Staff Assembly Supports Student Request for Divestment

gonzagaWhen Gonzaga students began urging their University to live up to its mission and divest from the companies with the largest stores of carbon fueling the climate crisis, it was not clear whether the student body, faculty, and staff would support them. Three years on it is now clear: the representative bodies of Gonzaga’s students, staff, and faculty all support fossil fuel divestment. The Gonzaga Student Body Association (GSBA) voted in favor of divestment in the spring of 2017. The Gonzaga Faculty Senate voted in favor of divestment in the spring of 2018. And now the Gonzaga Staff Assembly Executive Council has declared its support for divestment as well.

“The Staff Assembly Executive Council supports the student effort to encourage the Gonzaga University Board of Trustees to divest from the 200 most carbon-intensive companies.

We acknowledge that the Gonzaga University Endowment Fund is ultimately and solely the fiduciary responsibility of the Gonzaga Board of Trustees, and as such, our vote is meant to support students that are living into our Jesuit, Catholic, humanistic mission to care for creation.”

The students, staff, and faculty of our great University are speaking to our Board of Trustees with one voice: embrace a path to meaningful divestment from the fossil fuels driving climate change.

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An open letter to Gonzaga Faculty

The following letter from the student leaders of the Fossil Free Gonzaga divestment campaign was sent to members of the Faculty Senate on the day the Senate was set to vote on the divestment resolution (April 4, 2018). The Faculty ultimately voted in favor of the resolution and an amendment. For more on the Faculty Senate vote, go here.


April 4, 2018

Dear Gonzaga Faculty member,

As students of Gonzaga, we are prepared to be more than just doctors, engineers, teachers, and business leaders. Every day, we are taught to be champions of social justice, protectors of the vulnerable, and actively engaged members of our communities. This desire to better the world in which we live stems from Gonzaga’s mission which fosters “a critical understanding and appreciation of our common human nature, a dedication to human dignity, and an appreciation for international and global interconnectedness.” The GU mission also embodies the responsibility to promote the responsible stewardship of our physical resources and to recognize the importance of the rights of future generations.

We are proud that Gonzaga University has a robust Investment Policy for the endowment. The policy includes Environmental, Social, and Governance (ESG) considerations and states: “In keeping with the Mission Statement of Gonzaga University, it is the intention of this Investment Policy to promote the basic moral values of fairness, respect for human life, defense of human rights and social justice.” Now more than ever, it is imperative that we ensure that our investments align with this policy and with Gonzaga’s mission, which we as students strive to do every day. As global citizens with significant financial influence, we have the unique opportunity to live out our University’s values by divesting from fossil fuels.

To continue to invest our endowment in carbon-intensive companies is to intentionally profit from the systematic destruction of the good of creation and the unjust harm of the world’s poorest and most vulnerable. This is because the burning of fossil fuels creates injustices which include: food scarcity, drought, displacement of populations due to flooding, and increased intensity of storms. The realities of the climate science require us, as stewards of the environment, to honestly engage with the compressed timeframe we are working under.

We, the student leaders of the Fossil Free Gonzaga campaign, ask that you consider our arguments when discerning your vote on the Faculty Divestment Resolution. Our work on this campaign for the last three years is incredibly significant to us and the values we have upheld while attending Gonzaga. As students at this Jesuit university, we strongly believe that divesting from fossil fuels will allow us to live out our social justice mission and move towards a more sustainable future.

