Yesterday I wrote an emotional, Swarthmore-centric argument urging Swarthmore to divest. This post is going to be a more measured view. 350.org has started a campaign that urges universities to divest from fossil fuel companies. Here's their statement:
"In short: it just doesn’t make sense for universities to invest in a system that will leave their students no livable planet to use their degrees on, or for pension funds to invest in corporations that will ruin the world we plan to retire in. The one thing we know the fossil fuel industry cares about is money. Universities, pension funds, and churches invest a lot of it. If we start with these local institutions and hit the industry where it hurts — their bottom line — we can get their attention and force them to change. This was a key part of how the world ended the apartheid system in South Africa, and we hope it can have the same effect on the climate crisis."
I don't think that's a great argument, but (spoiler alert) I still think divestment is a worthwhile cause.
Case Against Divestment
Problems with the divestment strategy have been brought up by Christian Parenti and less forcefully by Cecelie Counts. The President of my alma mater, Rebecca Chopp, also made a brief case against divestment. All of these writers are pro-climate change action, but they don't think that divestment is the appropriate activism tool. Putting words in their mouth, I assume they would prefer a campaign for regulating coal power plant emissions or cap-and-trade legislation. The argument is that divestment won't impact fossil fuel companies (and greenhouse gas emissions) in the way that 350.org wants. I think there are two basic points in their favor:
1) Publicly traded fossil fuel companies don't control that much oil. "More than 70% of world oil reserves, and an even greater percentage of the remaining reserves of "easy oil" are held by national oil companies controlled by kings and potentates and even some democratically elected governments like Saudi Arabia, Venezuela, and Norway." Other fossil fuel companies, like the very evil Koch Industries, aren't publicly traded. None of these entities even have stock to divest from.
2) More importantly, even publicly traded companies won't be economically hurt by divestment. Companies make money from selling fossil fuels, not from stocks. Moreover, IF Exxon's share price fell because of divestments, less scrupulous investors would just see a bargain and buy the stock. There's a reason investors by Exxon stock: it makes a ton of money.
Thus, the anti-divestment crowd would rather see activism that is more directly linked to greenhouse gas emissions. And so would I. Except that the climate change movement has so little momentum right now and it needs to start with something tangible....
Case For Divestment
Bill McKibben makes his case in the NYTimes and Kate Aronoff (a Swarthmore student) makes hers in Common Dreams.
A lot of my argument is based on the context provided by this report on why climate legislation failed in 2009, summarized here. In a nutshell, Obama doesn't have as much power as people think he does; Congress has to pass legislation. Politicians need to see a political benefit to climate action (or cost to inaction). The Tea Party's hatred of climate change legislation outweighed broader support for action. "On public opinion, cap-and-trade supporters were too concerned with breadth and too little concerned with intensity." In Washington, interests groups with small, but passionate support (see the NRA) have influence that is disproportionate to the size of their base. Gun control legislation is so difficult to pass because politicians know there will be a political cost to doing so. We need the same sort of intensity with climate change.
Frankly, it's hard to get excited about advocating for a $20 per ton carbon tax. Or cap-and-trade. Or the production tax credit (a subsidy for wind energy). As much as the the 2009 push for cap-and-trade included the business community, that general support couldn't match the Tea Party's passionate hatred for the bill. Divestment (and the Keystone XL pipeline, which will be the subject of a later blog) is the opportunity to create that passionate base and send a message that there is a political cost to inaction on climate. And, as Bill and Kate point out, divestment can turn climate change corporations into social pariahs. If divestment leads to a conversation about the irreparable harm that fossil fuel companies are doing to our livelihoods, that is a great outcome.
AND, there is a moral case to be made here. Tobacco, apartheid, fossil fuels, whatever. I don't want to profit on things that do the world harm. Universities should be moral examples for the young adults they are shaping. As I said in my previous post, this is an opportunity to lead, not a cost.
And To Conclude...
That said, divestment advocates should know that, even if the campaign is 'successful,' it's just the beginning. Don't expect too much, climate change is still happening. At some point, there has to be a transition from divestment and Keystone XL to actionable policy that will make a dent in greenhouse gas emissions. And very soon. Government subsidies for fossil fuel subsidies might be a good transition issue for the movement. Eventually, we'll need cap-and-trade or a carbon tax. Demand for greenhouse gas intensive products and services has to be reduced, rather than just their supply. Ultimately, as long as we're demanding fossil fuels, there will be a market for suppliers to profit from, divestment or not.
