In Response to the Call to Divest

I write in response to the opinion piece, “A Letter to the Administration: When Will We Divest?”  about the college’s endowment. I’d like to provide The Student’s readers and the college community as a whole with some important facts that give a more accurate and complete explanation of Amherst’s investments. Before I do, I want to assure the authors of the opinion piece and subsequent petition that the college administration agrees entirely that we must shape the endowment to honor our mission and values while also ensuring that Amherst’s financial needs, now and into the future, can be met without damage to mission activities.

Here are the important facts to which I wish to draw your attention:

  • Amherst holds no direct investments in any private prison company and, to the best of our knowledge, has never held any such investments. Neither do any of the funds in which we invest. To be clear: not one dollar of the college’s endowment is currently invested in private prison companies — not directly or indirectly.
  • As the authors of the op-ed state, the college posts on the Investment Office website direct holdings of company stock currently in the endowment as a way of promoting transparency. It is important to understand that these investments that are posted on the website collectively represent less than five percent of the endowment as a whole. Of these, about half are stocks chosen by the independent, student-run Investment Club, which utilizes funds provided by a donor to help them gain experience investing in a real-world environment. The remaining stocks are held in a single college investment fund that is managed by a third-party firm specializing in large U.S.-based public companies. None of these investments are chosen by the college’s administration. More significantly, none of these investments are in fossil fuel or private prison companies.
  • The op-ed says that 24 percent of these 34 holdings (so, by the math, eight of them) “support the prison-industrial complex in some way” (though it does not cite the standard by which this assessment was made). Since none of these companies are private prison firms themselves, the authors are making more of an indirect case here that companies that sell goods and services to private prison companies — things like office supplies, food and banking services — are profiting from the prison industry. Amherst’s endowment is not invested in companies that depend for their profits on supplying prisons, with the exception of one very small indirect investment — less than 0.01 percent of the endowment — held through a private equity fund. The op-ed implicitly suggests that investors who invest any part of their funds in companies that derive a portion of their revenues from the private prison industry, even if the amounts are very small and the investments indirect, are themselves complicit in supporting private prisons. There is room for discussion and debate on this point, but it sets a difficult, perhaps impossible standard for any diversified investor to achieve. Since the op-ed lacks detail about the standard the authors are using on this point, we welcome clarification and the names of specific companies that the authors are concerned about.
  • The piece cites the college’s “massive” investment in natural resources which total seven percent of endowment investments. Yet, as the op-ed notes, natural resources is a broad category that includes timber, wind and solar energy, in addition to fossil fuel-related companies. The energy industry alone, leaving aside other categories of natural resources, represents eight to 10 percent of the global economy. The Amherst endowment has held fewer investments in natural resources than the economy as a whole does.
  • Far more important, of course, is the composition of these investments and how rapidly they have changed over time. While renewable energy funds represent only about 10 percent of the domestic energy consumption, they are 40 percent of the college’s energy investments. Until 2005, we held no such investments at all. They are exciting investments, both for their financial prospects and their alignment with our mission, and we are scouring the investment landscape for more. 

A few additional facts regarding the endowment’s energy-related investments:

  • We have increased the amount we have invested in renewable energy by over one-third in the last year.
  • Since the issuance of our first sustainability statement in 2015, we have quadrupled our investment in sustainable energy funds, including investing $50 million in a renewable energy fund in 2018, the highest one-time investment we have ever made in a single private investment fund.
  • These endowment investments complement and reinforce the investments that we are making to decarbonize the campus. For example, the college’s decision to commit to a 20-year fixed-rate agreement to purchase energy from a solar array in Farmington, Maine, rather than the cheapest energy available on the market, made that project possible. Notably, the endowment is also an investor in the firm that constructed that solar array and many more like it across the country.

The op-ed states accurately that the endowment holds direct investments in oil and gas funds. Currently, these investments represent about three percent of the endowment as a whole, down from nine percent as recently as 2008. In most cases, such investments were made many years ago and are naturally and rapidly dwindling as they run their course. As that occurs, the college redirects liquidations to new investments in other asset classes. In the last year alone, the remaining amounts invested in these funds decreased by 24 percent. Based on the current rate of liquidations, our direct holdings of oil and gas funds will further decrease by 60 percent in five years and 97 percent in 10 years, thereby declining as a proportion of the endowment from the current 3 percent to nearly zero. In short, Amherst will have divested the endowment of direct holdings in fossil fuels by 2030, the point at which the campus will be carbon neutral. Readers may wish to review the College’s 2015 Statement on Sustainability and Investment Policy, as well as its 2019 announcement of a Climate Action Plan.

Some will ask why we cannot divest the endowment of these investments immediately. We believe a commitment to being out of fossil fuels by 2030 is a responsible position. If it is possible to move more quickly without causing significant problems for the college’s operating budget, its highest priorities, and its future financial health, we will certainly try to reduce the three percent sooner. A significant part of the endowment is restricted to specific purposes, and the great majority of the payout from unrestricted funds in the endowment supports salaries and financial aid. These expenditures are core to our mission and require that we divest at a rate that preserves the college’s commitments to access and quality education.

I have invited representatives from the 11 groups that signed the petition we received last week to meet with me, Chief Financial Officer Kevin Weinman and Chief Investment Officer Letitia Johnson. Our hope for a meeting on Nov. 23, has not worked out, but we are holding time for next week. I hope this information helps clarify the college’s investment picture, our strategies and the values on which they are based. We share the authors’ and signatories’ sense of urgency about both of the pressing issues they raise — climate change and racism in the criminal justice system. We look forward to working with everyone in the community who is committed to doing their part.


Biddy Martin, Amherst College