On Sunday, February 17, thousands of students and activists will march on the National Mall in Washington D.C. in what has the potential to be the largest climate change rally to date. Around the country, similar movements are demanding that U.S. President Obama and the government take significant action against the growing threat of climate change.
The debate surrounding climate change seems to have a renewed vigor of late, perhaps due to events like Hurricane Sandy in December and other recent natural disasters. In his State of the Union address, Obama faced this issue head on and called for meaningful progress on the issue of climate change: “I will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.”
But many environmentalists have grown weary of unfulfilled government promises and have begun seeking out ways to make their own impact. Prominent activist and author Bill McKibben is the founder of the advocacy organization 350.org, and the catalyst behind a new movement which is calling on universities and colleges to divest, or sell, their investments in fossil fuel companies. Following his massively successful nationwide “Do the Math” tour, McKibben’s divestment campaign has spread to 252 campuses, and has overseen complete divestment from three universities. But not all are on board. To some critics, divestment just doesn’t add up.
Do the math
In August 2012, McKibben wrote a piece for Rolling Stone magazine which became the cornerstone of his divestment movement. In his article, McKibben argued that to begin to address climate change, we need to “do the math.”
McKibben explains that 2 degrees Celsius is the predicted maximum number that global temperatures can rise and remain safe. Scientists estimate that roughly 565 gigatons of carbon dioxide can be released into the atmosphere and still stay below the 2 degree mark, but Carbon Tracker Initiative, a London-based firm which assesses climate change impacts on markets, estimates that fossil fuel companies hold roughly five times that amount of carbon in their reserves. As carbon emissions continue at an unprecedented pace, the likelihood of surpassing 2 degree limit seems ever more likely.
Big Carbon companies factor their fossil fuel reserves into their share prices and net worth, which increases their value. To McKibben, this “explains why the big fossil-fuel companies have fought so hard to prevent the regulation of carbon dioxide – those reserves are their primary asset, the holding that gives their companies their value.” In fact, a report from banking giant HSBC found that the largest oil and gas companies, including BP and Shell, could lose 60 percent of their market value if governments proceed with carbon reduction targets or limit access to carbon reserves. It is also, McKibben claims, evidence that fossil fuel companies have no intention of slowing down production. Accordingly, says McKibben, if we wish to slow carbon emissions, outside forces need to actively combat fossil fuel companies, and divestiture is part of that struggle.
When universities divest
Every college and university has an endowment which consists of stocks, bonds, mutual funds and other investments to generate income. 350.org estimates that America’s colleges and universities hold roughly $400 billion in endowment assets. The Fossil Free Campaign calls for institutions to “immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years.” McKibben states that if universities don’t divest then their students’ “educations are being subsidized by investments that guarantee they won’t have much of a planet on which to make use of their degree.”
Unity College in Maine is one of three schools who have agreed to completely divest from fossil fuel companies. “You do not want your institution on the wrong side of this issue,” President Stephen Mulkey told InsideClimate News. “We realized that investing in fossil fuels was an unethical position, especially considering our focus on environmental issues.”
President Matt Derr of Sterling College in Vermont, which has also agreed to divest, said in a statement that given the institution’s legacy on environmental issues, divestment was the only to legitimate choice he could make. “We hope that we inspire other colleges and universities to take this important next step toward divestment in fossil fuels because higher education is an important bully pulpit, and we need to focus the nation’s attention on this critical issue for future generations of our students,” said Derr.
Many universities have found divestment to be a quite challenging practically. Cornell University’s president David Skorton said in an interview with the Cornell Daily Sun that although he thinks divestment might be useful on a small scale, complete divestment from fossil fuels is not a sustainable strategy financially. Skorton said that while responsible investments should be encouraged, he would not be in favor of investing in a certain area because it was socially responsible if the return on the investment was risky. The difficulty, he notes, is that the endowment must serve two very different purposes: “One, it has to be robust on returns we’re counting on in the short-term. At the same time, it’s something for the far future, the far horizon – the investments for the far horizon have a different criteria.”
But does divestment add up?
Some skeptics of divestment, including Skorton at Cornell, claim that the process will be risky, as it could hurt the returns of endowments. But Unity College and Sterling represent successful examples of divestment, and even at Harvard University, during reluctant discussions surrounding divestment, the Board of Trustees noted that divesting direct holdings in fossil fuel companies wouldn’t have a large impact on the value of the school’s endowment.
