Endowment Announcement, March 31, 2021
Dear Students, Faculty, Staff, and Alumni,
Today I am pleased to announce that the Board of Trustees has approved the following actions with respect to the College’s management of the Amherst endowment:
- Make no new investments in public or private equity fossil fuel investment funds.
- Phase out the remaining investments in directly held, long-term fossil fuel funds over time. By 2025, we anticipate that these investments will have been reduced by 60% from current levels, and that we will no longer hold any such investments on or about 2030.
- Instruct the managers of our separately managed accounts not to acquire or hold on our behalf direct investments in fossil fuel companies.
- Continue to engage with all of our managers to ensure that each appropriately incorporates long-term risks, including those posed by climate change, into their investment analysis. This includes our generalist investment managers who may, from time to time, hold investments in fossil fuels.
This announcement largely formalizes actions that have been in place for years. We have neither held direct investments in fossil fuel companies nor made new commitments to fossil fuel funds in over two years. Since the release of the Board’s Sustainability and Investment Policy in February 2015, direct and indirect investment in fossil fuels has rapidly declined as a proportion of the endowment, from 6% to 3%. Amherst has continued to engage in dialogue with our fund managers, including new fund managers, around their approach to sustainability.
As you know, these actions are part of a broader range of substantial commitments that the College has made toward sustainability. Recently, we released our Climate Action Plan, which accelerated the timeline of our commitment to achieve carbon neutrality from 2035 to 2030. The cornerstone of this plan is an investment of $80 million in the conversion of our power plant to run entirely using geothermal energy. Planning and early-stage investments in this project are well underway.
Endowment policies that limit the range of allowable investments are serious decisions for any institution, and particularly serious for Amherst because of our dependence on the endowment. In the current fiscal year, the endowment is funding nearly two-thirds of our entire operating budget, more than double the revenues provided by tuition, room, and board fees. This is one of the highest rates of “endowment reliance” of any institution of higher education in the country. It also allows us to provide one of the most generous financial aid policies of any liberal arts college, and one of the few need-blind admissions practice for all applicants, domestic and international.
We are able to make these new commitments as a result of the work of a dedicated and talented investment team, consisting of the Investment Committee of the Board of Trustees and the College’s Investment Office. They share responsibility for managing the endowment and face the diﬃcult challenge of building a portfolio that balances conﬂicting pressures for growth, stability, and cash ﬂow, a challenge that can only be met by making careful decisions about how to invest and when to pivot. Over many years, they have met that challenge admirably, so that Amherst can ﬂourish now and well into the future.
We thank our alumni, whose support has built the endowment, as well as the College’s constituencies, including our students, who share in our commitment that the College do its part in support of climate action, which becomes more urgent by the day, while also preserving educational opportunity and the extraordinary quality of an Amherst College education for generations to come.
In closing, members of the Board of Trustees and I encourage everyone in our community to develop and execute their own plan for addressing climate change in their daily lives. It is the combination of actions, large and small, by individuals and institutions, that will make a difference.
Andrew J. Nussbaum '85, Chair, Board of Trustees