We hope that you support our voices and understand the urgency of our argument when considering the Faculty resolution. Many thanks,

Tori Shaw ’19 Biology and Environmental Studies
Kathryn O’Brien ’18 Mathematics and English, Spanish minor
Ashley Beausoleil ’18 Biology, Spanish minor
Olivia Jackiewicz ’19 Environmental Studies, Solidarity and Social Justice minor
Paige Hauter ’18 Environmental Studies and Spanish


The following are names of students who would like to encourage the Faculty Senate to approve the divestment proposal; electronically signed between March 29th and April 4th, 2018. For a more complete list of student petitioners, consult our petition

Student Name, Major, Graduating Class:

Anna Belinski, ‘20 Environmental Studies and Sociology

Shannon Bauman ‘17 Environmental Studies

Sophia Troeh, Biology, Psychology minor, Class of 2020

Nathan Huff, ‘18 Psychology, Political Science, and Philosophy (minor)

Mikaela Schlesinger, ‘21 Biology, psychology minor

Olivia Molitor, ‘21 Nursing

Joe Wagner, Business Admin and Biology minor, Class of 2019

Laura Marck, ‘18 Business Admin and Art Minor

Kaiya Collins, ‘20 Environmental Studies and Primary Education Teacher Certification Program

Emma Hayden, ‘20 Sociology, Criminal Justice minor

Zeb Klement, ‘21 Environmental Studies

Claire Farrington, ‘19 Business Major and Biology Minor

Hailey Maher, ‘19 English and History, Religious Studies minor

Elizabeth Terry, ‘19 Environmental Studies, French and Biology minors

Isobel Smith, ‘18 Environmental Studies, Native American Studies Minor

Carly Meyers, ‘20 Environmental Studies, Sustainable Business and Journalism minors

Harry Gooding, ‘19 Environmental Studies, Political Science Minor

Claire Henson, ‘18 Biology, International Relations Minor

Maggie Gates ‘19 International Relations Major, Political Science Minor

Emma Hense, ‘19 Biology, Environmental Studies Minor

Jill Coleman, ‘21 Environmental studies major, Sustainable Business/Spanish minors

Alexis Smith, ‘19 Environmental Studies, Sociology Minor

Jonathan Snow, ‘17, History and Philosophy

Thomas Cast, ‘18, Biology

Samuel Sampinos, ‘19, Environmental Studies major, Business and Biology minors

Colette Werk, ‘18 Environmental Studies

Madison Vaughan, 18’ International and Environmental Studies

Lindsey Ernst, ‘21, Biochemistry, Spanish Minor

Madison Dougherty, ‘20, International Relations, French & Environmental Studies minors

Darby Howat, ‘20, Biology and Environmental Studies

Mary Armstrong, ‘18 Special Education

Jake Simons, ‘18, Biology & Environmental Studies

Patrick Tjandra, ‘18 Mechanical Engineering

Karli McIntyre, ‘18 Environmental Studies and Biology minor

Paul Leonetti, ‘18 Environmental Studies and Public Relations

Savanah Van Citters, ‘18 Biology and Environmental Studies

Jamie Mancini, ‘18 Environmental Studies

Lauren Rutherford, ‘20 Environmental Studies, Biology and Sustainable Business Minor

Noah Bagley, ‘20 Environmental Studies, Leadership Studies, Sustainable Business, and

Religious Studies Minors

Alex Gannett, ‘19 Environmental Studies, Biology Minor

Joshua Butorac, ‘21 Business Administration

Valeria Zaragoza, ‘21 Biology, Environmental Studies

Hadley Frazier, ‘21 Nursing

Claire Barone, ‘21 Business

Ana Orlowsky, ‘21 Biology

Anthony Willins, ‘21 Sociology, Econ, English minor

Claire Jacobs, ‘20 Nursing

Allison Daly, ‘20 Nursing, psychology minor

Julia Danahy ‘21 Human Physiology, economics minor

Audrey Holloway ‘19 Biology, Environmental Studies

Regina deAnda 19’ Communications, Spanish minor

Isaac Pacor ‘21 Undecided, Leadership Studies minor

Joseph Panchesson ‘18 Music, Environmental Studies

Alea Chatman ‘21 Environmental Studies and Religious Studies, Leadership Minor

Katie Bresnan, ‘19 Environmental Studies and Biology minor

Shannon Brennan, ‘19 Environmental Studies and Psychology major

Erin Brennan, ‘21 Business

Natalie Johnson, ‘21 Business Administration

Zoe Jaspers, ‘20 Religious Studies and History, minors in Philosophy and Women’s and Gender and Leadership Studies

