Opinion
Divestment challenges climate change by involving institutions
By Maggie Smith ’17
November 6, 2015
On September 21, the College hosted a panel discussion focused on the question: “Should colleges and universities Divest from Fossil Fuels?” Hamilton Divests believes the arguments against divestment, made by panelists Rachelle Peterson and Rafael Castilla, were flawed and unsatisfactory, especially when compared with the strength of the pro-divestment arguments made by Victoria Fernandez and Katelyn Kriesel.
Castilla, who manages a $10 billion endowment at the University of Michigan, emphasized that since the fossil-fuel industry is the infrastructure on which the developed world has been built, it is unthinkable to attempt to extricate ourselves from it. He pointed to the difficulty of our situation without offering an alternative to divestment. By most accounts, this is the most dangerous situation mankind has put itself in. But his message was hyperbolic because we are developing the infrastructure of renewable energy. We can see the beginning of a society which does not rely on the continued extraction of fossil fuels. His other main point was that it is quite hard to find investments with returns as high as those in the oil and gas industry. He stressed that the University of Michigan’s best assets are in dirty energy. Additionally, if Michigan were to divest from fossil fuels and switch to sustainable energy, the University could lose a lot of big-money donor support.
Katelyn Kriesel, a financial advisor with Koenig and Selzer (and the owner of Syracuse Sustainability Enterprises, which provides consulting services to divestment movements) echoed research we have done on socially responsible investing and analyses on environmental and social governance. Portfolios created using these techniques perform equally well or better than non-socially responsible portfolios. Not only that, but even when newly socially responsible firms lose donor support due to divestment, they gain small-donor gifts and good publicity that often compensates or surpasses the loss of support due to divestment. It is important to stress that the concerns of big donors should not determine the policies of educational institutions.
The other anti-divestment panelist was Peterson, a researcher studying divestment with the National Association of Scholars. Her argument can be summarized by three main points: first, divestment simplifies the climate change problem to its detriment. Second, divestment creates political polarization, meaning less is done regarding climate change. Third, institutions have no moral responsibility to combat climate change.
Victoria Fernandez, an analyst with 350.org and a former student-leader for a divestment campaign at UC Berkeley, spoke to our views on the urgency of divestment. She acknowledged that climate change is incredibly complex and divestment is not a panacea. But our changing climate is evidence of how quickly we must respond, and divestment is the quickest and most effective grassroots avenue we have. We do not have the time or resources to solve each problem as it comes. Instead, we must stigmatize, and hopefully cut off, the source: fossil-fuel extraction. In response to the second point, because climate change unquestionably exists, it is naturally polarizing. There are those willing to do something, and those who are too afraid or cannot be bothered. Our political system right now needs polarization to kick into action, and we must act right now. Third, she refuted the moral argument for divestment, where first-world emitters of CO2 have a collective responsibility to take down the fossil-fuel production industry and reinvest in renewable energy, by recognizing that the locus of moral responsibility resides in the individual. In other words,individuals have no right to question the ethics of the College’s endowment management if they are willing to drive cars and use plastics. But if corporations, governments and other institutions cannot be held accountable for greenhouse gas emissions, we have no hope of reversing our trend and avoiding catastrophic climate change. Potential for the biggest, most important changes lies with institutions. If we cannot conceive of collective responsibilities, we cannot conceive of hope for a solution.
To conclude, the anti-divestment arguments at the panel were not only answered but pushed back. The opposition has dangerous ideas about moral philosophy—we are left wondering what hope there is to make change of any sort if, as they say, no morality is required of institutions and corporations. Our research, as well as Kreisel’s, points to socially-responsible investing providing equal or better returns and less or equal volatility than traditional investments in oil and gas. Sure, divestment is polarizing but polarization is necessary. We are in a climate crisis, and at this point people have to pick sides. Fossil fuel divestment is a complicated issue, and there are various approaches to it, but there is also a fairly clear divide between those who favor removing institutional assets from the fossil fuel industry and those who do not. The panel discussion was itself polarized and complicated—but certainly everyone who attended came away with a new and more nuanced understanding of the issue.