“Symbols matter, because they signal our intent, and they invite other people to join in our intent.” – Naomi Oreskes, Professor, Harvard University.
Almost 20 years go by since that confident moment in Kyoto when leaders of nearly all the planet’s nations signed on to reduce greenhouse gas emissions. In the rain, that day, on the grounds of JFK airport, a proud President Clinton had declared, “[The agreement] reflects a commitment by our generation to act in the interest of future generations.”
Babies born that year are adults now. They look back on two decades of political gridlock and inaction. In a way, they are the first generation our leadership has failed, on that promise, to protect.
This new generation of young adults, though yet individually politically unpowerful, is the force behind the fossil fuel divestment movement now overtaking college campuses across the country. Their message to the leadership is clear: inaction is action. You’re responsible.
And it’s catching on. In May 2014, Stanford became the largest university to pledge disinvestment from a fossil fuel sector: specifically, coal. It joins a list of 26 colleges and universities that have thusfar made similar commitments.
Divestment as a political tool has a proven record: the tobacco industry in the 1980’s; South Africa beginning in the 1970’s. Though divestment’s direct financial effects are next to zero, a report published by Oxford University, found “almost every divestment campaign… successful in lobbying for restrictive legislation.”
Reflective perhaps of the digital age and the magnitude of the cause, the fossil fuel divestment movement is now the fastest growing campaign of its kind in history.
Just last week, MIT, responding to campus pressure, held the first public debate on the merits of fossil fuel divestment. The school administration invited three panelists each to argue for and against MIT’s participation. The discussion centered on not whether, but how, MIT, a thought and technology leader, should advocate for change. Does it do this through divestment, send a powerful sociopolitical message, and jeopardize “big oil”-funded research on campus? Or can they work from within the system, persuading the fossil fuel industry to work for the planet’s (and their own) long-term interests?
Meanwhile, it’s Heat Week at Harvard University, a weeklong awareness and activism event organized by the Divest Harvard student organization to get the message out. They are holding rallies with famous alumni speakers; they are carrying signs; they are painting sidewalks. They’re watching closely what happens at MIT as their own administration has stiffly resisted continuing pressures.
Last year, Ben Franta, PhD student at Harvard and one of the board members of Divest Harvard, publicly collided with Harvard President Drew Faust, in a series of open letters. Hers, to the Harvard community, shared her “strong presumption against divesting investment assets,” due, largely, to her fear of Harvard becoming a “political actor.” And his, addressed to Faust, published in The Nation, accused her of being “in denial… of important political realities”, and dismissive of the group’s effort at a serious on campus discussion.
He wrote, “you have shown an eagerness to engage with the fossil fuel industry. I ask that you show the same eagerness to engage with members of your own Harvard community.”
I asked Ben what he wants to accomplish, as a leader of the movement at Harvard, why he believes in it so strongly, and for his thoughts on their current progress and challenges. His responses, long but instructive, are given in full below.
Ben Franta, PhD student, Harvard University
What makes divestment an effective tool for political change?
The tactic of calling for institutional divestment from a target sector or industry is not entirely new. The most prominent examples from the past are probably the apartheid divestment movement of the 1960s-80s and the tobacco divestment movement of the 1990s. (Harvard partially divested from the apartheid sector after years of resisting student pressure and divested rather suddenly from the tobacco industry in 1990.)
The effect of the tobacco divestment campaign on the target companies has been studied with the help of internal tobacco industry documents describing its response. The paper describes how the tobacco divestment campaign produced bad publicity for the tobacco industry, denormalizing and delegitimizing it. Philip Morris, the primary active opposition of the tobacco divestment campaign, spent a significant amount of time and resources tracking and trying to counter it. Internal documents show that Philip Morris was worried that the divestment movement could lead to reduced access to capital and/or public stigmatization.
In the same period there was concern that “institutional addiction” to the tobacco industry existed in government, cultural (e.g., sports) institutions, and universities  wherein the tobacco industry would obtain respectability and legitimacy through the act of giving sponsorships, scholarships, and research funding. Severing that “institutional addiction” was a component of the tobacco divestment movement.
The overarching goal of divestment campaigns is to call widespread public attention to a destructive sector, industry, or business practice. Through the process of organizing supporters and articulating public arguments, the target of the campaign (e.g., the tobacco industry) can be socially and politically isolated. The isolation can be extensive as tipping points occur and as more institutions and individuals decide to divest, some publicly. Isolation of the target signals shifts in public opinion and facilitates government regulation of the target. According to the Oxford Stranded Assets Programme report on fossil fuel divestment , almost every past divestment campaign has been successful in lobbying for some degree of restrictive legislation affecting the target.