James McCarthy, ‘20 Economics and Mathematics, minors in Physics, Finance and Music

Sean Vietri, ‘21 Electrical Engineering, Pre-Law

David Baker, ‘19 Environmental Studies

Annie Wissmiller, ‘20 Environmental Studies

Bianca Burton, 18’ Engineering Management

Molly Wilson, 19’ English and Secondary Education majors

Grace McDaniel, ‘19 Business Administration, Journalism Minor

Kourtney Schott, ‘18 Accounting, English Minor

Madeline Dellinger,’19 History, English, Music, and political science minors

Haley Miller, ‘19 Communication Studies, English

Lauren Sharps, ‘19 English with Secondary Education credentials

Tilly Blakesley ‘18 English, Italian

Alice Barry ‘18 English

Victoria Weible ‘19 English, Business Law and Public Policy

Elizabeth Brudevold ‘19 English

Olivia Moorer ‘19 English

Madeline Helde ‘19 English, Latin American Studies

Emily Alexander ‘20 Psychology, English Minor

Danielle Field ‘18 English

Margaret Delaney ‘18 English, Political Science, Psychology Minor

Morgan Smith ‘19 Communication Studies, English and Solidarity and Social Justice minor

Hannah Li ‘18 English, History

Brahiam Villanueva ‘18 History and English Writing

Sarah Haley ‘20 English Literature, Secondary Education

Olivia Lada ‘19 English, History

Gabrielle Thompson ‘18 Environmental Studies

Phylana Diaz ‘18 English, Women and Gender Studies

Molly Burns ‘20 English, Secondary Certification

Spencer Brown ‘21 English, Journalism

Trang Tran ‘18 Sociology and English

Jacque Larson ‘18 Public Relations

Rachael Snodgrass ‘18 Biology

Allie Erickson ‘19 Biology

Giulianna Pendleton ‘20 Political Science, Environmental Studies

Aleksei Gendron ‘18 Biology

Madison Rose ‘18 Special Education

Gonzaga Faculty Senate Votes to Divest!

slider_40Pressure on Gonzaga’s Board of Trustees to divest Gonzaga’s endowment of climate changing fossil fuels increased today when the  Gonzaga Faculty Senate voted in support of moving toward meaningful divestment. The vote was in favor of the divestment resolution and an amendment supported by its sponsors. The resolution amendment reads:

This statement is an addendum to the Faculty Senate vote on the Fossil Free Gonzaga Divestment Resolution (Resolution hereafter), intended to provide our understanding of both the Resolution and our actions in voting in support of it.

  • The Senate concurs with Gonzaga President McCulloh’s September 14, 2017 statement that:

“The rapid, measurable changes in our earth’s atmosphere, and the impact these are having on the planet itself are some of the most pressing concerns of our time, with massive implications for the future and for the generations to come.  For decades scientists, politicians, activists, and theologians have expressed concern over the increase in CO2 in the atmosphere, the thinning of the ozone layer, and the consequential impact of thawing ice caps and warming seas.  Much of the recent focus has been on human-produced emissions from the burning of “fossil fuels” such as petroleum oil and coal.  Reflective of international efforts to bring attention to this issue, and deeply concerned that the current level of worldwide emissions — and more importantly, the trajectory of emissions based on growing consumption — leads to a catastrophic future, the nations of the world have endeavored to forge agreements to decrease CO2 emissions (such as the UN’s Paris Climate Accord).”

The Senate recognizes both the reality and urgency of anthropogenic climate change and affirms the goals of the 2015 Paris Climate Agreement that aims to keep global warming below an additional 2°C above industrial levels.

