Why American Universities Must
Divest from Fossil Fuel Companies
With our leaders repeatedly failing to take action on climate, divestment from fossil-fuel companies is one of the few effective strategies remaining. Climate change is an urgent moral crisis, and our universities and institutions must take a stand.
Let’s say that you are sitting in the front passenger seat of a car that is several miles from the Grand Canyon, conversing with the driver and other passengers about the importance of vehicle safety. The conversation might meander from technical questions about automobile design, to a discussion of the role of alcohol in causing accidents, to the need for top-notch driver education.
The debate about fossil-fuel divestment is, more than anything, about urgency. It is one of the few remaining strategies likely to awaken the leaders of our institutions, businesses, and government to the powerful necessity of massive and immediate action. Those who oppose divestment from fossil-fuel companies embrace arguments that might have been appropriate a generation ago — that tackling climate change is primarily a technical problem, that the most important form of action is research, that reasoned discussion will eventually win over skeptics, and that one should not pursue empty gestures that might upset those who still need to be persuaded. All this might be true if the dangers were approaching us at a languid pace.
Divestment has become the right tool because it is smart, legal, effective and critically necessary.Today, however, climate change is approaching at high speed. Every citizen — including the students, faculty, and alumni of major universities — must act decisively to move us from the path of catastrophe. Sadly, many of those who are charged with the long-term well-being of our people, our institutions, and our nation resemble the driver and passengers of that ill-fated car. Though we are headed toward what the United Nations has called “an existential threat to human existence” and what the U.S. Secretary of State recently termed “the world’s most fearsome weapon of mass destruction,” our leaders have failed. Our only salvation will come from the bottom up, through massive demonstrations of public discontent represented by such actions as divestment.
Divestment has become the right tool because it is smart, legal, effective, and critically necessary. Some, like Harvard University president Drew Faust, have
Divestment is smart because fossil fuel companies are on a collision course with reality, which in turn could devastate not only our planet (as if that weren’t enough) but also the companies’ financial value. They are investing hundreds of billions of shareholder dollars in discovering, securing, pumping, and marketing more fossil fuels at the very moment that we can no longer afford to use them. We know from various studies, for example, that there are more than five times the total amount of fossil fuel reserves than the world can safely burn. Either companies will obtain and use these resources and drive the planet toward destruction, or they will finally be restrained, stranding their assets with crippling financial impact on the value of their stocks. Universities that hold on to these stocks are not just risking their assets, but publicly proclaiming — in their capacity as owners — that they endorse this business and welcome its profits.
There is no fiduciary duty for any institution to own what it believes to be a bad stock, and today the shares of a company whose managers are systematically ignoring the avalanche of risks pouring down upon them is a particularly dangerous holding.
We are long past the moment when the impact of climate change can be described as a technicality. We are facing a moral crisis. We know from the history of every social movement in America that governments change direction when the people seize on a matter as one affecting our core beliefs. Such protests are far from symbolic; they affect the core of our identity and values as a nation.
As someone who was deeply involved in the South African divestment movement in the 1980s, and who has been advocating for climate action for nearly 25 years, I believe that only the uninformed can argue that divestment is not needed or does not work. In the case of South Africa, the causal sequence was incontrovertible: The protests led by students and the subsequent sale of stock and barring of purchases by universities, churches, and municipalities played a decisive role in the end of apartheid. Divestment transformed the debate in the U. S. Congress, where in 1986 a Republican majority passed a sanctions bill over the veto of their own president, Ronald Reagan; in corporate boardrooms, when most major firms chose to withdraw; and in the South African government, which released Nelson Mandela and negotiated a new constitution.
Given the record of inaction by the leaders at the top, we now know that fossil-fuel divestment has become urgently necessary. We should be chastened but not surprised that it is the youth of America who are demanding action through organizations like 350.org. In an ideal world, one would expect our leaders to lead wisely, just as we expect drivers to drive safely. But young people have tired of the aimless conversations emanating from the driver and the backseat, while they, with eyes on what lies ahead, can see that we are speeding toward the edge. They are right in seizing the wheel, and they are justified in raising their voices and demanding an abrupt change in direction.
By Robert N. Stavins
Having universities divest from fossil fuels is a feel-good measure that would do nothing to address the problem of global climate change. Instead, we should be focusing on efforts to push for strong government action.