Why fossil fuel divestment?
Today’s fossil fuel divestment movement began to expand rapidly in the fall of 2012. The early rationale was based largely on Bill McKibben’s article, “Global Warming’s Terrifying New Math” , which focused on the apparent incompatibility of a remaining 2-degree “carbon budget” and existing proven fossil fuel reserves (roughly 5x the 2-degree carbon budget). The concept of a carbon budget and the implied “stranded assets” (proven reserves that can’t be burned if a 2 degree limit is held to) were initially largely dismissed in both the science and finance worlds as being “oversimplifications”. However the concept of a carbon budget was adopted in 2013 by the IPCC in its Fifth Assessment Report, and the possible reality of stranded assets is starting to be taken more seriously in the finance world.
In general, there are three major themes that divestment campaigns focus on as “bad behavior” by the fossil fuel industry: 1) supporting climate change denial, 2) opposing government regulations that would support a transition away from fossil fuels, and 3) following a business plan based on burning “unlimited” amounts of carbon, implying very large amounts of warming and thus very large and potentially catastrophic costs to society. This last point is the same as that brought up by McKibben in his article.
Additional rationales for divestment have also become prominent over time. One rationale is based on risk aversion and fiduciary duty . Another is based on the idea that if there are two products that serve a similar function (e.g., coal and natural gas) and one is more environmentally damaging than the other, then there is no reason to invest in the more environmentally damaging product (especially if it’s not a very good investment, either). This was the logic used by Stanford administrators to explain their divestment from coal .
These five arguments for divestment are prominent at this point, but as new players get involved, the discourse shifts. And supporters of divestment might subscribe to one, more than one, all, or none of these arguments. Thus, there is a diversity present in the movement that hopefully (in my opinion) continues to grow.
What, in your mind, are the main reasons Harvard resists divestment?
Why Harvard doesn’t want to divest is fairly simple: it is not sure if it can make money by doing it. Harvard operates on principles of profit maximization. Once Harvard thinks it can gain more than it will lose by divesting, it will do so.
A more difficult-to-answer question is why Harvard is resisting the divestment movement so fiercely. Very early on in the campaign (after one year), President Faust put out a public statement ruling out divestment. Her arguments are generic and, in my view, not very well-formed intellectually. They have been ridiculed by many, including by Harvard faculty and outside observers, but if anything President Faust has doubled down on her opposition since then. This is interesting because it implies that she is supremely confident that the divestment movement will fizzle, or that she miscalculated the potential growth of the divestment movement and is in “face-saving” mode, or that she is not working on the basis of institutional strategy but rather on the basis of personal ideology.
Publicly-stated reasons for opposition from the Corporation appear to be conjectural rather than evidence-based. The main arguments used by President Faust against divestment are that 1) divestment would damage the endowment to an impracticable degree (this is refuted by quantitative investment modeling – and by real-life examples of institutions that are already divesting), 2) that divestment “won’t make a difference” (which is speculative and unsupported by evidence; it is also irrelevant to some degree as no single institutional investor can expect their decision in isolation to make “the” difference), 3) that divestment will make a difference and will be inappropriately “political” (which implies that there is serious debate about the need to transition away from fossil fuels; this might be her most compelling argument however), and 4) that engaging with fossil fuel companies through shareholder activism instead of divesting from them will help to push them to become low-carbon energy companies (though the idea that such engagement can work is unsupported by any evidence that this is possible, as past attempts to do this have failed spectacularly).
There are other arguments used as well, such as the fact that poor people in the developing world use fossil fuels (primarily coal) for cheap electricity. But there is no reason to believe that divesting would limit access to fossil fuels in the developing world.
Another is the “slippery slope” argument that if we divest from fossil fuels, we’ll start divesting from other things, such as sugar. This of course is entirely speculative and is a generic argument against taking any action in any area. Real-world examples of divesting institutions refute this argument.
The latest round of correspondence from the Corporation argues that by remaining invested in fossil fuel companies, Harvard can pursue joint R&D projects with them on energy efficiency and renewable energy projects. This sounds good but it’s difficult to imagine what this actually means: PV research funded by coal companies? Electric vehicle battery research funded by ExxonMobil? These seem far-fetched given that the fossil fuel industry is not trying to decarbonize. In any case it is clear that the Harvard Corporation is worried about “distancing” itself from the fossil fuel industry and foregoing the potential benefits of partnership.
Where has the divestment movement made strides?
