The Dividends of Divestment

Lewis & Clark makes the landmark decision to divest from fossil fuels.

Lewis & Clark makes the landmark decision to divest from fossil fuels, aligning investment policy with mission.

(Robert Reynolds) (Robert Reynolds)


Evelyn Hunsberger BA ’19 wasn’t sure what to expect, but recognized she and her peers faced long odds.

As coleader of Lewis & Clark’s Students Engaged in Eco-Defense (SEED), she helped organize the group’s case for divesting millions in fossil fuel holdings and present it to the college administration.

“I wanted our recommendations to be taken seriously,” says Hunsberger, recalling her mindset going into SEED’s initial meeting with Carl Vance, the college’s chief investment officer, in fall 2016.

She and her fellow student activists believed passionately in their cause. Yet they recognized that previous student attempts to advocate for fossil fuel divestment had been unable to get much traction. They also knew many colleges and universities had rejected divestment, provoking widespread protests by students.

The SEED students, however, encountered a willing ear in Vance and the college’s leadership. About a year and a half after the relaunch of SEED’s divestment campaign, the Lewis & Clark Board of Trustees voted in February to divest from all fossil fuel holdings in the endowment by 2023. Lewis & Clark is one of about 30 colleges and universities nationwide to make this commitment, according to the international environmental group

Looking back now, Hunsberger says, “Our timing was right.”

At first the college was cautious about making such a move. “I did tell the students it was a long shot,” says Vance, who worked with SEED to craft a campus petition supporting divestment. “I wasn’t sure the board was ready to make that decision. But the student voice was pivotal—it was the catalyst that put the proposal over the top.”

“Philosophically, the board was supportive of the students, but there was a question if we could divest without sacrificing returns,” says Amy Miller BA ’80, a longtime trustee and member of the board’s investment committee. She also heads global loan syndications for Scotia Bank in New York. “I was thrilled we were able to work toward a shared vision and reach a conclusion so quickly.”

Vance determined that fossil fuel divestment would not harm the college’s endowment returns. Quite the opposite, in fact: the research indicated the move would probably boost performance. That recommendation turned out to be the decisive factor in the board’s unanimous vote.

A Commitment to Sustainability

In many ways, Lewis & Clark has been on the path toward divestment for more than a decade—at least since the college signed onto the 2007 American College & University Presidents’ Climate Commitment. That accord called on higher education institutions across the country to redouble their efforts to embrace environmental sustainability by reducing carbon emissions and doing more to combat climate change.

Lewis & Clark has a strong record of embracing sustainability as a vital part of its identity. The college prides itself on academic programs such as the undergraduate environmental studies program and the environmental law program; its commitment to sustainable practices in construction, energy use, and recycling; and student awareness and activism around environmental issues.

External media have recognized the college’s efforts. In 2017, for the sixth year in a row, Sierra Club’s magazine named Lewis & Clark one of its “Cool Schools.” Lewis & Clark was the only liberal arts college on the West Coast—and the only school in Oregon—to make the top 10. In 2015, Lewis & Clark nabbed the No. 1 spot on Princeton Review’s “Green Colleges” list.

Since the late 1990s, the college has looked to leadership on “green” issues from its Environmental Council (now the Sustainability Council), which is composed of students, faculty, and staff from the College of Arts and Sciences, the School of Law, and the Graduate School of Education and Counseling. In 2010, Amy Dvorak was hired as the college’s first sustainability manager; she now heads the Office of Sustainability.

Nationally, the fossil fuel divestment debate started to percolate in the higher education world in the early 2010s, as started raising the issue’s visibility and organizing on college campuses. The idea met resistance in most places, due to the prevailing view that divesting in blue-chip oil, coal, and natural gas companies, such as ExxonMobil, Chevron, and BP, would reduce endowment investment returns.

Both private and public colleges rely on solid returns on endowment investments to thrive. Lewis & Clark’s endowment, supported by generations of donors, stands at about $240 million. Each year, the college spends a little over 5 percent of its endowment on a variety of operational needs, including funding scholarships for students. In 2017, the endowment contributed $12 million to the overall budget.

