Recent developments regarding a divestment proposal that Occidental students presented to designated members of the College’s Board of Trustees in May.
Dear Occidental community,
I am writing to update you on recent developments regarding a divestment proposal that Occidental Students for Justice in Palestine (Oxy SJP) and Occidental Jewish Voices for Peace (Oxy JVP) presented to designated members of the College’s Board of Trustees in May. The student groups proposed that the College cease direct investments and limit indirect investments in four companies (Boeing Co., Elbit Systems, Caterpillar Inc., and Lockheed Martin) based on their role in manufacturing weapons and equipment used by the Israeli government in Gaza.
By way of background, our Board consists of 42 trustees, most of whom are Occidental alumni and/or parents of alumni. Trustees have a fiduciary duty to ensure the College remains financially secure now and in the future, including by managing the College’s endowment. Like the Occidental community, trustees hold a wide range of beliefs and opinions, but as trustees, they are committed to putting the College’s best interests above all others, including their own personal views.
In 2021, the Board adopted an investment policy that included a process for College stakeholders to present divestment proposals to the Board’s Investment Committee (IC). This policy and process were shaped by input from stakeholder groups, including students and faculty, and formalized the IC’s longstanding practice of engaging with stakeholders to consider their viewpoints.
Oxy SJP and Oxy JVP submitted their divestment proposal through this process, and leaders from the College and the IC met with designated student and faculty representatives to discuss it. The IC then held a special session to review relevant materials and prepare a recommendation for the full Board to discuss and consider at its June meeting. Recognizing the importance of the issues presented, the Board chose not to delay consideration until the Fall.
When evaluating the proposal, the Board considered several factors in line with Occidental’s investment guidelines. The Board particularly focused its attention on the level of College community support for the proposal and the potential impact of divestment on the four targeted companies.
As part of the evaluation, the Board reviewed input from hundreds of communications from students, faculty, staff, alumni, parents, and non-Oxy affiliated persons and groups. The opinions expressed were diverse. Many advocated for divestment and indicated they would no longer support the College if the Board did not divest. Conversely, many opposed divestment and said they would withhold support if the College chose to divest. Some criticized the Board for listening to the student groups’ concerns, while others appreciated that the College disclosed information, enabled access to Board processes, and considered multiple perspectives.
The Board acknowledges the devastating effects of the Israel-Hamas War and expresses deep concern and sympathy for all affected by it. The Board therefore directed the College to find opportunities for positive engagement in efforts to alleviate suffering related to the Israel-Hamas War, increase educational opportunities, and strengthen the community’s capacity for dialogue on this and other challenging issues. The Board resolved to support and guide the College in expanding such capabilities going forward.
The Board declined, however, to take divestment actions based on the proposal because taking a position on a complex geopolitical situation would potentially chill the expression of diverse opinions, undermine the expression of pluralism, and alienate members of our community. The diversity of community members’ opinions was a compelling reason to refrain from acting on the proposal, as the Board believes a decision in favor of the proposal would be divisive and damaging to the College community.
Additionally, the Board found no expectation that divestment would significantly or adversely impact the targeted companies for two reasons. First, Occidental’s endowment does not currently include direct investments in any of the four companies mentioned in the divestment proposal, and the Board does not intend to make such direct investments in these or other companies in the future.
Second, the College’s exposure to indirect investments in these companies is minimal, amounting to less than one-tenth of one percent (0.1%) of total endowment assets. Still, the College cannot simply divest from specific securities within a fund without withdrawing from the entire fund, which would significantly impact endowment returns. These indirect investments are managed by third parties, overseeing pooled funds for multiple clients.
Occidental’s endowment returns are crucial for supporting financial aid, academic programs, and operational costs that are not covered by revenue from tuition, room, and board. To be clear, tuition and fees are not used for investment purposes. The Board believes it is not in the best interests of the College, or our current and future students, to jeopardize the endowment by divesting from managed funds that have minimal exposure to certain companies.
The Board appreciates all who offered their perspectives and remains dedicated to open dialogue. The Board will continue to uphold its fiduciary responsibility to manage the College endowment in support of the College’s mission, long-term goals, and financial security.
Sincerely,
Lisa H. Link P '18
Chair, Occidental College Board of Trustees