The college will immediately reduce exposure to fossil fuel investments in its endowment.
On February Ninth, the Carleton College Board of Trustees voted to reduce exposure to fossil fuel investments in the college’s endowment by immediately eliminating all direct holdings of fossil fuel companies, and resolving to make no new investments in private funds that focus exclusively on oil and gas extraction. This decision builds on the college’s historic leadership in sustainability and its 2020 commitment to incorporate Environmental, Social, and Governance (ESG) factors into its investment selection assessment process, aiming to accelerate the shift in balance between traditional and renewable sources of energy.
“Carleton has grappled for some time with the difficult question of whether to join the many peer colleges and universities that have expressed their commitment to sustainability through divestment from fossil fuels,” President Alison Byerly and Board Chair Wally Weitz ’70 wrote in a message to the Carleton community. “The Board of Trustees has recognized the tension between two competing values: the desire to strengthen Carleton’s endowment so that it can continue to support the mission of the college, and the belief that the college should not derive profit from fossil fuel companies whose primary business contributes to the climate change that threatens our students’ futures.”
Fossil fuel divestment has been a topic of discussion at Carleton for nearly two decades, and in reflecting on the recent vote, Byerly noted that the Board engaged in substantive research and discussion, with thoughtful and principled arguments made on both sides. Over the last several years, the Board received advice to divest from numerous constituencies, including formal proposals, letters, and petitions from students, faculty, and alumni, making clear that community feeling, though not unified, is strong.
The Board considered this input in its deliberations, which included the Divest Carleton Proposal of February 2022, the Carleton Student Association resolution of May 2020, the “Sense of the Faculty” Resolution on Fossil Fuel Divestment of January 2023, the Carleton Responsible Investment Committee’s (CRIC) April 2022 letter, and the April 2022 letter to the administration and Board by Alumni Divest Carleton.
“While the consequences of a single endowment’s investment decisions may be limited, we join a growing community of colleges and organizations that can have collective impact and greater influence by acting together,” Byerly and Weitz wrote. “Carleton’s action is part of the culture change that we know will be needed to successfully combat climate change. We look forward to continuing to work with the entire Carleton community to promote sustainability in both education and practice, and appreciate your support of the college’s efforts to ensure that our students are prepared to approach the challenges of the future with knowledge, purpose, resilience, and hope.”
The Carleton endowment’s allocation to oil and gas investments has steadily declined over the past three years and, as of January 2023, stood at approximately five percent of the endowment—a value that will immediately decrease as a result of the Board’s action. The college will also gradually eliminate private funds that focus exclusively on oil and gas extraction in a prudent manner that is consistent with an overarching emphasis on fiduciary responsibility. Due to the illiquid nature of these funds, the college anticipates that the remaining investments will decline over the next four to five years and will be fully liquidated by 2030. Given the limited amount of exposure in fossil fuel-related direct holdings and funds exclusively focused on oil and gas extraction, the Investment Office is expected to retain sufficient flexibility in its investment portfolio to minimize potential impact on the endowment’s market value and corresponding support to the college’s operating budget. The endowment supports 30 percent of college operations, including financial aid.
Carleton will continue to favor investment managers who support the energy transition and companies thatactively manage and minimize carbon emissions. The college will also maintain its support of the energy transition through continued investments in green energies and sustainable practices on campus, such as the geothermal heating and cooling project, construction of LEED-certified buildings, the planned installation of solar panels on new student residences, and the development of a plan to accelerate progress toward carbon neutrality by the Sustainability Working Group.
Carleton will continue to report its portfolio’s fossil fuel exposure through the Investment Office’s fiscal year-end endowment review letters, which are publicly available on the Carleton website, and will review those results annually with CRIC.
Read the full statement from Byerly and Weitz, and a set of frequently asked questions, on the President’s Office website.
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