The college’s endowment performance is susceptible to the ups and downs of global markets, but it has enjoyed solid gains over the past decade, yielding a 4.1 percent return in that span, compared to an industry benchmark of 3.5 percent.

Ethics in Investing

Although endowment performance is key to the financial health of many higher education institutions, it isn’t the only variable in play when making investment decisions. Colleges often experience a tension between fiduciary responsibilities to maximize returns and sometimes-complex ethical considerations.

We considered the environment, the community, and the economics of the issue. Sustainability works best when those forces are pushing in the same direction. Yes, it can get complicated, but a college is supposed to have these conversations and take on these challenging issues.” Dan RohlfProfessor of Law and Founder of the Pacific Environmental Advocacy Center (now Earthrise Law Center)

Acknowledging this reality, Lewis & Clark in 2014 adopted an environmental, social, and governance (ESG) policy to guide investment priorities. Profitability would no longer be the sole measure in decision making; the college agreed it also would consider criteria related to environmental sustainability, human rights, diversity, and other ethical and responsible business practices in its financial dealings.

This new policy is not empty rhetoric. ESG considerations prompted the college to change two investment managers that were deeply connected with coal and gold mining concerns and to convince another manager to quit investing in private for-profit prisons, an industry rife with abuse and corruption.

Using the ESG guidelines and tools has helped the college make more thoughtful decisions about where to put its money. According to Vance, “There’s been extensive research demonstrating that investing in companies with high ESG scores will outperform investments that don’t consider ESG factors.” Vance’s involvement with the national Intentional Endowments Network (he serves on its executive committee) also influenced the development of the college’s investment strategy.

Making the Case

In many ways, then, the table was already set when the SEED group approached Vance in 2016 to propose fossil fuel divestment. Even so, it was far from a foregone conclusion.

Hunsberger, a sophomore at the time who had been active in environmental causes since high school, was pleased and also relieved that Vance was so receptive to hearing them out. “There was a lot to learn, a lot of jargon, but Carl was really patient,” she says. “The more we met, the more we were able to build trust between SEED and the administration.”

Vance had been involved in a similar debate in the 1980s when students at his then-employer, Occidental College, protested for divestment from companies with ties to South Africa due to that country’s racial apartheid policies. Occidental didn’t wind up divesting, but Vance learned valuable lessons going through that experience about student communication that informed his approach this time around.

“Students don’t always have the patience to stick with what can sometimes be a long, involved institutional process,” Vance says. “This group showed perseverance. They were ready to put in the work.”

SEED met several times with Vance and also won the support of former Interim President David Ellis, who had recently served as vice president, secretary, and general counsel. The group spread awareness about the issue via social media and through campus events. The students circulated a “Go Fossil Free!” petition, including some editorial suggestions from Vance, that garnered more than 1,000 signatures.

Dvorak, the sustainability manager who is also an advisor to SEED, credited the students for bringing the divestment issue to the top of the college’s agenda in a positive, nonconfrontational way.

“On other campuses, the issue has been much more divisive, with sides taking an us-versus-them approach, but it was very different here,” says Dvorak. “The student voice in this initiative was critical. And that’s important because, at the end of the day, they are the reason we’re here.”

Students don’t always have the patience to stick with what can sometimes be a long, involved institutional process. This group showed perseverance. They were ready to put in the work.” Carl VanceChief Investment Officer

Vance also knew—thanks to his three decades in higher education finance and his experience navigating the 1980s divestment controversies—that a moral argument would be insufficient. To convince the board of the proposal’s merits, they would need to provide a financial rationale for fossil fuel divestment.

Vance worked with the SEED students to construct a case around the relatively new idea of “stranded carbon assets.” The concept posits that fossil fuel companies exist in an economic bubble because their market value is based on carbon reserves they won’t be able to use in the face of growing pressures to mitigate climate change. Those unusable reserves are essentially stranded, making fossil fuel companies overvalued and, thus, a risky investment.

Vance says, “We were able to develop data showing that there would be a huge risk in holding on to fossil fuel investments and that divesting was ultimately an exercise in fiduciary duty.”