  • The Faculty Senate recognizes that investment of the Gonzaga Endowment Fund is ultimately and solely the fiduciary responsibility of the Board of Trustees. Thus, we understand that, like the GSBA vote on the same resolution last May (2017), this vote by the Faculty Senate in support of the Resolution is ultimately advisory to the Board.
  • In voting in favor of the Resolution, the Senate wishes to clarify that it does not add itself as a formal signatory of the Resolution. The Senate’s vote indicates only that it supports the Fossil Free Gonzaga campaign’s petition to the Board of Trustees. Thus, the intention of the Senate in supporting this resolution is to encourage the board to embrace a path to meaningful divestment with a responsible mode and tempo. We believe that meaningful divestment could be achieved by divesting from the 200 most carbon-intensive companies, as stated by the Resolution, but recognize that there might be other ways (modes) to put Gonzaga on a path to meaningfully divesting from fossil fuels over an appropriate period of time (tempo).

This vote occurs one year after a vote in favor of divestment by the Gonzaga Student Body Association last Spring 2017. The elected bodies representing both the students and faculty of Gonzaga have expressed their support of divesting our endowment of fossil fuels. The representatives of the students and faculty of Gonzaga are speaking with one voice: investing in fossil fuels is, as our endowment ESG Investment Policy states, fundamentally “inimical to the values the University espouses.”

The votes by Gonzaga’s students and faculty are not rash. On the contrary, they are the culmination of three years of research and discernment on the part of the student body and the faculty. Just as in the 1980s when Gonzaga students fought for divestment from the racist Apartheid regime, they now call on their University to live up to its own mission to:

“foster a mature commitment to dignity of the human person, social justice, diversity, intercultural competence, global engagement, solidarity with the poor and vulnerable, and care for the planet.”

1989_1020
An article from the Gonzaga Bulletin, October 1989

Or will we fail our mission and seek to profit from the sale of the very substances that are rapidly changing our climate, precipitating the sixth mass extinction event of our planet? Will our University continue to seek to profit from the creation of climate change or commit to a responsible, measured path toward meaningful divestment from the most carbon-intensive coal, oil, and natural gas companies?

As Pope Francis forcefully noted in his encyclical,

“It is not enough to balance, in the medium term, the protection of nature with financial gain, or the preservation of the environment with progress. Halfway measures simply delay the inevitable disaster. Put simply, it is a matter of redefining our notion of progress. A technological and economic development which does not leave in its wake a better world and an integrally higher quality of life cannot be considered progress.”

Gonzaga’s students and faculty are unified in their call for fossil fuel divestment. However, in the end, these votes are merely advisory. The decision is left to the Trustees of our great University.

We hope that the Trustees are not persuaded that “half measures” will be sufficient. Impact investing or other positive steps are wonderful ideas, but they don’t obviate the need for divestment. Doing a small good cannot justify causing large harm. Green washing our endowment will not do. Nothing short of a commitment to finding a path to meaningful divestment is consistent with our mission. Is our ESG policy meaningless, or is it in fact possible to enact negative screens? Are we truly committed to the demanding work of social and environmental justice, or are we really only interested in burnishing our reputation with talk of concern for the vulnerable and care for the planet? What the Trustees do next will reveal the answer.

gugrad-tutu
Archbishop Desmond Tutu delivering the 2012 Gonzaga commencement address.

Looking back on the Apartheid era we can be proud that Gonzaga ultimately did the right thing (though initially the Trustees voted against divestment before finally agreeing). Most would agree that we are on the right side of history in having divested from the racist Apartheid regime. As Nobel Peace Prize laureate and honorary Gonzaga degree recipient Archbishop Desmond Tutu has noted, there is a clear moral line to be drawn from Apartheid to fossil fuel divestment.

“Just as we argued in the 1980s that those who conducted business with Apartheid South Africa were aiding and abetting an immoral system, today we say no one should profit from the rising temperatures, seas, and human suffering caused by the burning of fossil fuels. We can no longer continue feeding our addiction to fossil fuels as if there is no tomorrow. For there will be no tomorrow.” —Desmond Tutu

History will surely judge what our Trustees do next with respect to fossil fuel divestment. Will Gonzaga once again have the courage of its convictions or will we seek to continue to profit from the sale of the very substances destroying the planet and harming the most vulnerable among us? As Tutu reminds us: “The destruction of our environment is the human rights challenge of our time. … Time is running out.”

