Sterling Terrain V02 - Flipbook - Page 8
6 | Sterling College
Sterling’s
Divestment
Journey
Written By
Eric Becker,
CFA & Sterling Trustee
Eric Becker is Clean Yield Asset
Management’s chief investment
officer, a chartered financial analyst
(CFA), and has been engaged in
social and environmental investing
since 1993.
He was a founding member of the
Slow Money movement, which
seeks to connect investors and
entrepreneurs in the service of
building a healthier and regenerative food system.
He lives in St. George, Vermont.
This marks his ninth year on
Sterling’s Board of Trustees where
he currently serves as treasurer as
well as the chair of the College’s
investment committee.
In July 2012, Rolling Stone published a
compelling article by Bill McKibben entitled, “Global Warming’s Terrifying New
Math.” It focused on three numbers: 2°
Celsius (the maximum amount of global
warming thought at the time to be compatible with a livable planet), 565 gigatons (the amount of additional carbon
that humans can emit into the atmosphere and still stay below a 2° increase),
and 2,795 gigatons (the world’s proven
fossil fuel reserves). McKibben spotlighted the terrifying reality that humans can
only “safely” burn 20% of known fossil
fuel reserves. We need to leave 80% of
those reserves in the ground to have a
livable future.
McKibben then pointed out the absurdity of college endowments holding stock
in fossil fuel companies. For students
at those colleges, “their educations are
being subsidized by investments that
guarantee they won’t have much of a
planet on which to make use of their degree.” The implied moral imperative was
clear: college and university endowments must divest their fossil fuel holdings. The Rolling Stone article was the
piece that took a nascent college-campus movement to divest endowments
and launched it into the mainstream.
S&P 500 Group E-Wtd. (SPX-E)
Select Sector SPDR Trust - Energy (XLE)
Sterling’s Board of Trustees embraced
the wake-up call at the urging of former
trustee Rian Fried and quickly moved to
ensure that the College’s endowment
was free of fossil fuels. It shifted management of the endowment to Trillium
Asset Management, a pioneer in social
investing and one of the few managers at the time offering fossil fuel free
portfolios. In 2013, Sterling was the first
Vermont institution of higher education
to divest its endowment and the third in
the nation.
Ten years on from the Board’s divestment decision, the world looks radically
different, for better and for worse. The
dire predictions of climate disruption
and catastrophe have been borne out in
almost ceaseless headlines of drought,
wildfire, and superstorm. Yet the fossil
fuel divestment campaign was a huge
success. By last October, 1,485 institutions representing over $39 trillion in
assets had committed to some form of
fossil fuel divestment.
This accomplished several things. First,
it raised awareness of the risk to fossil fuel companies of “stranded assets,”
the investments they have made in
coal, gas, and oil reserves that they will
Current 274.16
Median 114.64
High 333.96
Low 0.00
CAGR 14.1%
Current 45.69
Median 8.06
High 51.58
Low -36.11
CAGR 3.8%
329.0
329.0
315.2
315.2
301.5
301.5
287.8
287.8
SPX-E
274.1
274.1
260.4
260.4
246.7
246.7
233.0
233.0
219.3
219.3
205.6
205.6
191.9
191.9
178.2
178.2
164.5
164.5
150.8
150.8
137.1
137.1
123.4
123.4
109.7
109.7
95.9
95.9
82.2
82.2
68.5
68.5
54.8
54.8
XLE
41.1
41.1
27.4
27.4
13.7
13.7
0.0
0.0
-13.7
-13.7
-27.4
-27.4
2013
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2016
2017
2018
2019
Total Return % Comparison
2020
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2023