Another significant factor was Lewis & Clark’s reputation as an eco-conscious college. “If Lewis & Clark was going to promote itself as a ‘green’ school, it needed to realign priorities,” says Hunsberger. “For us, this wasn’t just about the money. It was about sending a message.”

SEED presented its case to the trustees’ investment committee in spring 2017. “It was impressive to see the students come forward with a strong united voice,” says Trustee Miller.

The committee responded by strengthening its ESG policy and freezing fossil fuel investments, as well as establishing a divestment subcommittee to study the issue in more depth. Over the summer and fall of 2017, the subcommittee, led by Miller, analyzed best practices and comparative data, tackled various technical questions, and developed a set of recommendations for the investment committee, now headed by Jouni Korhonen BA ’82, and the full board.

If Lewis & Clark was going to promote itself as a ‘green’ school, it needed to realign priorities. For us, this wasn’t just about the money. It was about sending a message.” Evelyn Hunsberger BA ’19

A Historic Vote

In February 2018, the Lewis & Clark Board of Trustees passed a new policy calling for divestment within five years. The college would immediately cease making new investments in “the largest owners of coal, oil, and natural gas reserves” and start the process of selling off existing investments (see related article at right).

Says Miller, “Once we studied the facts, the board was convinced we would not only be protecting the college by divesting, but actually improving our investment returns over time.”

Hunsberger says the SEED students couldn’t have predicted how the board would vote. She was studying in a computer lab on campus when Dvorak sent her a cryptic email to come by her office. “I was nervous,” says Hunsberger. “Up to that moment, I really didn’t know how everything would turn out.”

When she rushed over and got the news, “there was definitely a moment of pure joy and celebration.” She is still amazed the college acted so decisively. “They addressed everything in our petition.”

Dan Rohlf, professor of law and founder of the Pacific Environmental Advocacy Center (now Earthrise Law Center), applauds the decision. He’s been involved with campus sustainability issues for three decades and served on the board’s divestment subcommittee.

“The divestment issue underlines the essence of the concept of sustainability,” says Rohlf. “We considered the environment, the community, and the economics of the issue. Sustainability works best when those forces are pushing in the same direction. Yes, it can get complicated, but a college is supposed to have these conversations and take on these challenging issues.”

For Vance, who served the college for 12 years and retired in May, Lewis & Clark’s decision provided a proper culmination to a career spent behind the scenes working to bring a sense of integrity to boosting the bottom line. As he wrote in an article about Lewis & Clark’s divestment process (recently published in the magazine of the National Association of College and University Business Officers):

“Lewis & Clark College, a private liberal arts institution with a public conscience… is a place deeply committed to all aspects of sustainability: learning, innovation, and principled action. Aligning our investments with our intentions is integral to those commitments.”

Romel Hernandez is a freelance writer in Portland.

  • L&C Divestment Policy Highlights

    As the result of a collaborative effort between students, faculty, the Board of Trustees, and the administration, Lewis & Clark’s fossil fuel divestment policy now includes these guidelines:

    • Lewis & Clark’s endowment shall not directly own any securities publicly issued by companies in the fossil fuel industry, specifically the largest owners of coal, oil, and natural gas reserves (“fossil fuel companies”).
    • Starting immediately, Lewis & Clark will make no investments in any new fund that has exposure to fossil fuel companies.
    • Over the next five years (before December 31, 2022), Lewis & Clark will eliminate exposure to fossil fuel companies held indirectly through public commingled strategies. In addition, the college will exit all private limited partnership investments holding fossil fuel companies as they mature, which will take more than five years.
    • Consistent with the college’s existing ESG [Environmental, Social, and Governance] policy, Lewis & Clark will actively engage with existing investment managers to encourage them to adopt fossil fuel–free investment options.
    • Lewis & Clark will provide an annual update to the broader campus community on holdings of fossil fuel securities in the endowment portfolio.

    “When national politics are aggressively undermining U.S. commitments to fight climate change, it is up to local jurisdictions and institutions like ours to lead. I applaud the trustees for their action. We must be more than pioneers by name, we must be pioneers by nature.”

    —Wim Wiewel, Lewis & Clark President