To the Editor:
In response to questions raised by students in recent weeks, the Board of Trustees has formed a committee to examine the question of divestment from fossil fuels in regards to Andover’s Ethics and Investing policy. This committee will comprise of Amy Falls ’82, Shelly Guyer ’78, Rejji Hayes ’93 and Gary Lee ’74, trustees representing diverse backgrounds, expertise and opinions. The committee will explore the issue and make a recommendation to the Board. We encourage members of the community to share their views with the committee by sending e-mails to email@example.com.
The intelligence, respect and passion expressed by students, faculty and trustees on this complex and nuanced topic over recent weeks represent knowledge and goodness in action and are a credit to Andover.
At the outset, it seems important to clarify the history and principles of Andover’s Ethics and Investing policy. The current policy is summarized in the Resolution Regarding Ethical Considerations which was adopted by the Board of Trustees in January 2008 in the wake of the genocide in the Sudan. To view the full policy, please view the online version of this letter.
The policy specifies that a decision to divest rests with the Board of Trustees as part of their fiduciary obligation. It also establishes parameters for divestment including broad agreement that the targeted entities are unambiguously committing acts of grave social injury. The policy intentionally sets a high bar for acts of divestment for three primary reasons.
The first is the simple recognition of the importance of the endowment to the Academy and its mission. Andover could not fulfill its twin goals of excellence and access without its endowment. Funds from the endowment are the single largest source of revenue for the Academy. Without the endowment we could sustain little if any financial aid, let alone our needs blind policy. Indeed, every student benefits from the endowment draw as the cost per student of an Andover education exceeds the full tuition by a substantial amount.
The Investment program must generate sufficient returns to cover the annual draw and inflation while limiting the risk of a substantial drop in value. Risk mitigation is equally important to returns, as we learned in 2008 during the credit crisis when the majority of asset classes depreciated materially. Real assets, which include fossil fuels but also other commodities such as land, timber and real estate, help reduce risk because they provide diversification from equities and protection from rising inflation.
Respect for the diversity of the Andover community is another important objective of the policy. Like access, diversity is part of Andover’s bedrock. The wide range of stakeholders including students, faculty, staff, alumni, parents and donors can and do value a wide variety of social concerns including but not limited to: climate change, firearms, tobacco, labor practices and human rights abuses. For one imperative to take precedence over all the others requires a virtual unanimity of concern and agreement that divestment is the best course forward.
Finally, as fiduciaries we must protect the right of donors to have their funds applied to the philanthropic purpose they intended. Funds in the endowment have been given by a wide variety of individuals both living and deceased to support the operations of Phillips Academy. Diversion of funds through investment activity or otherwise to support other philanthropic or ethical goals must only be done with a high degree of confidence that these goals would be likely to be shared by the original donor.
In sum, the decision to divest from investment in a country, sector or company rests with the Board of Trustees. In our capacity as fiduciaries, we must assess the advisability, benefits and potential costs of any such decision. Important questions that should be addressed are:
– Does the country, sector or company engage in activities that are universally held to be gravely injurious to society?
– Is there a clear and definable standard by which countries, sectors or companies are included or excluded from the divestment decision?
– Is divestment the best way to effect change, and is it clearly superior to attempts to engage constructively as shareholders with the companies or governments in question?
– What are the broader economic consequences of divesting from these entities? In particular, do these entities provide value to society as well as costs?
On behalf of the subcommittee and the Board of Trustees, we welcome your input as we prepare for a thoughtful deliberation on this topic.
Amy Falls, ’82 Shelly Guyer ’78 Reijji Hayes ’93 Gary Lee ’74