On April 19, a Student Government Organization referendum introduced by climate activism student group Swarthmore Sunrise passed with 87% approval. The referendum calls for the Board of Managers to remove a clause from its investment guidelines requiring that the Investment Committee manage the endowment so as to “yield the best long-term financial results, rather than to pursue other social objectives.” The board has cited this guideline, which was added in 1991 following divestment from Apartheid South Africa, as a reason not to divest its fossil fuel company holdings. It remains unclear how the Board will respond to the referendum, though the Board has historically not made policy changes from similar student initiatives.
In the referendum, Sunrise makes two demands for the Board. First, they demand that “a discussion of the repeal of the 1991 Ban must be on the agenda for the next Board Meeting, set for May 11th and 12th.” Second, Sunrise demands that “the Ban must be replaced with a holistic investment policy that takes into account both long-term financial results and Swarthmore’s commitment to social responsibility.”
Sunrise, previously known as Mountain Justice, also ran an SGO referendum in February 2017 calling for partial divestment. That referendum passed with 80.5% approval, though President Valerie Smith and then-Board chair Tom Spock ’78 swiftly released a statement affirming its 2015 decision not to divest.
Compared to last year’s partial divestment referendum, the turnout for this referendum was slightly lower. 40.7% of the student body voted on this most recent referendum, compared to 54.3% for the 2017 referendum.
Of those who did vote, 87% approved of the referendum, while 11.5% voted against it. 1.5% students indicated “no preference.”
In May 2015, following a 32-day sit-in in Parrish led by Mountain Justice, then-Board president Gil Kemp ’72 released a letter reporting that the Board had decided against divestment. In the letter, he made an explicit reference to the 1991 investment guidelines as a reason why Board members chose not to divest. The Board reaffirmed this decision in 2017, following the partial divestment referendum.
“What the school has told Sunrise for the past few years has been ‘oh, we can’t divest because we have this policy in place,’” Sunrise member Aru Shiney-Ajay ’20 said. “Our decision was, if that’s the reason we’re given, these are the terms we’re going to talk about.”
Sunrise leaders Shiney-Ajay, Gabriel Brossy de Dios ’20 and September Porras Payea ’20 met with President Smith and her assistant on April 5, prior to publicly introducing the referendum. In this meeting, Smith promised that if the referendum passed, she would bring it up at the May Board meeting.
“We have been in contact with her since and have confirmed that she will personally present it to the Board, though perhaps not necessarily express her opinion on it,” Porras Payea ’20 wrote in an email to The Phoenix. “Ultimately the president of the college is hired by the Board, so her influence is limited, but this is a big step in comparison to past conversations and referendums [sic] she’s been involved with.”
However, it is unclear whether the Board will carry through with the terms of the referendum even if President Smith presents the referendum at the next meeting. The Board has a mixed track record of responding to student referenda; the most recent instance it carried through with the terms of a student referendum was in 1994, when 61% of students voted to fly the American flag above Parrish, an action that many Board members already supported.
“I think it’s really difficult to say the exact impact of the ban on whether [the Board divests],” Shiney-Ajay said.
Vice President for Finance and Administration Greg Brown has also come out in opposition to repealing the 1991 ban. In an op-ed published in The Phoenix, Brown asserted that he, as well as members of the Board, believes that lifting the ban would be a meaningless gesture.
“The College’s investment policy takes into account broader concerns, such as climate change or changes in an investment manager’s stated strategy, when they might materially affect the financial performance of the endowment upon which we rely to support our core mission and goals. Changing the investment policy to make a moral statement with no tangible effect could have the effect of diminishing performance and reducing funding available for critical mission-centric initiatives such as financial aid and academic programs, which is why the Board believes our current policy is the right one for the College,” Brown wrote.
However, Brossy de Dios believes that even if the Board doesn’t repeal the ban, having the referendum in place will give student activists more leverage to push for fossil fuel divestment.
“I worked on the campaign with Mountain Justice and was here for the referendum on partial divestment last year,” Brossy de Dios said. “One of the things around that was that having that referendum even though they had rejected it right-off, it still laid the groundwork and put a lot of pressure on them.”
The guideline was established in 1991, not long after the college had fully divested itself from Apartheid South Africa. In the November 7, 1997 issue of The Phoenix, former College president Alfred Bloom, who assumed his position in 1991 around the time the ban was instated, defended the ban as a means to protect Swarthmore’s educational quality.
“Given the primary responsibility to use our endowment to support our educational mission, there would likely be very few times when we would want to take risks with the financing of that educational purpose by using the endowments to make social… statements. [However], joining the initiative to undercut apartheid, in my opinion, was one such rare moment,” Bloom wrote.
The endowment did lose value following South African divestment, which resulted in temporary pay cuts for staff and a possible decrease in financial aid. However, the actual loss of returns on the endowment, as compared to peer institutions that did not divest, was $917,000, which was considerably less than the $2 million the board allocated to cover endowment losses.
Whether the 1991 ban was an ethical decision was the center point of debate that SGO moderated on Monday night between representatives from Sunrise and representatives from the Swarthmore Conservative Society, who argued against the referendum. Students and faculty members packed into Science Center 101 on Monday night to watch the debate. SGO Co-President David Pipkin ’18 estimates that about 110 people attended. SGO also live-streamed the debate on its Facebook page, which was viewed by 565 people.
