibility to be financial stewards of the College, and to take a long-term view to ensure we are able to pursue our mission as an educational institution,” he said.

Shuchman cited the college’s policy of carbon neutrality by 2035, and the introduction of an internal carbon tax as examples that show the board’s refusal to divest from fossil fuels “does not in any way mean that we are not concerned about climate change and its impact on our society.”

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