 

Impact investing instead of divestment?

Several days ago Winnie Mandela, mother of South Africa and spouse of Nelson Mandela, died at the age of 81. The media coverage of her struggle against Apartheid reminds us of Gonzaga’s small part in that struggle. In 1986 Gonzaga students began what would end up becoming a four-year campaign to convince the Gonzaga Board of Trustees to divest its endowment of companies supporting the racist Apartheid regime in South Africa. Under considerable pressure, the Trustees tried to placate the students by offering to fund several scholarships to bring two South African students to Gonzaga.

1987_0206
An article from the Gonzaga Bulletin, February 6, 1987.

The news was welcomed by many students, but it did not satisfy the divestment campaigners. Several months later, the students even built and occupied a make-shift “shanty town” to highlight the injustices many black South Africans faced.

1987_0416
Gonzaga Bulletin, April 16, 1987

The following fall (September 1987) the Gonzaga Board of Trustees ultimately did take a vote on Apartheid divestment and they voted against divesting. Undeterred by the setback, the students persisted and in the spring of 1988 they held a week of activities to raise awareness about Apartheid and the University’s investment practices. This seems to have created the context for a vote in favor of divestment by the Gonzaga Student Body Association in October of 1989. The Board ultimately relented and agreed to divest itself of $3 million in holdings.

This is a story about the persistence and moral clarity of Gonzaga students, but it is also a story about the University’s attempt to placate a call for divestment with an alternative. In the Apartheid era it was the offer to fund scholarships for South African students instead of divesting. In the fossil fuel era a similar idea is being floated. Some are suggesting that, instead of divesting from the top 200 most carbon-intensive fossil fuel companies, perhaps instead we could do some positive “impact investing” or investing “made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.”[1]

Impact investing surely does seem like an idea that is consistent with our mission values. We should be doing it. But impact investing or similar ideas does not obviate the moral obligation to stop seeking to profit from the substances causing climate change. That is, it does not lessen the moral obligation to divest from fossil fuels.

Consider this example: Imagine that a major athletic apparel company used by Gonzaga sports teams is guilty of using sweatshop labor and that students call for a boycott of the company until they change their practices. Would it be sufficient if the University said, “We don’t need to divest. Instead of divesting, we are going to donate 25 pairs of the company’s shoes to the local Boys and Girls Club basketball team.” While certainly a nice gesture, this positive investment does not fix the problem and it does not less the obligation to boycott the company until it ends its sweatshop practices.

The same is true of the challenge of anthropogenic climate change. To avoid catastrophic warming we must keep no less than 80% of all carbon energy underground. It is little more than green washing to make small positive investments in sustainability while simultaneously seeking to profit from the sale of the substances causing climate change. The University should explore impact investing, but it must also commit to a path of meaningful fossil fuel divestment over a reasonable period of time.

 

 

Is investing in fossil fuels “inimical to the values the University espouses”?

Over the last three years Fossil Free Gonzaga has been making the case that global climate change is an existential and moral crisis the likes of which our species has never experienced and that seeking to profit (investing in) from the sale of the substances causing the problem is clearly inimical to our most fundamental values. We don’t think our argument is especially controversial: if ever there was a time that our ESG policy would require us to exclude securities inimical to the values the University espouses,  fossil fuels stocks would seem to be it. What is fascinating is that, to a significant degree, Gonzaga has already affirmed the premises of this divestment argument. So far it has been unwilling to face squarely and courageously the inexorable implication of those premises. Let’s consider the premises.

