Response to Smith College Alums for Responsible Investing

March 28, 2018

Dear Ms. Zutrau:

We write in response to the letter sent to Board Chair Deborah Duncan, Investment Committee Chair April Foley, and President Kathleen McCartney. In that letter, you requested that Smith: 1) “identify pathways to full fossil fuel divestment with Investure or select a new endowment manager that will help Smith work towards a fossil fuel-free portfolio”; 2) “cancel the two-year hiatus on taking further action towards fossil fuel divestment”; and 3) “publish a financial analysis of potential divestment pathways and impacts, on par with those of our peer institutions like Barnard College.”

The first request was addressed in October 2017 when the Advisory Committee on Investor Responsibility (ACIR) presented—and the Smith College Board of Trustees adopted—four strategic recommendations regarding climate change and the Smith endowment in October 2017. These consensus recommendations were the product of two years of community engagement and were directly informed by the report of the Study Group on Climate Change (SGCC). Both ACIR and SGCC included members of the faculty, staff, students and trustees. The recommendations did not include divestment. The four recommendations are:

Recommendation 1: Increase impact investing: Smith will increase its impact investments—those intended to generate measurable social and environmental change alongside a financial return—from $9.5 million to $30 million, over time. This enhanced commitment to impact investing aligns with values of innovation and social change at the center of the Smith experience.

Recommendation 2: Favor managers and funds adhering to environmental, social and governance (ESG) principles: This decision reflects the recognition that this type of investing can support the college’s broader commitments to environmental sustainability and social equity while still generating appropriate financial return.

Recommendation 3: Avoid future direct holdings in coal: As of June 30, 2017, Smith’s endowment does not have any direct coal holdings. Recognizing that coal is the most environmentally harmful fossil fuel, the board voted to avoid any future direct investments in coal. The Investment Committee will work with Investure to exclude from the endowment any new investments in coal that would be directly owned by Smith or held directly by Investure funds.

Recommendation 4: Report regularly on socially responsible investment progress: The Investment Committee of the board will work with Investure to provide regular, transparent reports to the Smith community on such metrics as fossil fuel exposure, ESG adoption and impact investments. ACIR will receive and review such reports on a quarterly basis.

In regard to the second request, we believe the implementation phase (which you reference as a “hiatus”) is an important step in enacting and evaluating the four recommendations. We do not plan to change it.

In regard to the third request, there is no current plan to study other paths of climate action or divestment. We have found the work undertaken by ACIR and SGCC to be comprehensive. Taken together, it integrates climate action and sustainability across all aspects of the college—education, research, operations, financial investments and engagement of the Smith community.

In February, ACIR met with Investure, the college’s outsourced investment firm, to ensure the firm is actively moving forward on the recommendations. Investure understands Smith’s goals and is making progress on them, including the review of new impact investment opportunities. Smith periodically reviews its relationship with Investure; the most recent such review took place in 2017 and resulted in a commitment to remain with the firm.

The issue of the Smith endowment and climate change has been raised and addressed, as outlined above; implementation of the four recommendations is actively underway. We thank you for your engagement and look forward to keeping the Smith community advised of our progress.

Sincerely,

April Foley ‘69, trustee
Chair, Advisory Committee on Investor Responsibility

Deborah L. Duncan ‘77
Chair, Board of Trustees