The noticeable increase in Climate Change awareness this semester has led to a number of policy proposals from students, faculty, and staff. One of these, divesting the Hamilton endowment from fossil fuels, seems particularly popular among students. Proponents of divestment, however, play down divestment’s cost to our institution and overestimate its environmental benefit.

First, to understand the issue as it relates to Hamilton: About 3 percent of its roughly $1 billion endowment is invested in the fossil fuels industry. Ending our investments in fossil fuels -- “divesting” -- will undeniably harm the college’s financial situation. In fulfilling its fiduciary obligations, the college’s Investment Office aims to maximize the risk-adjusted returns of its portfolio in order to provide a consistent stream of income to fund operations. Our endowment’s assets will always be allocated in ways and amounts that the Investment Committee deems to deliver this best possible return. Since an investment in fossil fuels is, in its professional judgment, a part of the best possible allocation which the endowment can achieve, exiting from these investments would, by definition, reduce the endowment’s financial performance and thus the money available to the college. Here lies a perfectly rational decision for Hamilton to make: Do we divest from fossil fuels and cut funding to a college program, or not?

This raises a necessary question and my second point: Does divestment meaningfully reduce climate change? Short answer: No. Long answer: Divestment is supposed to work by increasingly denying fossil fuel companies access to capital markets, from which those firms may need to raise cash for various projects. In the short run, a low share price (resulting from fewer investors being interested in a firm, and thus a lesser demand for its shares) will not reduce a firm’s ability to do business. In the long run, a sustained low share price may make funding more expensive for it. By looking at historical precedent, however, we can see that this long-term pressure is unlikely to occur. A 1998 economic study of the divestment movement that targeted apartheid-era South Africa found there was only a minute discernible effect on South African companies’ ability to do business even when many universities and businesses divested from such companies. Divestment campaigns will create opportunities for other investors to enter the market cheaply, thus maintaining fossil fuel companies’ access to the capital markets. Since fossil fuels are still crucial to the functioning of our world (and will be for a long time), it is highly unlikely that these firms will be cut off from the capital markets. Divestment would be emotionally gratifying to some students, but would not bring about the environmental change they are advocating.

Our endowment will naturally divest from fossil fuels over time as they fade in economic importance to the world, but rushing this process would only harm our college. A weaker endowment return would jeopardize Hamilton’s ability to offer as much opportunity as it has been able to offer its students. Would students choose divestment, or maintaining or increasing current levels of financial aid? How about divestment or increased resources at the counseling center? The college is not “contributing to the environment’s demise in search of short-sighted profit,” as Eric Stenzel ‘23 writes in The Monitor‘s November 13 issue, but ensuring that the blessings of the Hamilton experience will be shared by generations of students to come, a decidedly long-term outlook. Many students don’t see the complex balancing of priorities the administration must undertake, but they would feel the pain of our college’s having fewer resources if it divested.

Divestment proponents should refocus their efforts and attempt to work with the administration to achieve their goals. Instead of vilifying Investment Committee chair Bob Delaney ‘79, Mr. Stenzel and others should understand the complex balancing act he leads for the college. Not caving to a request from a segment of the student body shows that Mr. Delaney is concerned with long-term priorities for generations of future Hamilton students, some of them not even born yet. Might I suggest, then, that divestment proponents push for other actions, with low costs and which will meaningfully effect change? The college could, for example, use some proceeds from the endowment to erect more solar panels on campus. While even this might cause short-term pain by diverting those resources from another project, it would benefit Hamilton in the long run by reducing its energy costs as well as carbon emissions -- clearly more effective than divestment.

In sum, divestment is merely a moral action which fails to effectively address climate change, delivering nothing but the short-term emotional gratification that is so rewarding to many of us. To the administration, then: Stay the course. Do not cave to calls for an ineffective solution which would reduce the college’s ability to provide the life-changing opportunities it has offered so many.