Demystifying Divestment

This Wednesday, Sense and Sustainability hosted its first on campus event, “Demystifying Divestment,” at Harvard College. The goal of the discussionwas to expose students to multiple perspectives on the hot-button issue of Harvard’s divestment from fossil fuel companies and allow those students to form opinions for themselves.  The event featured Professor James Engell, a Harvard College professor and active member of Harvard Faculty for Divestment, and Scott McNally, who has previously worked at the US Department of Energy and who is currently a graduate research assistant and second year master’s student at the Harvard Kennedy School.

The event began with Professor Engell giving a solid overview of the topic of divestment, succinctly laying out many of the arguments for divestment and refuting popular counterarguments.  Engell emphasized that climate change is a problem which calls for us to do everything we possibly can, which includes divestment.  He argued that divestment by an institution like Harvard would make a strong statement (much stronger than even Stanford or smaller liberal arts colleges, which have divested from some fossil fuel companies, could make through divestment) about the urgency of climate change.  While Professor Engell said he would be the first to admit that divestment does not guarantee a reduction in carbon emissions, he argued that it is a legitimate method of attempting to do so, and that divestment would help galvanize the type of support that is needed to one day sway public policy.

Engell went on to say that change will not come about quickly enough without some impetus, and that by their own estimates, fossil fuel companies predict to produce as much or more fossil fuel in the year 2040 as they are now.  He believes that the government will need to enact policy that will facilitate the transition away from a fossil-fuel dominated energy makeup.  Professor Engell also noted that there is some evidence to suggest that Harvard’s endowment would perform no worse if they did divest from fossil fuel companies.

After Professor Engell’s remarks, Scott McNally began by saying that he agreed with perhaps 90% of the points that had been made, and so said he would focus on the points about which he and Professor Engell disagreed. McNally, while conceding that the current energy situation is problematic, the focus should be on changing consumption choices, not on demonizing fossil fuel companies. After all, fossil fuel firms operate on a simple premise of supply and demand; we cannot change the current situation without changing consumer habits. It may be more beneficial to direct efforts on other things that can be tackled first and more easily, such as better insulated houses and lowering the national speed limit.  In addition, it is beneficial to have responsible members on boards that make good investment decisions, such as Harvard professors.

In particular, he emphasized the point that if Harvard divests, someone else will buy the shares they sell.  In a world in which everyone concerned above climate change divests, those people buying the shares will be ones who do not care about climate change.  As a result, fossil fuel companies will be governed by shareholders whose only priority is increasing profits.  Reforming fossil fuel companies may be done more effectively by remaining shareholders and demanding that fossil fuel companies reform their behavior.  Lastly, he pointed out that divesting from such companies can reduce the amount of investment that goes into finding sustainable solutions for energy problems and projects on making energy sources more efficient, therefore divesting can do more harm in the long run.

It was evident that both speakers have given substantial thought to the subject of divestment.  The fact that two very intelligent, passionate environmentalists are able to disagree about divestment is a testament to the complexity of the issue.  However, it is our hope that discussions and events like ours will continue to provide people with a better understanding of the topic, with which they can form their own well-reasoned opinions.

Image Credit: Nichon Glerum via Flickr


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  • alasti

    McNally makes a number of points which have repeatedly been addressed and refuted by divestment campaigns:
    • The current energy situation isn’t “problematic”; it’s disastrous.
    • Fossil-fuel companies are in fact doing everything possible to maximize both supply and demand, this despite the consensus of the climate-science community that a large percentage of even proven reserves must be left in the ground if we are to have any chance of keeping global average temperature increases within the 2°C maximum which may permit the continuation of civilization as we know it.
    • Rather than dedicating their phenomenal resources and expertise to a partnership with humanity toward a sustainable future, these companies justify their persistence with business practices which will have consequences the equivalent of genocide and ecocide, with the fantasy that currently untenable sequestration technologies and expansion of biofuel reliance will be sufficient to compensate for their products’ continued impairment of planetary habitability.
    • Shareholder resolutions and engagement have been ineffectual in significantly altering how fossil-fuel companies operate, after many years of concerted effort by shareholders with large stakes. Shareholder resolutions by law may not address basic business functions, which are a management prerogative.
    • Of course we must do everything possible to improve consumers’ awareness of practices which will contribute to emissions reductions. It will also be necessary for local, state and national governments, businesses, non-governmental organizations, every sector of society to participate in the transformative changes without which we cannot succeed in the endeavor of maintaining a hospitable Earth for generations to come. Without legislation, regulatory action, and binding international agreements, however, anything we attempt individually will never be sufficient, and we will *not* be provided with energy-usage options which will allow us to break with our fossil-fuel dependencies. Those governmental initiatives will only occur once the citizenry has been adequately enlightened as to the urgency and enormity of the crisis we face. There is no means of getting that message out more effective than divestment.

    If Harvard wants to propose shareholder resolutions, or to have the opportunity to vote on such (which can have value as a societal good), it can do so by maintaining a token $2000 worth of stocks. We do have professors and former professors on the boards of Harvard Management Company, the Corporation and the Overseers, yet what focus there is on sustainable investment practices has developed only subsequent to student activism, and we still await any concrete indications of in what ways those assertions of commitment will manifest in anything substantive.

    Universities and colleges worldwide need to come together with a manifesto which states that academia is determined to assist the peoples of the world in every possible way in confronting the almost insurmountable challenge of climate change. Thus far, the response has been aneimic compared to the necessity. Let us not permit aneimia of determination to be a terminal condition.