Letter to the Editor: Response to ASG Divestment Resolution

John Kerrigan  May 24, 2016In response to Jenni Sigl’s article in the May 19 issue concerning the ASG resolution regarding divestment, I highlight the following points:By way of background, the topic of divestment has been formally addressed twice by the Santa Clara University administration, first in June 2015, and again in February 2016 ("the VPFA responses"). These communications were the culmination of numerous discussions, including many hours of meetings between students representing Fossil Free SCU and the Vice President of Finance and Administration, the Investment Office, the SRI Subcommittee of the Investment Committee and various investment managers. The Markkula Center for Applied Ethics also hosted a public forum on the topic of divestment.The VPFA responses highlighted various initiatives and investments, including funding for an on-campus "green" fund (which is in operation) and over $10 million of endowment investments in socially responsible investments and renewables funds (which have been made).These activities speak to ASG's third request, "that SCU provides future opportunities akin to the Campus Sustainability Investment Fund (CSIF) program sponsored by the Office of Finance and Administration and use this program as a model for future reinvestment and climate neutrality efforts."I ask that ASG focus on programs that are currently available, especially given that we are operating in a resource-constrained environment.ASG also requested,"that the university's investment officers explicitly communicate with fund managers that the student body does not approve of investment in fossil fuel extraction companies." I can assure you that our understanding of many students' views on the topic of divestment has been discussed with all of our energy sector managers over the past two years.As opportunities arise to discuss these concerns in the future, I will seize them.The VPFA responses noted that our holdings in energy sector funds and securities are a relatively small percentage of the overall endowment fund. The majority of our managers are invested in other sectors.Finally, in our meetings with FF SCU students, through the VPFA responses and in my subsequent correspondence with ASG, we have provided details about the various structures and investment vehicles that make up the endowment.Beyond that, I must decline the request, "that the Center for Sustainability should include commingled fund investments in fossil fuel companies in its overall carbon footprint calculations."The Center for Sustainability is a very critical operational unit, but it is not responsible for endowment preservation and growth. Prudent investment management considers the implications of many factors, including climate change, in determining the attractiveness of different opportunities.Furthermore, the Santa Clara Investment Office works with our managers in all sectors to identify best practices in environmental, social and governance matters.Cumulatively, the Investment Office and others have spent nearly 500 hours on the topic of divestment over the past 24 months. I ask that ASG and other stakeholders focus on and continue to engage with various sustainability activities throughout the university and recognize the substantive, proactive actions by VPFA and the Investment Office.John Kerrigan is Santa Clara's Chief Investment Officer. Contact John Kerrigan at jkerrigan@scu.edu.