Divestment on Campus: Debate is One-Sided

By Evan J. Mandery

Climate change is our era’s defining challenge, but most of America’s universities are planning to sit this one out. Though students and faculty members at more than 400 colleges have called for administrators to divest from fossil-fuel energy companies, fewer than 20 have committed to doing so. Stanford recently divested from coal, but none of the other schools had endowments within the 150 largest in 2013.

The principal justification schools offer is that endowments should be reserved to advance an academic mission. As Cornell’s president, David J. Skorton, put it, “We must resist, in almost all cases, the temptation to manage these precious funds to further social or political causes, no matter how worthy.” Drew Gilpin Faust, Harvard’s president, said, “The endowment is a resource, not an instrument to impel social or political change.”

These statements stunned me. Academics are a liberal lot. Research — much of which is conducted at universities — overwhelmingly supports the fact that climate change is man-made. How can it be that so few universities are willing to take on global warming? How can they defend their position by saying they have an obligation not to consider morality when they invest?

“Ivory Tower” Breached Many Times

Let’s separate what universities say from what they mean. Their appeal to the image of university as ivory tower, where objective research is conducted in social isolation, rings hollow. Universities have cultivated relationships with businesses, governments and donors for commercial and political purposes. Derek C. Bok, a former Harvard president, wrote, “The ‘ivory tower’ has been breached at so many points and the connections with the outside world have grown so numerous and close that the term no longer has descriptive value.” Every university president knows this.

Every university president also knows that endowment managers don’t have unfettered discretion. Would anyone defend a university that bought stock in a company known to employ child laborers? Moral considerations have altered investment policies in the past. More than 150 schools divested from South Africa during apartheid — albeit reluctantly. Others divested from the tobacco industry and select Sudanese companies.

What presidents really mean is something more nuanced, like “divestment should be considered only in extraordinary cases about which there is broad consensus.” You can see why they might feel this way. Causes abound. Portuguese colonialism in Africa was the outrage in 1972 when Harvard students occupied university buildings and the word “divestiture” first emerged. Today, students are calling for divestment from prison companies, China and Israel. It’s easy to see how taking sides in the Israeli-Palestinian conflict would undermine universities’ role as a forum for open debate.

Divestment is a slippery slope. Where do universities draw the line? Columbia’s president, Lee C. Bollinger, says, “The bar has to be very high, and the reason is there are lots of things that people don’t like about the world.”

But what better forum than the university could there be for distinguishing among competing moral claims? Knowing students and professors, these debates would be prolonged, but it’s easy enough to structure the questions that would be asked and how they’d be answered regarding fossil fuels.

Debunking Fossil Fuel Investment Myths

First, what is the significance of the social cause? University presidents have overwhelmingly acknowledged the harm caused by fossil fuels, though some, including Brown’s president, Christina H. Paxson, have argued that “this harm is moderated by the fact that coal is currently necessary for the functioning of the global economy.”

Then we’d ask about the school’s mission. Perhaps investments in fossil fuel are justified if profits are used for social good, like financial aid programs, which are supported by endowments. But most elite private colleges remain bastions of privilege. Public universities — especially community colleges, which have better track records on access — have a more compelling claim on this defense.

Next, how much would divestment cost? Not much. According to a 2012 report sponsored by the American Petroleum Institute, oil and natural gas constituted merely 2.1 percent of endowment holdings. Some research suggests that endowments would have performed better over the past decade had they excluded fossil-fuel companies.

Finally, how would divestment advance the cause? Defending Western Washington University’s decision to remain invested in fossil fuels, the president, Bruce Shepard, wrote, “Everybody understands that divestment by our foundation would have no material effect on climate change.” More constructive, wrote Ms. Faust, would be to “think about how we might use our voice not to ostracize such companies but to encourage them to be a positive force.” This recalls South African divestment campaigns, when presidents argued universities could exert more leverage if they remained invested. But Nelson Mandela and the South African president, F. W. de Klerk, each cited divestment as influential. Endowments have quadrupled in size since 1990, in real dollars.

Of course, the National Party had the power to end apartheid. Even the most optimistic environmentalist cannot envision fossil-fuel usage ending immediately. “I also find a troubling inconsistency,” wrote Ms. Faust, “in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies’ products and services for so much of what we do every day.”

Changing Fossil-Fuel Companies’ Behavior

It’s a valid point, but if presidents think it relieves them of all duty, they aren’t listening to the distinction students and faculty have drawn between driving corporations out of business and changing their behavior. For fossil-fuel companies don’t just extract and sell energy. They also spend on elections and oppose renewable energy standards. Investment could be contingent on a company’s agreeing to curtail its political spending, report on climate change or include environmental experts on its board. Universities could distinguish among fossil-fuel companies and industries, as Stanford did in divesting from coal.

It’s impossible to imagine that after a fair debate only a handful of universities would choose to do anything. But it’s not a fair debate. Shared governance — students, teachers and administrators making decisions together — is a defining feature of the university. This unique issue is being decided by trustees, who see their responsibility as maximizing returns. Gofossilfree.org has identified only 41 schools with investor responsibility committees, but they are advisory, with authority reserved to the fiduciaries.

Of course, global warming is at bottom a dilemma about the nature of fiduciary duty — about whether that duty is solely to make money or whether we also owe an ethical obligation to endangered species, the inhabitants of low-lying islands and our children. If this debate included more voices, one can’t help but imagine that our universities might construe their obligation more broadly.Φ