Earth Day will see calls on college campuses to pull funds from carbon-producing fuels but activists should consider positive ways to change energy policy
Its April; your taxes are filed (hopefully); the cherry blossoms are out (hopefully), and Earth Day has rolled around once more. And in what is becoming yet another April ritual, on a growing number of college campuses, students are staging protests demanding that their institutions divest themselves of any holdings in companies involved in fossil fuel exploration or production coal, crude oil or natural gas.
Its all in the spirit of Earth Day. It certainly draws attention to the issue, which is the primary purpose of any divestment campaign.
Thats precisely what won the day for those of us who advocated for South African divestment: eventually, however long it took, about 200 US companies doing business in South Africa found the PR cost of being associated with its loathsome apartheid regime too high to pay, and pulled out of the country, triggering a massive flight of capital. By 1994, white majority rule collapsed, and Nelson Mandela later acknowledged that the divestment campaign played a key role in bringing South Africas apartheid leaders to the negotiating table.
While the success of the South African campaign is encouraging a new generation of students today to demand that college trustees sell off shares of any fossil fuel companies in their institutions endowments, will this actually help global warming?
The costs of divestment are clear even if divestment advocates prefer to focus on the much, much higher costs of global climate change. What remains unclear, and possibly incalculable, is whether divestment can alter the calculus, even in the very broad way that it did in the case of South Africa.
This new wave of activism began nearly five years ago at Swarthmore College and a cluster of other campuses. At Swarthmore, a dozen or so students asked the administration to sell endowment holdings in fossil fuel companies: the answer was a firm no and remains so to this day, in what has become an increasingly contentious debate, with students accusing three of the colleges 37 trustees of conflict of interest.
Other colleges, however, have climbed on board the divestment bandwagon. One early mover was Hampshire College, which adopted a new investment policy excluding fossil fuel companies in 2012. As mission-driven (rather than for profit) institutions, colleges and universities often grapple with the question of whether to apply their values to the way that they invest as well as the way that they spend their funds, even if doing so might diminish their funds, wrote Jonathan Lash, Hampshire Colleges president, at the time of the decision.
This week, students at Columbia, members of a group called Columbia Divest For Climate Justice, have been holding a sit-in at the Low Library building, while more than 100 others camped out overnight on Thursday night on the plaza outside in solidarity. University authorities have threatened to suspend the students occupying the building.
At New York University, 18 student members of NYU Divest ended a 33-hour occupation of an elevator at the Elmer Holmes Bobst Library, having blocked access to administrative offices, after they were told they faced disciplinary action. The NYU administration said they would make a good-faith effort to address fossil fuel divestment at a future board meeting. The group was offered access to the boards investment committee, but not to the full 68-member board of trustees, which NYU Divest rejected. Divestment deserves a full and nuanced hearing, said one member of the group in a statement.
All told, the group 350.org, which has led the push for fossil fuels divestment, had calculated that 40 students had been arrested at eight campuses by mid-month.
And yet, divestment, by its very nature, is a negative act. Sure, it means that college campuses wont be endorsing fossil fuel companies or benefiting from their profits. And it sends a message, of sorts, to those companies, that a growing proportion of their potential investor base wont tolerate the way they are running their businesses at present. It provides a model for other investors to follow.
The big energy companies wont care very much, at least for now. Nor will they be all that badly damaged by divestment campaigns. What is going to hurt them is the price of oil (or natural gas or coal.) Thats why some activists suggest that if the real goal of divestment is to have an impact on climate change, the target should be advocating for some kind of carbon tax, not divestment.
For me, the biggest problem of the divestment campaign seems to be that it is making only one half of the argument. Its advocates are making a lot of hullabaloo in favor of selling something they find distasteful. But where is the constructive counterpoint? Divest in fossil fuels, sure but where is the proposal for creative ways to invest the proceeds of those sales in clean energy technologies?
Bill Gates isnt talking about divestment, but about investment in carbon-free energy developments that require big infusions of cash, in the shape of his Breakthrough Energy Coalition. Some of that must come from governments, but some also could come from college endowments, which have the kind of long-term time horizons required to fund innovative startup ideas. Why isnt some of this divestment energy being directed not just to telling trustees that they need to sell, but at offering them alternative ideas?
Its even worth bearing in mind that staying invested in fossil fuel companies rather than divesting could offer colleges the opportunity to have an even greater impact. Just ask Carl Icahn, or any other activist investor, how influential a gadfly can be to a corporate management team.
Even Bill McKibben, the leader of 350.org, hasnt seemed averse to the idea of influencing the CEOs of those companies. In the past, he has provided a guideline for what the management teams of oil and gas companies, for instance, would need to do to keep on the groups good side. Theyd need to stop exploring for new reserves (collectively, theyve already got five times more than the world can afford to burn, according to scientists) and stop lobbying against emissions policies. And they would need to work on a plan to keep those reserves in the ground, while focusing on other, low-carbon sources of energy.
An investor who sells their stake in, say, ExxonMobil, wont have any right to a voice in the companys strategic direction. Those shares will be bought instead by someone who simply doesnt care about climate change issues, and whose only goal is earning a financial return. An investor that hangs on to their shares, but that is intent on the company making significant change, can ally itself with other shareholders like it. Together, members of that group can oust directors that dont agree with their strategic vision for a new ExxonMobil.
Divestment is dramatic. When youve completed the process, you can feel better about yourself: the 2% to 5% of university endowments invested in fossil fuel companies will be gone! But someone else will own those shares (were still not at the point where fossil fuels companies are valueless stranded assets). It hasnt solved the problem of climate change, which will still exist.
At the very least, divestment advocates should consider broadening their demands. Their vision of a perfect college endowment portfolio shouldnt be one that is simply purified by being stripped of fossil fuel investments, but that acts to create an alternative. That would be great for the climate, and probably good news, financially, for their college endowments as well, helping ensure future generations of students at their alma mater have access to tuition help and great educational resources. Then they will really have earned the title of advocates.