Student Group Debates Fossil-Fuel Finance with Administration

Kerry Houston

Sustainability has always been a significant undercurrent of Colgate’s endowment, providing roughly 20 percent of Colgate’s annual revenue, covering costs for lighting, heating, research, faculty, staff and much more. Through Colgate Energy Analytics Group (CEAG), students have found a way to get involved.

CEAG was created this past spring by Brendan Carson ’13 as a club committed to learning more about the finance industry, especially in relation to divesting away from carbon-based stocks. Composed of Economics and Geology majors, CEAG meets weekly to research a variety of stock options, learn about industries, analyze stock performances and look at future trends in order to contribute to the development of a portfolio of about 10-15 alternative cleaner-energy stocks. Ultimately, CEAG plans to present its findings to the Investment Office at the end of the semester. Club leaders will determine the group’s future goals for next semester based on responses to the portfolio.

President of CEAG Erin Fett ’14 describes the group as being primarily a learning opportunity for students interested in both finance and sustainability. The group’s key focus is learning what stocks are feasible for providing long-term returns on investments. For example, the group has found that many technology-related investments, such as solar and wind companies, are often volatile investments because it is impossible to predict what the companies will produce in terms of research and development.

Director of Investments Joseph Hope has been communicating with leaders of CEAG to help guide the club’s course of action.Sustainability has always been a significant undercurrent of Colgate’s endowment, providing roughly 20 percent of Colgate’s annual revenue, covering costs for lighting, heating, research, faculty, staff and much more. Through Colgate Energy Analytics Group (CEAG), students have found a way to get involved.

CEAG was created this past spring by Brendan Carson ’13 as a club committed to learning more about the finance industry, especially in relation to divesting away from carbon-based stocks. Composed of Economics and Geology majors, CEAG meets weekly to research a variety of stock options, learn about industries, analyze stock performances and look at future trends in order to contribute to the development of a portfolio of about 10-15 alternative cleaner-energy stocks. Ultimately, CEAG plans to present its findings to the Investment Office at the end of the semester. Club leaders will determine the group’s future goals for next semester based on responses to the portfolio.

President of CEAG Erin Fett ’14 describes the group as being primarily a learning opportunity for students interested in both finance and sustainability. The group’s key focus is learning what stocks are feasible for providing long-term returns on investments. For example, the group has found that many technology-related investments, such as solar and wind companies, are often volatile investments because it is impossible to predict what the companies will produce in terms of research and development.

Director of Investments Joseph Hope has been communicating with leaders of CEAG to help guide the club’s course of action.

“The overarching goal of the endowment is intergenerational equity,” Hope said.

“We just want to create an alternative portfolio that anyone can invest in. There’s no precedent for this to happen at Colgate. You can’t tell these fund managers what to do and we’re not expecting them to do that,” Fett said. “This is predominantly a learning experience and secondary, to see where we could go with that…Our goal is to create an investment portfolio that has undertones of more renewable suggestions.” 

However, a fundamental problem behind such divestment is that it is difficult to show that there is a significant return on investing in renewable energy. There is currently a movement across the United States to remove money from coal, oil and other non-renewable energy source industries, yet there is currently little evidence demonstrating that investing in renewables is a feasible alternative to non-renewables.       

Under the leadership of Colgate’s first Director of Sustainability John Pumilio, the Office of Sustainability has been trying to add more social and

environmental consciousness to university decision-making. Between 2009 and 2012, Colgate reduced its carbon footprint by 20 percent and its operating budget by about half-a-million dollars. Although Colgate has taken a number of steps in becoming more sustainable, the conversation regarding Colgate’s commitment to divestment has yet to come up.

“For me it comes down to a question of principle, and I emphasize the word question,” Pumilio said. “If we have a commitment to be carbon neutral, and we recognize that climate change is real and could have devastating impact on society in the years ahead, is it a conflict of interest to be investing in and supporting companies that depend on the extraction and consumption and burning of fossil fuels? That’s a loaded question and there’s no easy answer to it.”

“We’re not looking to do anything radical here, we’re just trying to have a good economic and financial analysis of renewable and non-renewable companies,” Fett said.

Contact Kerry Houston at [email protected]