Starting with their opening statements, the debaters dove into conversations about whether the 1991 ban was ethical. Porras, who debated on behalf of Sunrise, argued that the ban reflects poorly on the Board’s commitment to social justice.
“The institution of this ban raises a really pressing question: does the Board of Managers regret divesting from South African apartheid?,” Porras said. “The Board of Manager believes that investments should be solely managed for financial reasons. If they truly believe that, then they don’t believe that divesting from apartheid is the right decision. If they do believe that divesting is the right decision, there is no logical reason for this ban to be in place … It very much does not align with our values.”
Swarthmore Conservative Society member Matt Stein ’20 argued that the ban is essential because it prevents the school from taking a stance on issues where the student body has heterogeneous views. He made reference to the Overton window, a term describing the range of ideas considered acceptable within public discourse for politicians.
“The school by divesting from fossil fuels, or any other thing that has views that can be defended within the Overton Window, is essentially saying that those views are antithetical to the university’s values and that students should not be advocating for those views,” Stein said. “That’s completely the opposite of what the university is supposed to be. It’s supposed to be a free marketplace of ideas.”
Stein went on to adopt a similar line of reasoning as did Bloom and Dean Brown, and argued that the Ban is a safeguard against divestment for anything but the most extreme cases.
“There are clearly stances such as South African apartheid where views defending are clearly not within the Overton Window, and we should divest, but that doesn’t necessarily mean that all divestment should be on the table,” Stein said.
Sunrise members pushed back against Swarthmore Conservatives’ argument that divestment ought only to be used in “extreme” cases.
“You mentioned that the Overton Window applies to things that are outside of intellectual discussion, things that deal with overt racism, and cited South African apartheid as dealing with that,” Porras said. “Well, climate is racist. The climate crisis is specifically targeting people of color and low-income communities that are politically, socially and culturally disenfranchised.”
Another concern that the Swarthmore Conservative Society debaters raised was that lifting the ban would make the Board susceptible to future divestment movements. Though the college’s Board of Managers has not faced serious pressure in recent years on issues other than fossil fuel investments, some Board members have expressed concern that fossil fuel divestment might lead to a “slippery slope” toward divestment from private prisons and from companies that support Israeli occupation.
“The fact is that we open a big door by taking away this ban. We open a door to divesting from a bunch of different of things. It’s basically the slippery slope argument,” Stein said.
However, Porras feels that it is antithetical to the college’s values to have a ban on all divestment. She feels that students should have space to have discussions with the board.
“I’m looking at this policy and it’s something specifically… that goes against Swarthmore’s values,” Porras said. “I also think that if there are things on this campus that students feel like looking at they realize they don’t want to be invested in and it’s financially viable to divest from, that’s something students should have the pathway and… be able to have that discourse with the Board without this blanket ban that none of our peer institutions hold.”
The debaters also sparred over whether fossil fuel divestment, specifically, would affect the endowment returns.
“Possible financial returns on the endowment are a social good in itself, in order to make sure that low-income students have greatest opportunities to come here and to make sure that students get the highest quality education possible here so they can continue on to do good things,” Conservative Society President Jorge Tello ’20 said.
Shiney-Ajay argued that the partial divestment proposal they introduced with the 2017 referendum would absorb most of the potential costs of divestment. The proposal calls for the college to divest from its fossil fuel holdings in separately managed accounts, or funds that solely respond to the college. For funds managed by other organizations, Sunrise would have Board request that investment managers move its holdings to fossil-free accounts, which would eliminate the costs of hiring another manager. She also argued that fossil-free funds are a better long-term investment given current market trends.
“There’s no reason to think that divesting from fossil fuels would significantly lower our endowment,” Shiney-Ajay said. “Even if it were, one, [the endowment has] really high returns, and two, there are choices other than financial aid the school could choose to cut back on. Sunrise Swarthmore has said repeatedly that we won’t be supporting any plan for divestment that cuts back on financial aid.”
Susanna McGrew ’20, who attended the debate, did not know how she felt about the referendum and the ban. As of Monday night, McGrew had not decided whether to vote in favor or against the referendum, or whether to vote at all.
“The ban, I think, is kind of immaterial, because the ban just prevents us from making these decisions, it’s just a stop-gag in a way,” McGrew said. “I think that it’s probably an okay stop-gag to have because most of the time I think we don’t want to divest, but does the ban prevent us from considering exceptional cases? Maybe it does. There’s no language about that in the ban. Should it be amended to make way for exceptional cases? Probably not, because I think that could get into the whole ‘slippery slope’ argument.”
Reuben Gelley Newman ’21 felt more confident about his vote on the referendum.
“I’m voting ‘yes’ because I think Swarthmore has to back up its professed social justice values with real action on an institutional level,” Gelley Newman wrote to The Phoenix. “The Board’s investments should obviously make financial sense, but must be true to the values held by students, faculty, and the institution as a whole.”
If President Smith keeps her word, the referendum will go before the Board in May, whose response will determine whether or not social considerations should be taken into account for the college’s future financial decisions.