Alumni Trustee Hopeful Calls Divestment Financially ‘Prudent’
Members of the Board of Trustees may propagate a “tunnel vision” perspective on divestment...comments share
By Drew Musto via The Cornell Daily Sun, 7/1/16
Fossil fuel divestment is more likely to augment the University’s endowment than harm it in the long run, according to Joe Rowland ’73, a candidate petitioning to be considered for an alumni-elected position on the Board of Trustees.
“Today the question to be answered is not why should Cornell … divest from companies holding fossil fuel reserves, but why not?” Rowland wrote in a University Assembly resolution, urging the University to divest by December 31, 2035.
Rowland explained that current political and economic trends predict negative consequences for investment portfolios dependent on on fossil fuels.
“Back testing of balanced portfolios over a rolling 10-year time frame gives a slight nod to a fossil-free portfolio,” he said. “However, we know that climate change is likely to lead to more restrictions and regulations in the future regarding fossil fuels.”
Arguing that fossil fuel assets will soon lose their value, Rowland said he believes “a prudent long term investor would be well advised to dump them at the next reasonable opportunity.”
“You don’t have to be a weatherman to know which way the wind is blowing,” he said.
Rowland’s claims about the benefits of University divestment have not gone uncontested. Prof. Hendrik Bessembinder, finance, Arizona State University, published a study May 11 that estimated Cornell’s endowment would decline by between $120.75 million and $724.5 million over the next 20 years, solely due to the frictional cost of transitioning to and maintaining a fossil-free portfolio.
Rowland called Bessembinder’s study “twaddle,” arguing these frictional costs are negligible if divestment is “done intelligently.”
“If the frictional losses referred to were an issue, there would be one hell of a plume rising above Wall Street,” he said.
Rowland added that the trustees’ promise to divest from “morally reprehensible” companies must “[take] into account the 100 million climate refugees to come, the current poisoning of aquifers, streams and oceans, the ongoing destruction of habitat and extinction of species” — all of which he called consequences of burning fossil fuels.
“We, including Cornell, must embrace this culpability, divest and replace the fossil fuel paradigm with all the haste we can muster,” he said.
Rowland also argued that the trustees should honor the desires of the University’s constituencies.
“If all five assemblies agree to support a particular position or course of action, then I believe that the trustees should defer to them, though … they must still fulfil their responsibilities as fiduciaries,” which he said mandates that they manage Cornell’s assets with practicality and “prudence.”
The members of the Board of Trustees — many of whom hail from business backgrounds — may propagate a “tunnel vision” perspective on divestment, according to Rowland.
“I would guess that most of our business orientated trustees are [R]epublicans,” he said. “This means they have been exposed to a great deal of erroneous climate change skepticism and outright denial.”
Rowland clarified that he does not, however, question that the trustees are acting in what they believe to be the best interest of the University.
“They care about Cornell, their children and the future that we all will inhabit,” he said. “In the end, facts whip fallacy. They will not be swayed by me, but by a preponderance of the evidence and their duty as fiduciaries.”
Rowland and Linda Copman ’83 are currently petitioning to be added as write-in candidates for the position of alumni-elected trustee, on platforms of advancing Cornell’s carbon neutrality, The Sun previously reported.
If either candidate hopeful receives 400 alumni signatures on their petition by August 1, they will appear on the March 2017 alumni ballot.
Drew Musto is a freshman in the College of Arts and Sciences. He is a staff writer for the News department and can be reached at firstname.lastname@example.org.
Views expressed in News posts may not be those of Cornell University. No endorsement is implied.