Special Campus Memo: Divestment

February 08, 2017

Dear Grinnellians:

Over the past weekend several students from Grinnell College Student Action (GCSA) occupied Nollen House to demonstrate their support for the College's divestment of all endowment funds invested in the fossil fuels industry. The issue of fossil fuels divestment has been debated on campus and among the leadership and the Board of Trustees of the College for several years. Student activists have met on several occasions with Scott Wilson '98, the College's chief investment officer, and with me.

As a result of those discussions as well as the growing number of industries that are the object of divestment movements, during the recent meeting of the Board of Trustees, the Investment Committee voted on a policy that will determine the process by which the Board will receive, assess, and respond to requests from faculty, staff, students, or alumni to divestment from any category of investments.

Furthermore, largely because of the engagement of GCSA, I will propose to the Investment Committee of the Board that it consider creating a donor-requested investment fund whereby future donors who request that their contributions to the endowment not be invested in fossil fuel-related funds may instead have their donations invested in a separately managed endowment fund that would be free of all fossil-fuel investments.

While only the Investment Committee of the Board can decide whether such a fund will be created, I am confident that the committee will give the request the serious consideration that it deserves.

While I fully agree with the student activists about the existence, causes, magnitude, and impact of global warming, I have concluded that divestment of our college's endowment is not a tactic that I can support to address the problem.

There are numerous reasons for this. First, many of the investments in renewable, alternative energy sources, such as wind power, are being made by fossil fuel companies. By way of an independent example, Des Moines-based MidAmerican Energy is the No. 1 owner of wind-powered generation among U.S. rate-regulated energy providers. The energy that MidAmerican generated from wind equaled 47% of the energy sold to its retail customers in Iowa in 2015. In addition, MidAmerican plans to invest $3.6 billion to install more wind turbines in Iowa by the end of 2019, bringing the company's annual renewable energy generation to a level equivalent to approximately 90% of Iowa retail customers' annual energy use. The College has a voice as a shareholder in various companies and can encourage them to be a positive force for renewable energy development.

Second, the College relies on endowment earnings to fund about 55% of the annual operating budget. If we restructure the investment pool by divestment in fossil fuels, we could seriously endanger investment returns. That will make it more difficult for the College to continue to provide generous financial aid. Approximately 26% of our students have grants that cover all of their tuition, plus our graduates have the lowest outstanding debt among graduates of all four-year, regionally accredited colleges and universities in Iowa.

A significant portion of Grinnell's assets are invested in commingled funds where we are choosing the manager and not the underlying investments. No funds are focused solely on energy. However, Grinnell currently has investments in "clean" technology and in green energy, though all investments are chosen based on their investment merits and not as political statements.

One of our College's greatest traditions is one of active social engagement, and civil and thoughtful discussion of complex and contentious issues is essential to the core mission of our College. I admire the students who have taken on this issue.

While I agree that it's imperative to act now to reduce global warming, reasonable people can disagree about the best tactics to use in accomplishing that goal. Rather than divesting from fossil fuels companies, Grinnell will have more impact by continuing to educate thoughtful and engaged citizens who want to solve problems structurally and systematically.


Raynard S. Kington, President