  1. The Catholic church has, since 1990, recognized that there is an “ecological crisis” and that anthropogenic climate change is a real and present threat to much of life on the planet, especially to the most vulnerable members of the human family.[1] This was enshrined in Catholic Social Teaching in Pope Francis’ 2015 encyclical.[2]
  2. The Jesuits in particular have affirmed since General Congregation 35 (2008) that care for and right relation with creation is a fundamental and irreducible aspect of the Society’s charism.[3] This was made especially clear in the 2011 Special Report of the Society’s Social Justice and Ecology Secretariat.[4]
  3. Gonzaga President Thayne McCulloh has affirmed the importance of the Paris Climate Agreement, the reality and urgency of anthropogenic climate change caused primarily by the burning of fossil fuels, and that “the trajectory of emissions” ultimately “leads to a catastrophic future.”[5]
  4. Gonzaga’s own mission statement recognizes our obligation to “care for creation” and “responsible stewardship of our physical, financial, and human resources.”
  5. Gonzaga has for some time maintained, and in December 2015 reaffirmed, an Environmental Social and Governance (ESG) Investment Policy that states, in part, “In keeping with the Mission Statement of Gonzaga University, it is the intention of this Investment Policy to promote the basic moral values of fairness, respect for human life, defense of human rights and social justice. In the process of accomplishing a satisfactory risk adjusted return on the invested assets of the Endowment Fund, the Committee may weigh … excluding from the Fund, securities of firms or managers whose policies or practices are inimical to the values the University espouses….”

What is the logical implication of these five premises?

  • The Catholic church, the Society of Jesus, and Gonzaga University have all affirmed the scientific account that global warming is anthropogenic, driven primarily by the burning of fossil fuels, and that the climate change caused by this warming is morally and existentially urgent.
  • Gonzaga’s own Investment Policy allows it to exclude investments that are contrary to the values of the University.

The only thing that is missing is the logical implication of these premises. We admit that climate change is happening, that fossil fuels are its primary cause, that it is and will increasingly harm all life, especially the most vulnerable humans, and that it is morally urgent. If seeking to profit from the sale of the substances causing the climate crisis is not inimical to the most fundamental values of the institution, it is hard to imagine what would be. Gonzaga has already affirmed every premise. Will it have the courage to recognize the logical implication of those premises?


[1] Pope John Paul II, “The Ecological Crisis: A Common Responsibility” https://w2.vatican.va/content/john-paul-ii/en/messages/peace/documents/hf_jp-ii_mes_19891208_xxiii-world-day-for-peace.html.

[2] Pope Francis, Laudato Si’: On Care of Our Common Home, https://m.vatican.va/content/dam/francesco/pdf/encyclicals/documents/papa-francesco_20150524_enciclica-laudato-si_en.pdf.

[3] General Congregation 35, http://www.sjweb.info/35/documents/Decrees.pdf.

[4] “Healing a Broken World,” http://www.sjweb.info/sjs/documents/PJ_106_ENG.pdf. “To the oft-asked question whether GC 35 says anything new regarding the relationship between ecology and our fundamental charism as defined by GC 34, the answer must clearly be ―”Yes”. There are two significant departures from the way the theme of ecology was treated before GC 35. First, GC 35 makes a comparison between reconciliation and right relationships, that is, it introduces the idea of reconciliation into the faith-justice dyad; and second, it establishes an intrinsic and indissoluble unity among the three types of relationships (with God, with others, and with creation).”

[5] President McCulloh’s September 14, 2017 memo: “The rapid, measurable changes in our earth’s atmosphere, and the impact these are having on the planet itself are some of the most pressing concerns of our time, with massive implications for the future and for the generations to come.  For decades scientists, politicians, activists, and theologians have expressed concern over the increase in CO2 in the atmosphere, the thinning of the ozone layer, and the consequential impact of thawing ice caps and warming seas.  Much of the recent focus has been on human-produced emissions from the burning of “fossil fuels” such as petroleum oil and coal.  Reflective of international efforts to bring attention to this issue, and deeply concerned that the current level of worldwide emissions — and more importantly, the trajectory of emissions based on growing consumption — leads to a catastrophic future, the nations of the world have endeavored to forge agreements to decrease CO2  emissions (such as the UN’s Paris Climate Accord).”

