On Monday, February 2, six members of Swarthmore’s Board of Managers again failed to take leadership on the climate crisis and divest from fossil fuels. With a majority of the student body and nearly half of the faculty calling for divestment, Mountain Justice proposed that Swarthmore commit to achieving a fossil-free endowment by 2020, the same year that global emissions must peak if we are to avoid catastrophic climate change. Although some of the Board members we met with were interested in moving our proposal forward, Investments Committee Chair Chris Niemczewski and Board Chair Gil Kemp — the people with the most power to move the process forward — were not present. It was clear that they had not intended for this meeting to produce concrete outcomes.
Since the announcement by one of our primary investment consultants, Cambridge Associates that they would help Swarthmore to divest, we requested meetings with Niemczewski and Kemp numerous times in order to develop a proposal for divestment to bring to the February Board meeting. After Board members rejected these requests, Mountain Justice, based on Kemp’s suggestion met multiple times with the college’s Finance and Investments Office, and through those meetings we developed our own proposal. At our meeting with the Board, we fully expected to continue the constructive process we began with Chief Investment Officer Mark Amstustz and Vice President for Finance and Administration Brown, and we were deeply disappointed that despite the mandate from the campus community to move forward on divestment, the Board chose to turn their backs on our generation and side with a rogue industry.
Last fall, the UN Intergovernmental Panel on Climate Change released its starkest report yet, warning of “serious, pervasive, and irreversible” climate change if the world burns more than roughly 465 gigatons of carbon. The fossil fuel industry plans to burn over five times that much, putting the planet and our future on path for a calamitous 6 degrees Celsius of warming. Their business plan is incompatible with a just and sustainable world. From New Orleans to the Philippines, those least responsible for the the crisis are being hit hardest. With our future hanging in the balance, how can our college choose to invest in and legitimize this industry?
One of the most powerful opponents of divestment on the Board has been Niemczewski. Niemczewski is the founder and President of Marshfield Associates, one of Swarthmore’s highest-paid investment advisory firms. He retains between 25 percent and 50 percent of the company’s stock, and his wife is a Principal at Marshfield. Niemczewski has a clear interest in ensuring that Marshfield can continue managing a portion of Swarthmore’s endowment – but Marshfield Associates does not offer fossil fuel free investment strategies. This conflict of interest may cloud the reliability of the Board’s decision-making.
If the Board accepts our proposal to divest the endowment by 2020, Mr. Niemczewski must either adapt Marshfield’s strategy to accommodate fossil free investment opportunities, or he must end Swarthmore’s investments with Marshfield. To justify the college’s refusal to divest, Mr. Niemczewski issued a deceptive report claiming that fossil fuel divestment would require shifting our entire endowment from actively-managed funds to index funds. The assumptions of this report are false and Mr. Niemczewski knows better. While some managers, including Marshfield, do not currently offer fossil free investment opportunities, a growing number of commingled fund managers, including some of our current managers, do: the use of sustainable, responsible, and impact investment strategies grew by over 75 percent between 2012 and 2014.
As a financier, Niemczewski must know that a growing number of investment leaders are recognizing the risks posed by the climate crisis and unburnable fossil fuels. HSBC investment bank estimates that if governments follow through on international agreements to keep warming below 2 degrees Celsius, the fossil fuel industry will lose $20 trillion in assets and their companies could be devalued by up to 60 percent. The increasing recognition of the risks posed by this ‘carbon bubble’ have led to rapid shifts in the financial community, including the announcement by Cambridge Associates, which helps advise 71 percent of US college endowments worth over $1 billion, including Swarthmore’s, that it will help institutional investors identify actively managed, fossil free funds.
Yet, in Monday’s negotiation, we were astonished and deeply disturbed when members of Niemczewski’s Investment committee again rejected the growing consensus that the carbon bubble presents serious risks to investors. While Niemczewski’s committee refuses to protect our endowment from the carbon bubble, an unprecedented chorus of financial leaders, ranging from Bank of England Governor Mark Carney to billionaire investor Tom Steyer, are sounding the alarm on the risks of unburnable carbon. Former SEC Commissioner under Ronald Reagan Bevis Longstreth argues that the top 200 fossil fuel stocks are “severely overpriced in the market” and thus colleges and universities have “a compelling reason on financial grounds alone to divest these holdings before the inevitable correction occurs” and the carbon bubble pops. UK Energy Secretary Ed Davey warns that fossil fuels could become the “sub-prime assets of the future.” UN Climate Chief and Swarthmore alumna Christina Figures calls continued investments in fossil fuels a “breach of fiduciary duty.” It is not a question of whether we will transition to a low-carbon society in which fossil fuel companies cannot burn through their reserves, Figueres notes, but a question of whether we transition “because nature will force us, or because policy will guide us.” But these warnings fall on deaf ears: Niemczewski’s Investment Committee maintains that all is well, that fossil fuels are not overpriced, and that stranding 80% of reserves in the ground poses no risk to our endowment.
While fossil fuel divestment enters the financial mainstream, Niemczewski and his committee continue to obstruct progress at Swarthmore and violate our college’s Quaker values: social responsibility, leadership for the common good, and truthful dialogue. The Board of Managers has failed us repeatedly. They took too long to divest from South African apartheid, and once again they are on the wrong side of history. As students, we cannot stand idly by as Niemczewski and his committee prevent Swarthmore from aligning our investments with our values and taking critical leadership on climate change. Fossil fuel investments are in the public eye and by investing our $1.8 billion endowment in fossil fuels, Swarthmore is saying this industry’s business model is compatible with our values of social justice and sustainability. This is the wrong message being sent at the worst time. The next five years are pivotal ones for ensuring the survival of our generation; the window for action is closing rapidly.
The odds are against us. The fossil fuel industry is one of the most powerful and profitable industries in modern history. Every institution has a responsibility to maximally leverage their resources to promote action to best ensure a livable planet. In particular, institutions of higher education must ensure that their students have a future in which to flourish. It is unconscionable for Swarthmore to invest in the very companies that are recklessly endangering our future. Along with thousands around the world, Swarthmore students and faculty will rise up tomorrow for Global Divestment Day and ask our the Board of Managers: whose side are you on?
Join Mountain Justice tomorrow at 5PM in SCI 183 for a faculty and student teach-in on divestment and the history of student activism, where we will announce next steps for our campaign.