So far the divestment movement has accomplished a few important things. First and foremost is the increase in large-scale awareness and clarity on climate change, fossil fuels, and the unsustainable path we are skipping down. Second, and very importantly, is the organizing that has occurred, which has created new networks of politically active and increasingly experienced actors in the climate change space. Organizing is a prerequisite for any large-scale, democratic, political change.
Third, the divestment movement (and the climate movement at large) has been successful at reframing climate change as a social justice issue rather than a technocratic issue. This has engaged large groups of people in new ways, especially young people. This is important because large groups of people need to be engaged on the issue for democratic action to be taken. Social justice and human rights issues have the potential to engage large swaths of the population because they use reasoning methods based on ideas of right and wrong, while technocratic issues do not because they use reasoning methods dependent on specialized training. At the same time the framing around divestment is flexible enough that it can be supported by the language of different professions (e.g., doctors and investment professionals).
The shift to a social justice framing, which is human-centric, also might allow the old political deadlocks surrounding leftist environmentalism to be broken or avoided. There is a growing identity among climate activists that is distinct from the “environmentalist” identity. This allows the inclusion of groups of people who do not consider themselves to be environmentalists or left-wing (in the American sense).
Fourth, the divestment movement has been able to “zoom out” and look at the global energy economy as a system. Previous efforts to deal with global warming have focused on changes in personal behavior (e.g., riding a bike to work), which some subset of the population adopted. Yet when the global energy economy is looked at as a system, these personal behavioral changes are not only insufficient, they are an inappropriate strategy for dealing with global warming. This is because regardless of personal behavior in the first world, global energy use will continue to rise, and the majority of that energy presently comes from fossil fuels. The main challenge is not to use less energy globally, which is probably not possible. The main challenge is to replace high-carbon energy systems with low-carbon energy systems as quickly as possible and at scale.
That is done through systems-scale solutions and long-term investment. The divestment movement tries to build support for systems-scale solutions (e.g., government regulation) while calling attention to the inconsistencies that currently underlie global investments.
The Harvard Corporation, which resists divestment strongly, has been pushed away from its initial position of investments being “neutral” and profit-maximization being the only criterion for decision-making. At this time the Corporation’s primary argument is that by remaining invested, Harvard can be a shareholder activist, submitting shareholder resolutions to push fossil fuel companies to switch to renewable energies (although both logic and past experience indicate that this would not be successful).
Another more recent argument from the Corporation is that by not divesting, Harvard will avoid irritating fossil fuel companies, and then Harvard can pursue joint research and development projects with them. This argument also does not appear to be grounded in anything specific, but the point is that the Harvard Corporation is now feeling the need to justify its investments in the fossil fuel industry as practical means to an end, instead of arguing that they are justified in principle.
What are your current activities and demands?
At Harvard we are maintaining our ask of divestment from the 200 publicly-traded coal, oil, and gas companies with the largest carbon reserves. The student, faculty, and alumni wings of our campaign have become increasingly active. Last spring involved quite a bit of escalation at Harvard with a civil disobedience action by students, the launch of an active faculty wing, and a protest by alumni. Over the summer we have seen more decisions to divest globally, both among universities and among religious institutions. Another recent development is the creation of a mainstream fossil-free investment fund. There is a lot of movement happening.
How can someone learn more or get involved?
There are so many active divestment campaigns at this point that chances are there is at least one near you. I recommend going to a few meetings just to see how things operate. It is much more interesting than just reading about the movement. It’s the best way to see how the sausage gets made.
Wander, N., & Malone, R. E. (2006). Fiscal versus social responsibility: how Philip Morris shaped the public funds divestment debate. Tobacco Control, 15(3), 231–241. doi:10.1136/tc.2005.015321
Cohen, J. E., Ashley, M. J., Ferrence, R., Brewster, J. M., & Goldstein, a O. (1999). Institutional addiction to tobacco. Tobacco Control, 8(1), 70–74. doi:10.1136/tc.8.1.70
Ansar, A., Caldecot, B., & Tibury, J. (2013). Stranded assets and the fossil fuel divestment campaign: what does divestment mean for the valuation of fossil fuel assets?, 1–81.
McKibben, B. (2012). Global Warming ’ s Terrifying New Math. Rolling Stone, 1–13.
Longstreth, B. (2013). The Financial Case for Divestment of Fossil Fuel Companies by Endowment Fiduciaries. Huffington Post. Retrieved from http://www.huffingtonpost.com/bevis-longstreth/the-financial-case-for-di_b_4203910.html
Weinstein, S. (2014). Why Divestment Can Be Successful.
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