Five years after the Board of Trustees published an official Resolution for Divestment and established the Impact Investment Platform, Oberlin’s endowment remains partially invested in companies that benefit from the production and consumption of fossil fuels.

“Oberlin still has minimal exposure to fossil fuel investments,” wrote Vice President for Finance and Administration Rebecca Vazquez-Skillings and Chief Investment Officer Jun Yang in a joint email statement to the Review. “However, they are legacy investments and the College has not made any new investment for several years.”

In 2014, The Board allocated $5 million to fund the IIP and adopted an official Resolution for Divestment. Each year for the past five years, $1 million was transferred from the endowment’s General Investment Fund to the IIP. The platform, a subcommittee of the Investment Committee, financially promotes environmental sustainability and social justice by investing in companies and securities that meet rigorous environmental, social, and governance standards, rather than divesting from those that do not. Currently, around $30 million of endowment fit the criteria of the IIP.

The Board acted in response to student requests for divestment from companies that profit from the production and consumption of fossil fuels, private prisons, or the Israeli occupation of Palestine. The resolution provides an outline for the Board to consider future divestment requests.

Divestment would require the Board to vote to cease all current and future investments in holdings that contribute to or support activities that “shock the conscience, such as genocide, ethnic cleansing, unjustified disregard of profound environmental degradation and other wide-scale acts of injustice,” according to the official resolution document.

The Investment Committee — co-chaired by current trustees Amy Chen, OC ’79, and Leah Modigliani, OC ’86 — oversees the performance of the endowment, facilitates third-party investor manager relations, and assists the Board in pursuing both active and passive investment strategies. A majority of the nine voting members must be members of the Board, according to the committee charter.

However, the decision to divest requires the approval of two-thirds of the Board, according to the 2014 resolution.

Fourth-years Jubreel and Jabree Hason, chief investment officers of the Oberlin Student Finance and Investment Club, feel that divesting is more of a politically symbolic action than an effective financial tool to disempower fossil fuel companies.

“Some issues may arise when large institutional investors decide to boycott or sell out of their positions in these environmentally-unsustainable companies,” Jubreel and Jabree wrote in a joint email statement to the Review. “We would argue that in the perfect scenario, all investors would divest from environmentally unsustainable positions. In all actuality, though, it only takes the buy-in of a few large investors to keep their stock prices afloat.”

Benchmark indices, which track the performance of a specific basket of assets, help measure the endowment’s financial performance as compared to the rest of the market. According to the investment policy, the Investment Committee compares each asset class — a group of investments with similar characteristics — held in the endowment to specific benchmarks that reflect a long-term view of expected return and potential risk.

Many benchmarks are at least somewhat buoyed by fossil fuel investments, depending on their exposure to energy markets. This presents challenges for ESG-minded investors; it can be difficult to find an index that is both composed of sustainable investments and performs as well as the rest of the market.

“The benchmark that many investors use to compare returns to is the S&P 500 index, which — as of today — holds a little over 4 percent in energy stocks,” Jubreel and Jabree wrote.

Some of the indices that Oberlin uses as benchmarks, including Cambridge Associates’ Global Private Energy index and the iPath Dow Jones-UBS Commodity Exchange Traded Note, contain holdings that are at least partially invested in fossil fuels. 3.95 percent and 12.55 percent of the DJP ETN tracks natural gas and gasoline commodities, respectively.

Members of Sunrise Oberlin, the student chapter of the national environmental activism group Sunrise Movement, argue that divestment is a vital step toward systematic change and is necessary for fostering a greener economy and society.

“We believe that all institutions, Oberlin College included, need to do more than divest from fossil fuels, but invest in building a just and sustainable economy that is not dependent on fossil fuels,” wrote College second-year and Sunrise Oberlin member Rachel Serna-Brown in an email to the Review. “That said, we believe the College should pledge to completely divest from fossil fuels, and urge them to quicken the process of moving towards the reliance on alternative energy sources.”

Vasquez-Skillings and Yang maintain that divestment can be tricky to achieve given the financial complexity of endowment funds.

“Given the little exposure, it is difficult technically and financially to divest fully,” they wrote.

Other colleges and universities — including Middlebury College and the University of California system — pledged earlier this year to fully divest from fossil fuel investments, citing financial risk.

“The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for UC’s diversified portfolios,” wrote University of California’s chief investment officer and treasurer Jagdeep Singh Bachher and chairman of the UC Board of Regents’ Investments Committee Richard Sherman in an article in The Los Angeles Times (“UC Investments Are Going Fossil Free. But Not Exactly For The Reasons You May Think,” Sept. 16, 2019).

Although current Oberlin students, employees, and alumni can submit divestment requests via email, “it appears we have not received any requests in the past few years,” according to Vasquez-Skillings. Requests must be approved by the Office of Investments prior to submission to the Board for consideration.