Pomona College Evaluates Endowment Impact of Fossil Fuel Divestment
In response to the threats posed by global warming and community calls for Pomona to divest from fossil fuel companies, Pomona College recently directed its principal financial advisors, Cambridge Associates, to undertake a thorough examination of the potential impact that divesting the College’s endowment from these investments would have on endowment growth over time.
In a Sept. 24 email to the College community, President David Oxtoby announced that the College would not divest from those investment funds. “There are two fundamental points on which most of us agree,” he noted. “First, global warming is a real and growing threat to our way of life…. it is also true that colleges such as Pomona have an obligation to live up to the values they teach… However, we also have an obligation to weigh carefully the cost and probable impact of our actions. For issues that affect the endowment, that obligation rises to the level of a sacred trust. The gifts that created our endowment were intended by our donors to ensure that the things that make Pomona great—such as an exceptional faculty, strong programs and generous financial aid—are never diminished or threatened by time and rising costs. Managing an endowment is a matter of keeping faith with both past benefactors and future students, for whom the endowment is the sole guardian of generational equity.
“Cambridge’s projections show that divestment would in all likelihood result in a total decrease in the endowment’s performance over a 10-year period of about $485 million. This loss of growth in the total endowment, caused mainly by the need to withdraw from the best actively managed commingled funds, would result in an estimated $6.6 million loss in annual spendable income for such things as financial aid, faculty and staff salaries and program support.
In response to those numbers and the fact that divestment by Pomona would only have a symbolic impact, the Board of Trustees Investment Committee did not approve moving forward on divestment.
A leader in higher education sustainability, Pomona College is a charter STARS (Sustainability, Tracking, Assessment and Rating) participant, with a gold rating, and was recognized for its sustainability efforts across the campus by Princeton Review, which named Pomona to its Green Honor Roll in 2014. Among the sustainable programs on campus are Green Bikes, CleanSweep/ReCoop, sustainable purchasing in the dining halls, the transformation of Pomona’s landscape in several areas, and an active Sustainability Office that works with numerous groups across campus. In addition, the College has invested a total of about $14 million in sustainable building practices since 2004 and requires all new construction to be built to the U.S. Green Building Council’s LEED gold standards.