Is Gonzaga’s ESG Investment Policy Meaningless?

The discussion over fossil fuel divestment is running up against a difficult problem. At times we are being told that, given Gonzaga’s current investment strategies, it simply isn’t possible to do any negative screens for fossil fuels. Actually, it isn’t just fossil fuels. At present, we are told, there are no mechanisms by which Gonzaga could exclude or include anything, ever. This is an interesting admission. Why? If it is true that the current investment strategies are incompatible with any screening, then there are currently no conditions under which it is possible for Gonzaga to follow its own Environmental Social and Governance (ESG) Investment Policy. This would be very problematic because it would imply that Gonzaga’s ESG policy is quite literally meaningless.

Let’s look at this argument a bit more carefully from the beginning, starting with the key section of Gonzaga’s Endowment Fund Investment Policy, which was reaffirmed by the Board of Trustees in December of 2015. Section L is labeled “Environmental, Social, and Governance (ESG) Considerations” and states:

“In keeping with the Mission Statement of Gonzaga University, it is the intention of this Investment Policy to promote the basic moral values of fairness, respect for human life, defense of human rights and social justice. In the process of accomplishing a satisfactory risk adjusted return on the invested assets of the Endowment Fund, the Committee may weigh: (1) excluding from the Fund, securities of firms or managers whose policies or practices are inimical to the values the University espouses; (2) investing in securities of firms or managers that demonstrate a high level of social concern; (3) influencing the social behavior of firms invested in through the exercise of ownership rights.”

We are proud to be part of an institution that has a policy such as this. Gonzaga is right to recognize that its mission is not value neutral and that the investment of its Endowment Fund is itself a moral statement. It is right that the university should exclude or include securities or firms based on whether they are compatible with our most deeply held values. Further, we recognize that it is not always obvious which values or investments are so important that they would require action under this ESG policy. That would need to be decided on a case by case basis. What about fossil fuel divestment?

A common refrain we hear is not that climate change is not urgent but that, given how we invest our endowment, it really is not possible to do negative screens on anything, including fossil fuels. This is a very surprising claim. For, if it is true that it is not possible to do any negative screens, then there are no conditions under which it is possible to ever follow our own ESG Investment Policy. If there are no conditions under which it is possible to ever follow our ESG Investment Policy, then the ESG Policy is itself meaningless. Perhaps it makes us feel good, but it can never meaningfully inform decision-making. Put even more directly, if negative screens are not possible, then our ESG Policy is, at best, window dressing and, at worst, a sham.

But this isn’t all bad news. We believe that Gonzaga does want to have a meaningful ESG policy that can inform Endowment Fund investment. That means that it is incumbent upon Gonzaga to create the necessary mechanisms by which negative (and positive) screens could, in principle, be used by its fund managers. And this is good news. For, once those mechanisms are created, once it is possible to, in principle, follow our own ESG policy and include or exclude securities based on our fundamental mission values, then it also becomes possible to divest from the fossil fuels causing catastrophic climate change.

So there we have it. Either negative screens (and divestment) are impossible and the ESG policy is meaningless or the ESG policy is meaningful and negative screens (and divestment) are possible. In other words, the very act of affirming our ESG policy refutes the claim that it isn’t possible to divest. The ESG policy requires that divestment is, in principle, possible.

This is a very important realization because it allows us to return focus to the real issue. The real issue is not whether it is possible to divest, we now see that our ESG policy establishes that it is, but whether investing in fossil fuels is so inimical to the values of Gonzaga that any reasonable interpretation of the ESG policy entails fossil fuel divestment. In the justification for the resolution we have made the case that the answer to this question is, “Yes.” Here we make the case that the University has, in a sense, already agreed to the premises of the argument for divestment.

 

Claim that divesting could cost $1.3 million misleading

Some may say: “Divesting could cost the University an estimated $1.3 million dollars.”
However, the $1.3 million figure postulated is misleading. There are no inherent costs of divestment.

