Divestment, in this case, means not owning companies whose value is derived from the fossil fuel reserves they own in the ground. Most people are familiar with the moral and environmental arguments for divestment, but there is also a compelling financial argument. Supporting fossil-dependent businesses is a risky long-term investment: global climate change poses significant risks to the health of our economy, to fossil-based firms, and to the institutions that are invested in them. Investing in fossil-based corporations not only underwrites these activities; it also exposes Williams to future risks that are not yet priced into market values and returns on investment. Creating a fossil-free investment portfolio can help mitigate the increasing risks associated with climate change and ensure that Williams can provide the highest quality education to an increasingly diverse student body for generations to come. And perhaps most importantly, the largest and most comprehensive analysis of the economics of climate change concludes that the benefits of limiting climate change far outweigh the costs of not acting.
For these reasons, we argue that Williams College should put into place a risk-minimizing policy of never owning the stock of the200 largest publicly traded oil and coal companies and allow that list to change as the market changes.
The divestment movement is gaining traction not only among colleges, cities, and churches, but also in the financial sector. Respected investment groups like MSCI and Impax have released reports showing that fossil-free portfolios have outperformed their counterparts, and warn of the impacts of future climate regulations and climate-based economic changes. And major institutions like the World Bank, the Department of Defense, and reinsurance corporations are already strategizing around the economic and ecological effects of climate change.
But there’s another reason why it’s important for Williams to divest. Our endowment is $1.8 billion or so. Most of our money is managed by corporate fund managers -- i.e. the financial establishment -- who have no interest in allowing clients to specify what companies to own or not own. But once a major client like Williams clearly states what economic sectors it cannot support, financial professionals will have to respond, and this lays the groundwork for a whole range of universities, pension funds, and foundations that want to divest but have less clout. In short, Williams can blaze the path for a whole movement.
Responding to climate change is going to require more than simply changing lightbulbs or driving habits. We also need to work through the institutions and communities that we are a part of to initiate large-scale changes. Williams is one of those communities; it’s one of the most personally important to us and one of the most powerful. That’s why we’re asking for Williams to be a leader.
Re-investment is possible, it's responsible, and it makes sense. With enough support from alumni and current students, we can make this happen.