The Symbolism Of Divestment Is Not Worth The Sacrifice by Stanley Druckenmiller, The Bowdoin Orient
The Bowdoin Investment Committee, on which I serve as chair, has one goal: to earn the highest return on the College’s endowment over time. I am happy to report that the most recent figures show three-, five-, and ten-year annualized returns for Bowdoin’s endowment that were all in the top fifth percentile among comparative colleges and universities.
In her opinion piece (“We demand that trustees put aside conflicts of interest and take action” – The Bowdoin Orient, April 15, 2016), Isabella McCann offers a misguided insinuation about my motivation for not favoring divestment from the fossil fuel industry. At various times, my funds have been net long fossil fuels equities, at other times we have been net short them. We do not buy stocks to support the fossil fuel industry, and we do not short them to destroy the industry. We go long when we think they are going up, and we short them when we think they are going to go down. Please take into consideration that Ms. McCann’s article offers just two snapshots in time over my thirty-year career when my funds’ positions fit her narrative.
My primary concern is that Bowdoin’s divesting energy equities would only have a symbolic effect on the fossil fuel industry, which is mature and enjoys significant free cash flow. It is misguided to think that the Bowdoin endowment, particularly given its size relative to the market capital of the industry, would have any effect whatsoever on the industry going forward. But, as an investment committee member, it is clear to me that it would have a dramatic effect on the College endowment going forward. Most of the managers Paula Volent and her team have selected who have contributed to our outstanding returns would no longer be eligible to manage Bowdoin’s endowment. If you limit options, you limit returns over time. This would adversely affect the College’s ability to support need-based financial aid, endowed professorships (which are used to attract world-class educators), and yes, Bowdoin’s ability to advance knowledge in climate science and a wide range of other disciplines over time.
Finally, and on a more personal note, I would like to clarify that I am deeply committed to ensuring a sustainable future for our planet. I am on the board of the Environmental Defense Fund, through which my wife and I have committed tens of millions of dollars to combat climate change, including helping to fund a series of studies designed to help us better understand and reduce methane emissions (an even more potent warming agent than carbon). These studies are helping to drive important policy changes and have led to regulations at the state and federal level. I mention this to demonstrate that I do not have a conflict of interest that would prevent me from taking action on climate change; rather, I share Ms. McCann’s and the Bowdoin Climate Action group’s passion for this issue. However, as an investment committee member, my primary responsibility to Bowdoin is to help grow its endowment, and I do not think it is worth sacrificing future investment returns for an action that is simply symbolic.
Stanley F. Druckenmiller is a member of the class of 1975 and is the chair of the Investment Committee.