Based on reporting in the Gonzaga Bulletin and conversations with Faculty Senators, the Faculty Senate delayed a vote on the Fossil Free Gonzaga Resolution primarily for two reasons. In our earlier blog we responded to the first concern. In this blog we respond to the second concern: “Divesting from the 200 most carbon-intensive companies would cost the University an estimated $1.3 million dollars.”

At a recent meeting of the Faculty Senate, the claim was introduced that divesting could cost the University an estimated $1.3 million dollars. At the time it was not given any context or explanation. Subsequent inquiries yielded the following information about how this figure was derived:

“The University has not commissioned a study, internally or externally, to measure the cost of transition to fossil fuel divestment. … In lieu of a more exhaustive divestment study, a reasonable starting point for such an estimate, in very rough terms, is to look to the market of active fund managers that provide negative screens. It is not uncommon for such funds to charge 20 to 50 basis points (0.20% to 0.50%) annually for the administration of such a program. This also does not include any internal costs to administer or any frictional costs of making the transition.

So, for conversational measurement of the cost of implementation, a working estimate is .50% x $250,000,000 (our pooled endowment figure), which approximates $1.3M. The actual figure … could be lower or higher. This analysis also does not factor in the opportunity cost of what such fees could have earned over time had they not been charged annually to the portfolio. Assuredly, there are additional costs required to administer such a portfolio.”

There are several responses to this claim.

  1. This analysis seems to misrepresent the fraction of the endowment potentially affected by divestment. Less than half of the Endowment Fund is in equities. Thus, even if the analysis above were reasonable, and we do not believe that it is, the estimated cost would not be $1.3 million, but less than $650,000.
  2. As Gonzaga’s former President Fr. Robert Spitzer is fond of saying: “Arbitrarily asserted, arbitrarily denied.” The fact that this “conversational estimate” picks the high end of an arbitrary range suggests that the University is looking for excuses not to divest, rather creatively discerning responsible paths to divestment.
  3. It is important to put the proffered 0.5% number into some perspective. The challenge of managing the Endowment Fund is to achieve adequate risk adjusted returns over time. $1.3 million is not a small amount of money, but it is dwarfed by the massive market uncertainties. Historically there have been decade-long periods where the S&P 500 has lost money and decades where the returns have been in the high teens. Will the endowment be worth less than $250 Million in a decade? More than $1 Billion? These are the fundamental challenges for the Endowment Fund, not a rounding error discussion about divestment.
  4. If divestment is done over a responsible period of time, which is what we are calling for, it is possible to achieve desired risk adjusted returns while gradually shifting to fund managers willing to assist with negative screens. There is no inherent reason that a fossil free endowment would be more expensive to manage and transition costs will be negligible if done responsibly over time.
  5. Insufficient justification is given for the .5% figure. Specifically:
    • There is no mention of the costs of the existing program, either portfolio management, advisory or mutual fund, or separately managed account costs, nor is there any comparison to the costs reasonably available with an intelligent asset management strategy.
    • As we see in the discussion lead by finance expert Randy Cerf last fall, there is no reasonable justification available for this assumption of .5%.  It is not uncommon for an asset management fee to be charged whether a portfolio is fossil free or not and there is no inherent reason for it to be any different with or without divestment.
  6. Any reasonable comparison would involve actually doing the work of constructing a before and after portfolio. Anything short of that is not worth taking seriously. If one were tasked with doing so to prove that divestment was expensive, one could clearly construct portfolios that proved that divestment was costly. No doubt one could generate costs even more expensive than 0.5%. Similarly, if one wanted to prove that divestment was costless, one could construct a lower cost portfolio, perhaps with 0.5% lower costs. Neither of these are meaningful because neither approach replicates anything like reasonable portfolio strategy.  Both ignore the most important goal of maximizing returns on a risk adjusted basis after all fees.

Bottom line: there are multiple responsible paths to meaningful divestment. Gonzaga just needs to commit itself to finding one that works for us.

(See our comprehensive list of objections and replies to fossil fuel divestment. )