Although the Colorado College mission statement professes a commitment to “environmental sustainability,” CC invests millions in companies with long histories of environmental degradation and corporate irresponsibility.
ExxonMobil, BP, McDonalds, Fannie Mae, Freddie Mac, Canadian Natural Resources, Occidental Petroleum, Monsanto, Comcast, Tiffany and Co., Goldman Sachs, and Halliburton are just some of the companies that benefit from our investment. Our holdings in these companies total upwards of $15 million.
While CC brands itself as a green and progressive campus, our money is hard at work in the hands of “Big Oil” and in a plethora of other industries that don’t seem to champion our core values.
In addition to being enemy number one for the environmental movement, ExxonMobil has received media attention for denying benefits to LGBT employees and received a zero on the Human Rights Campaign’s Corporate Equality Index.
Canadian Natural Resources owns and operates the Horizon Oil Sands, a tar sand extraction site in Northern Canada.
In June, Bloomberg reported that Occidental Petroleum had helped the late Libyan dictator Muammar Gaddafi lobby for exemption from a law that let American terrorism victims seize assets of countries found liable. The U.S. Government eventually granted the exemption.
Monsanto has taken the concept of “Big Agra” to an extreme, using its monopoly to push genetically modified everything on the world. From allegations of child labor exploitation to toxic waste dumping, Monsanto epitomizes everything we claim to abhor in food production. We revel in using our Tiger Bucks to support the environmentally responsible Bon Appétit, but our endowment money supports a very different kind of food production.
Goldman Sachs, the King of Wall Street, might be the most horrendous company we invest in. “The Vampire Squid” took a leading role in the 2008 financial crisis, used government agencies to bail out AIG (which insured their toxic assets), and perverted the oil futures market that helped cause the 2008 oil crisis.
CC students may have protested the Iraq War, but meanwhile Halliburton was busy profiting handsomely from alleged no-bid contracts. In Oct. 2010,The New York Times quoted the presidential commission investigating the gulf oil spill as saying, “Halliburton officials knew weeks before [the explosion]… that the cement mixture they planned to use to seal the bottom of the [BP] well was unstable but still went ahead with the job.”
Still, it’s not so easy to write off the endowment as some amorphous evil. Although it’s hard to know for sure, given the secrecy that shrouds college endowments, these types of investments don’t seem to be out of the ordinary for institutions like CC. Moreover, the vast majority of the endowment is invested in companies like Continental Airlines, 3M, Amazon, Costco, and Apple. In all likelihood, Treasury Bonds are our single largest investment.
Most importantly, the endowment is what allows the college to operate. It provides about 17 percent of our annual operating budget and 36 percent of that goes towards student aid and awards.
If we must choose between the health of our college and sustainability, where do our loyalties really lie? If ExxonMobil dividends pay for financial aid, is sustainability still the greater good?
“You read all of these articles that say sustainable investments can perform just as well as [regular] investments but the data suggests that’s not always the case,” said CC’s Assistant Treasurer and Director of Investments, Stacy Lutz Davidson.
Over the past four years, Lutz Davidson has welcomed students into the decision-making process. There is a student environmental group that looks at the approx. 34 percent of the endowment managed for the college by John W. Bristol & Co., Inc. The group looks at where we’re invested and is allowed to vote through Bristol as a shareholder on the college’s behalf.
If a company is doing what might be conceived as “bad” things and you turn away, you lose the power to be a voice for change, said Lutz Davidson, “If you don’t invest, you don’t have a say.”
The group also made a presentation to the board of trustees at the end of last year.
“What’s good about all of these, even though they’re baby steps, is that we’re engaging the trustees as well, [and they] have a wide variety of opinions… At least we’re thinking about sustainable investments.”
The student group looking at sustainability was allowed to invest in a fund of their choice, albeit not with endowment money, and selected a fund called Portfolio 21 to invest $10,000 in last year. “We made the first step with the Portfolio 21,” said Lutz Davidson, it “has screening criteria on the social side and on the environmental side that helps them select the underlying securities that they put in the portfolio.”
They made the investment in late Winter/ March of last year and it has appreciated $131 through Sept. 30.
We’ve all had the discussion about sustainability from the performance side, said Lutz Davidson, and we wanted to see how it’d perform in comparison with the endowment.
As of Sept. 30, 2010 the endowment’s market value stood at $485.8 million. Over the past 20 years the endowment has grown 10.7 percent in compounded annualized returns (a smoothed-out way to express growth rate) and 21 percent in fiscal year 2011 through June 30.
Endowment management, admittedly, has a singular goal: to make money. “We hire managers for business purposes and we don’t typically micro-manage that process,” said Lutz Davidson.
The Catalyst was given access to the 34 percent of the endowment under Bristol’s purview. Given the college’s secretive history, this shows unprecedented transparency. It’s not perfect, but it’s a start.
On transparency, Lutz Davidson said, “I think at the end of the day if we wanted to make [endowment investments] public information then we’re not doing anything special to earn money for the college.”
About half of the endowment is invested with managers who tell us exactly what our holdings are. The 34 percent mentioned above falls into that half. The other half is invested with managers that divulge about 20 percent of holdings. Those alternative investments, as they’re called, keep much of their business under wraps. “If we’ve hired a manager because of how incredibly good they are and they have public documents that say exactly the trades and things that they’re holding, it’s no longer proprietary,” said Lutz Davidson. However, she said, that doesn’t mean that there isn’t contact with them or that phone calls can’t be made.
About 1.5 percent of the endowment portfolio is in energy and about 2 percent is in natural resources. Those subsections fall into the more secretive half of the endowment. “Those are investments with firms that just do that [energy or natural resources], [but] that doesn’t mean we don’t have exposure elsewhere,” said Lutz Davidson.
In campus discussions about environmental issues, the endowment remains the elephant in the room. How can we calculate our carbon footprint when so much of our impact is externalized and kept secret? Is there no alternative to investing as we currently do?
The endowment serves the student body and at the most basic level; we’re all on the same team. Transparency and honesty hold the only hope for answering these questions.
Alex Kronman 