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In response to activism by the Campus Climate Coalition (CCC), the MSU Alumni Foundation’s Board of Governors has created a working group to study divesting the university’s $225 million endowment from funds containing companies operating in industries such as fossil fuels, private prisons, and tobacco. The CCC was formed by students during the 2020-21 school year to advocate for sustainability and equality on campus. 

Atticus Cummings, an At-Large ASMSU Senator, started the CCC during the fall 2020 semester as part of an independent study project. Cummings will be joined by Raye Myers, a member of the Sustained Dialogue leadership team within the Diversity and Inclusion Student Commons and Sustainability Fellow in the MSU Office of Sustainability, as the two representatives from the coalition appointed to the working group.

In addition to the CCC representatives, who were nominated by ASMSU President Norris Blossom, two members from the MSU campus were appointed to the working group by President Cruzado, and two members of the Board of Governors were appointed by Steven Rovig, chair of the board. Cruzado appointed Terry Leist, MSU vice president for administration and finance, and Gary Caton, finance professor in the College of Business. Rovig appointed William Sanderson, chair of the Alumni Foundation Finance Committee, and Mark Bacigalupo, chair of the Alumni Foundation Investment Committee. Alumni Foundation President and CEO Chris Murray will serve as the organizer of the group.

The CCC began campaigning for divestment in the spring 2021 semester, when members started handing out pamphlets and holding teach-ins during classes to educate students about divestment and encourage them to sign a petition in support of divesting the endowment. 

According to CCC students, the divestment campaign started from a desire to see the investment strategies for the university’s endowment better reflect the values of MSU’s strategic plan, “Choosing Promise”, including environmental stewardship, equality and leading students into ethical business.

In its open letter to the Alumni Foundation, the coalition cites key areas where companies common in investment portfolios fall short in mirroring those standards: Fossil fuel companies, such as Exxon Mobil, are key culprits producing greenhouse gas emissions that cause global climate change, which is projected to increase daily average temperatures in Montana by six degrees Fahrenheit by 2050 and significantly damage the health of Montanans if no action is taken to curb emissions. Private prison companies such as Geo Group and CoreCivic disproportionately incarcerate people of color. Publicly-traded tobacco companies such as Philip Morris International have marketed addictive products to young people

Murray said one of the first steps taken by the working group will be to measure the extent to which the university’s endowment is invested in those categories. “My guess is that private prisons and tobacco is very small, probably negligible, but we need to confirm that,” he said. “And then probably we do have some exposure, I’m sure, to some energy funds. So that’s where we’re gonna need to roll up our sleeves and then figure that one out.” 

Divestment means gradually removing all portions of the endowment invested in funds containing those types of companies and reinvesting the money according to Environmental, Social and Governance (ESG) criteria. Companies or investment portfolios performing well under ESG standards are those that operate most environmentally sustainably, act responsibly on social values, adequately protect employees’ health and safety and conduct business transparently, for example.

“We’re not trying to be moral police on campus,” Hailey Sinoff, a member of the CCC and Campus Sustainability Advisory Council, said. “We just think that these are investments that could reflect the mission of the university better.”

In addition to better reflecting the university’s mission statement, the CCC students say, investments in funds that meet ESG standards can provide a rate of return equal to or greater than portfolios containing the previously mentioned companies. Moving money into funds that more closely align with MSU’s mission and receiving the returns needed to sustainably manage the endowment “aren’t mutually exclusive,” Myers said.

According to research published in 2020 by Morningstar, an investment analysis company, and cited by the CCC, investors won’t sacrifice returns when investing globally in companies with good ESG ratings.

ESG policy is one of a number of other factors currently taken into consideration by the Alumni Foundation’s Investment Committee when selecting investment managers, who are responsible on a day-to-day basis for making decisions about the movement of endowment funds. The committee consults with an investment advisory company called Wilshire Associates, which provides recommendations to the committee for potential managers accompanied by reports containing information about the managers’ track records.

At the end of the spring semester, the CCC reached out to the Alumni Foundation to ask for a meeting about divestment, precipitating the formation of the working group. The students met with Murray over the summer, and each of them shared how their perspective on divestment was shaped by connections to a diversity of student organizations and communities on campus. He recommended they write a formal letter to him and the Board of Governors explaining their goals. “We made the argument that unless certain actions are taken, the future’s gonna look really pretty different. And so I think he was receptive to that,” Cummings said.

“I think that meeting substantiated that we are hoping to not only speak for ourselves because we’re passionate about it but because we feel that other students care about climate action,” Myers said.

“This is important to me personally, as the CEO and President of the foundation, and we’ve got to really take a look at this issue, and do it thoughtfully and with purpose,” Murray said. “But I also think that it was very timely for the students to reach out and of course there have been a number of conversations on campus about sustainability, and so forth.”

On Sept. 23, the ASMSU Senate passed resolution 2021-R-12, sponsored by Cummings, which formally declared a climate crisis and called for “rapid, sustained and immediate action” at MSU. 

The Board of Governors discussed the letter from the CCC, also considering the ASMSU resolution, and decided to create the working group during its Oct. 1 meeting.

“The Board recognizes that this will be challenging work given the complexity of MSUAF’s endowment investments and the many competing demands for funds generated by those investments,” Rovig wrote in his charge letter to the members of the working group. “However, it is my strong conviction that our shared concern for the global impacts of the climate crisis and the Board of Governors’ responsibility as the steward of MSUAF’s endowment need not be mutually exclusive.”

According to Murray, one of the challenges that will need to be discussed is that the investment managers selected by the foundation invest the endowment in funds containing multiple companies rather than investing in individual companies in order to maintain a diverse portfolio. This means the group will need to navigate where to place funds when some companies in one fund may meet ESG criteria while others in the same fund will not. “That’s one potential challenge,” he said. “It’s not insurmountable, I don’t think, and there’s other universities and foundations that have found a way to approach that. So I’m confident we’ll come up with a good path forward.”

Murray said the first meeting of the working group, which will take place on Friday, Nov. 19, will be focused on structuring how to discuss divestment and laying out those types of problems that would need to be solved for divestment to happen. The second meeting, he said, will likely focus on how other universities are divesting their endowments. 

Universities across the country have announced decisions to divest from fossil fuels, including Harvard University, which announced its plan to divest its $41.9 billion endowment in September.

“My hope is that by May we’ll have some formal output from that working group that says ‘here’s what we talked about, here’s what we discussed, here’s the issue that we identified and here are some potential steps forward,” Murray said.

Myers and Cummings said they would collaborate with the group to provide information and connect the members with resources to demonstrate the feasibility of divesting.

“We want to make sure that everybody on all sides of the equation, whether that’s students, whether that’s administration, whether that’s the Alumni Foundation, whether that’s donors, particularly donors, that everybody still feels like welcomed and valued members of the community,” Cummings said. “And that we’re just simply making an adjustment to the way that we’re spending our money, investing our money, to align with the values that we’ve set out.”

The Exponent will continue to report on the working group throughout the school year.