EDITORIAL: Commending trustees' fossil fuel decision
On Wednesday, University President Ron Liebowitz shared an update from the Board of Trustees on the University’s policies and actions regarding fossil fuel divestment. This board commends the Trustees and President Liebowitz for this positive, prudent and practical approach to address the concerns of community members.
Of the University’s approximately $1 billion endowment, 5 percent is set aside for investment by the Office of Investment Management in private limited partnerships, which have a set partnership time frame. The rest is entrusted to a network of approximately 40 independent fund managers who invest in commingled funds, over which the OIM, administration and Board of Trustees have no direct control. Some of these managers may have small investments in the energy sector, including fossil fuels. Per a Dec. 3 email from Chief Investment Officer Nicholas Warren, roughly 6.2 percent of the University’s total endowment is invested in fossil fuels as of Oct. 30, 2018.
Brandeis has committed not to invest endowment funds directly in “public or private companies or partnerships whose principal business is the mining of coal for use in energy generation.” This important step aligns with the policies of other larger schools. The University will also not make any new investments in fossil fuel partnerships for three years, at which time they will re-evaluate its portfolio. While this may not be the immediate action that some students and faculty had hoped for, it is a realistic and productive compromise. Leaving limited partnerships is not simple, as it comes with many fees and penalties. As Warren’s email notes, Brandeis would incur a loss of about $12.7 million by doing so.
The last piece of the divestment puzzle is the commingled funds, 2.6 percent of which are comprised of holdings in fossil fuels. Liebowitz wrote that the Board decided not to divest these funds, as that would be “imprudent and place the financial well-being of our endowment in jeopardy.” The University relies on an excess return on investments to ensure growth of spending power and the endowment each year.
Pulling out of every fossil fuel investment — every limited partnership, direct investment and commingled fund — would greatly jeopardize the stability and growth of the University’s endowment, threatening professorships and financial aid. According to Warren, divesting would cost the University $130 million to $280 million in endowment value 10 years into the future. We believe that Liebowitz and the Trustees have adopted realistic and practical policies with a framework in place to re-evaluate their investments in three years.
Outside of divesting, the University has made great strides to reduce its carbon footprint. Liebowitz mentioned that the University has reduced its carbon emissions by 12.6 percent since 2015 and is working toward a 15 percent decrease by 2020. This board commends Liebowitz and the Brandeis community for their ongoing commitment and action to make the University more environmentally friendly while balancing student needs and financial stability.
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