Deviating From Divest
The fossil fuel divestment movement has such strong support in campus settings that it is easy to forget about the viability of arguments against divesting. Student-led, grassroots movements have pressured Glasgow University (2014 decision), University of Dayton (2014), and Syracuse University (2015), among others, into fully selling their investments in coal, tar sands, and other fossil fuels. Dozens more, including Stanford University (2014 decision), Oxford University (2015), and Yale University (2016), stand in the middle, where partial—but not full— divestments have been made. However, several major players, including Harvard University (2013 statement), University of Michigan (2015), and MIT (2016), in addition to almost all Canadian universities, are not only holding out, but explicitly rejecting divestment in any form. What lies behind such strong statements against divestment? Though the issue is nuanced, these schools aim to go about fighting climate change through angles other than divestment—including funding research, scholarship, and energy projects, the sum of which could be more effective in addressing climate change than divesting.
Why Campuses Should Divest
At its highest level, fossil fuel divestment is a social undertaking intended to undercut the industry that has driven human-caused climate change. For a closer look, several previous S&S articles have laid out the groundwork for understanding the premise behind divestment. Essentially, divestment supporters offer the following proposed benefits: divestment is a statement of withdrawing support from fossil fuels and thereby initiating climate action; it is an economically sound long-term investment decision; and it is the correct moral decision for our earth’s health. From this viewpoint, if a university continues to invest in fossil fuels, it is taking an unacceptable “business-as-usual” position. Divesting is thus aimed at shifting public opinion away from “business-as-usual” in order to raise awareness about the immediate need to take action on climate change. Furthermore, divestment may be becoming more than just a socially responsible and environmentally-conscious act: the stranded-asset potential of fossil fuels may prompt investors to divest, based on the economics alone.
Why Campuses Should Not Divest
Harvard President Drew Faust opened her 2013 letter originally rejecting divestment with the following words: “Climate change represents one of the world’s most consequential challenges.” None of the institutions rejecting divestment dismiss the severity of climate change. Instead, they believe that there are better and more appropriate mechanisms for universities to fight climate change.
Schools who reject divestment maintain that their endowment is donor money intended to further academic and research programs; thus, they must avoid leveraging academic endowments for political or social reasons. Faust’s oft-quoted line in this regard is, “the endowment is a resource, not an instrument to impel social or political change.” To them, divesting takes an unnecessary political position. In addition, as stated by University of Michigan President Mark Schlissel, “fossil fuels enable us to operate the university, to conduct research and to provide patient care. At this moment, there is no viable alternative to fossil fuels at the necessary scale.” These universities maintain that simply dropping fossil fuels for ethical reasons is slightly hypocritical, when fossil fuels remain, for the moment, our main source of power.
What’s more, remaining invested in fossil fuel companies allows the investor the opportunity to explore “shareholder activism”: shareholder activism sees investors pressing companies they are shareholders in to change their behavior. In contrast, when simply divesting of shares in a company, there is no clear impact on the company and its way of doing business. Thus, being a shareholder can be seen as the stronger position because it enables investors to influence the company from within. In the same vein, MIT has repeatedly emphasized “engagement” with industry in fighting climate change. “We believe that divestment—a dramatic public disengagement—is incompatible with the strategy of engagement with industry to solve problems that is at the heart of today’s plan,” MIT President Rafael Reif wrote in a 2015 statement. Such an approach exemplifies the collaborative approach that society must take in pursuing sustainability goals—and that includes government, the research community, and, according to Reif, private industry.
If not divestment, then what? Perhaps the largest-scale alternative focuses generally on scholarship, education, research, and other miscellaneous sustainability-related exploits. Most universities cite this alternative to divesting as their main avenue to combatting climate change. MIT defined its five-year climate plan in five general pillars, broken down into specific initiatives in a 2016 statement. The plan includes $5 million toward environmental research, a new Environment and Sustainability minor degree, and a pledge to slash the carbon footprint of MIT’s campus, among other steps. In October 2016, the university bought a 650-acre, 60 MW solar panel power plant to further its goal of cutting its carbon emissions by 32% from 2014 levels.
In addition, campuses can promote small-scale, local, campus sustainability initiatives and continue to pursue waste reduction and carbon emission goals. In fact, Harvard University recently released a December 2016 report claiming it had met its “bold” 2008 campus carbon-reduction goals. According to President Faust, the university has also hired sustainability officers to join the endowment management team and has signed onto the UN-backed Principles for Responsible Investing (PRI) agreement and NGO Carbon Disclosure Project (CDP). Funds like the university’s $12-million-dollar Green Revolving Fund—which is continually replenished as funds for environmental projects are withdrawn—are examples of locations where money ends up.
By no means an exhaustive list, these approaches represent a growing set of viable alternatives to divestment. However, divestment activists have criticized these alternatives, calling them “lip service” or “re-packaged business-as-usual”. The vagueness of university statements on their alternative-to-divestment plans does little to dispel these criticisms.
2016 witnessed shifts in the attitudes of several universities—both towards and away from divestment— demonstrating the ongoing and highly dynamic nature of the divestment discussion. In October 2016, Harvard officials said that the university was “moving away from coal” in its investments. Whether or not this action has to do with Harvard’s poor endowment results in recent years is yet to be seen. On the other hand, Stanford University, despite its 2014 decision to rebuke coal, decided in April 2016 to remain invested in oil and gas companies, releasing a 2016 statement similar in tone to those originally rejecting divestment. Even Yale’s early 2016 divestment from coal and oil came as an about-face after its earlier 2014 stance of entirely rejecting divestment.
It is safe to say that university stances on divestment can—and probably will—continue to change in the coming years. The future is uncertain by definition and the divestment discussion remains a fluid one. In such a complex issue, no single course of action has yet emerged as the “correct” one.
Image courtesy of Flickr. Originally published by S&S on January 5, 2017.