Eliot Circular

Reed Won’t Divest

In July, Roger Perlmutter ’73, chairman of the board of trustees, announced that Reed would not divest its $500-million endowment from fossil fuels, as the student group Fossil Free Reed had requested. 

Writing on behalf of the board, Perlmutter cited Reed’s 1978 Investment Responsibility Policy, which states that the board’s primary investment objective is to safeguard the value of the endowment so that it can support the mission of the college. He also called attention to Reed’s “intense commitment” to academic freedom, which requires, he said, that Reed as an institution maintain political neutrality in order to protect freedom of inquiry and expression. The college should only depart from institutional neutrality “where the action taken reflects widely-held, perhaps almost universally held, social, or moral positions.” He continued:

Balancing our social concern, our institutional financial concern, and our concern for keeping the college institutionally dissociated from particular political positions, the board did not agree that divestment of Reed’s endowment from fossil-fuel investments meets the high standards of our policy. The balancing was not easy, it was intensely discussed, and the weighting of these variables was no doubt different for different members. Some think that divesting Reed’s endowment from fossil-fuel investments would not have significant impact on actual CO emissions. Others stressed that in light of the college’s continued use of fossil fuels, and similar reliance on fossil fuels by nearly all of the members of our community, to the degree such a gesture would purport to contribute to a solution, it would lack the integrity we all expect from the Reed community. Some were animated principally by concern that the requested action would have a significant negative impact on the endowment. They stressed that Reed’s endowment is largely invested in funds whose strategies permit quick and untrammeled decision-making by fund managers. To these members, divesting from funds with carbon exposure would mean dissociating from managers carefully selected for the likelihood of high performance. Finally, many were concerned that a decision for divestiture would open other discussions about other causes in ways that would ultimately divide the community and force it to make official decisions about matters of reasonable academic and political debate.

Perlmutter emphasized the trustees’ view that the most effective way for Reed to combat global warming lies in its educational mission, and pointed to the college’s new environmental studies program as an example. He also cited Reed’s direct efforts to reduce its carbon footprint, including a $5.4 million investment in energy efficiency that will reduce CO emissions by 2.65 million pounds per year.

Read the full statement.