"In short: it just doesn’t make sense for universities to invest in a system that will leave their students no livable planet to use their degrees on, or for pension funds to invest in corporations that will ruin the world we plan to retire in. The one thing we know the fossil fuel industry cares about is money. Universities, pension funds, and churches invest a lot of it. If we start with these local institutions and hit the industry where it hurts — their bottom line — we can get their attention and force them to change. This was a key part of how the world ended the apartheid system in South Africa, and we hope it can have the same effect on the climate crisis."
I don't think that's a great argument, but (spoiler alert) I still think divestment is a worthwhile cause.
Case Against Divestment
Problems with the divestment strategy have been brought up by Christian Parenti and less forcefully by Cecelie Counts. The President of my alma mater, Rebecca Chopp, also made a brief case against divestment. All of these writers are pro-climate change action, but they don't think that divestment is the appropriate activism tool. Putting words in their mouth, I assume they would prefer a campaign for regulating coal power plant emissions or cap-and-trade legislation. The argument is that divestment won't impact fossil fuel companies (and greenhouse gas emissions) in the way that 350.org wants. I think there are two basic points in their favor:
1) Publicly traded fossil fuel companies don't control that much oil. "More than 70% of world oil reserves, and an even greater percentage of the remaining reserves of "easy oil" are held by national oil companies controlled by kings and potentates and even some democratically elected governments like Saudi Arabia, Venezuela, and Norway." Other fossil fuel companies, like the very evil Koch Industries, aren't publicly traded. None of these entities even have stock to divest from.
2) More importantly, even publicly traded companies won't be economically hurt by divestment. Companies make money from selling fossil fuels, not from stocks. Moreover, IF Exxon's share price fell because of divestments, less scrupulous investors would just see a bargain and buy the stock. There's a reason investors by Exxon stock: it makes a ton of money.
Thus, the anti-divestment crowd would rather see activism that is more directly linked to greenhouse gas emissions. And so would I. Except that the climate change movement has so little momentum right now and it needs to start with something tangible....
Case For Divestment
Bill McKibben makes his case in the NYTimes and Kate Aronoff (a Swarthmore student) makes hers in Common Dreams.
A lot of my argument is based on the context provided by this report on why climate legislation failed in 2009, summarized here. In a nutshell, Obama doesn't have as much power as people think he does; Congress has to pass legislation. Politicians need to see a political benefit to climate action (or cost to inaction). The Tea Party's hatred of climate change legislation outweighed broader support for action. "On public opinion, cap-and-trade supporters were too concerned with breadth and too little concerned with intensity." In Washington, interests groups with small, but passionate support (see the NRA) have influence that is disproportionate to the size of their base. Gun control legislation is so difficult to pass because politicians know there will be a political cost to doing so. We need the same sort of intensity with climate change.
Frankly, it's hard to get excited about advocating for a $20 per ton carbon tax. Or cap-and-trade. Or the production tax credit (a subsidy for wind energy). As much as the the 2009 push for cap-and-trade included the business community, that general support couldn't match the Tea Party's passionate hatred for the bill. Divestment (and the Keystone XL pipeline, which will be the subject of a later blog) is the opportunity to create that passionate base and send a message that there is a political cost to inaction on climate. And, as Bill and Kate point out, divestment can turn climate change corporations into social pariahs. If divestment leads to a conversation about the irreparable harm that fossil fuel companies are doing to our livelihoods, that is a great outcome.
AND, there is a moral case to be made here. Tobacco, apartheid, fossil fuels, whatever. I don't want to profit on things that do the world harm. Universities should be moral examples for the young adults they are shaping. As I said in my previous post, this is an opportunity to lead, not a cost.
And To Conclude...
That said, divestment advocates should know that, even if the campaign is 'successful,' it's just the beginning. Don't expect too much, climate change is still happening. At some point, there has to be a transition from divestment and Keystone XL to actionable policy that will make a dent in greenhouse gas emissions. And very soon. Government subsidies for fossil fuel subsidies might be a good transition issue for the movement. Eventually, we'll need cap-and-trade or a carbon tax. Demand for greenhouse gas intensive products and services has to be reduced, rather than just their supply. Ultimately, as long as we're demanding fossil fuels, there will be a market for suppliers to profit from, divestment or not.
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