But while skeptics regarding divestment’s effects on endowments may be silenced, many still doubt the economic impact divestment could have on Big Carbon companies. Christian Parenti, an author and contributing editor at The National, lists three flaws inherent in the divestment movement: “First, it misrecognizes the basic economics of the fossil fuel industry, and thus probably won’t hurt it. Second, it misrecognizes the nature and function of the stock market. Third, it ignores the potentially very important role of government in addressing the climate crisis.”
Parenti’s main criticism is that divesting from fossil fuel companies doesn’t hurt then financially. Fossil fuel companies like Exxon, Chevron, and BP don’t earn profits from the stock market, but from selling their products like gasoline, oil, and coal. As long as consumers continue to demand their products, fossil fuel companies will continue to profit. “Economically speaking, more effective than a divestment campaign would be a gas boycott,” said Parenti. But McKibben argues that the movement is about more than profits. It’s about credibility and weakening Big Carbon’s political lobby.
“The idea is to get more people to understand that they’re a kind of rogue force, and to say that we don’t want to cooperate with them anymore,” said McKibben in the Huffington Post. “We think that will have a powerful effect on their ability to manipulate our political system. Stigmatization is the key.” Parenti argues that social stigmatization against Big Carbon already exists, and that activist focus should instead be directed towards the government’s ties with Big Carbon. “I think it’s good to mobilize people against the fossil fuel industry, but I also think that it’s dangerous to fall into a kind-of progressive-green-left version of neoliberal assumptions about the role of markets versus the role of states,” stated Parenti. “I think we need to think about how government is ever-present in the economy and try and use that power to shape and control and check the fossil fuel industry.” Parenti says divestment will never stop Big Carbon. Instead, reorienting the government’s “vast spending power to create a market for green energy” and giving the EPA more power to regulate fossil fuel companies would be a more effective step.
While the decision to divest might not affect a company’s bottom line, it is still a strong ethical and political statement. As universities decide to divest, McKibben hopes they might spark wider powerful and symbolic changes. In the 1980’s, universities across North America decided to divest their holdings in companies that had business in South Africa. This stance of solidarity against apartheid was considered an integral part of the international anti-apartheid movement and is the model for the fossil free movement. The important thing, McKibben argues, is that the anti-apartheid divestment movement represents an example of the change that can be made when universities “bring their moral power to bear.”
Alli Welton, a co-coordinator of Divest Harvard, told IPS that “it seems like students know a lot more about this issue and are feeling its urgency. It really feels as though divestment is a very clear way that we can effect change.” Welton is not alone. As more students around the country join the divestment movement, the hope that it might spark real change is spreading. “These local-level initiatives make climate change more accessible for people, and make it more possible for them to get involved. We can see very clearly that we’re part of something gigantic, and that definitely creates identity for a national, and even international movement,” said Welton. McKibben and others involved in the movement feel this growth holds the potential to have a wide ranging impact: “Movements rarely have predictable outcomes. But any campaign that weakens the fossil fuel industry’s political standing clearly increases the chances of retiring its special breaks,” said McKibben.
In an address to Harvard students involved in the movement, environmentalist and former Vice President Al Gore said that divestment is “an opportunity for learning and the raising of awareness for the discussion of sustainable capitalism” and stated that the “passionate advocacy” of young people “is what’s going to save our future.” Like many movements before it, the divestment campaign has the potential to raise awareness regarding a number of wider political issues, and reminds politicians how many voters are deeply concerned about these issues.
“I believe what will happen will depend entirely on what kind of movement we build,” stated McKibben. “My sense of Washington is that when you push, sometimes things happen.” And things are happening. As thousands of activists converge on Washington D.C. to mobilize the government to act on climate change, divestment may be seen as another emerging movement representing America’s readiness to tackle the issue of climate change. Those in favor of divestment join other activists on the National Mall to challenge President Obama to follow through on his promises made during his State of the Union address.
As the movement grows it has yet to be determined if the math really will add up. No university with an endowment over one billion dollars has agreed to divest, and none seem to have imminent plans to do so. Can divestment make a powerful difference in the fight against climate change? Does divesting from fossil fuels have a tangible economic impact on fossil fuel companies? Many universities remain unwilling to risk their endowments and their returns with so many questions still left unanswered.