Accountability on Climate Change – Fossil Fuel Divest
University leadership should support fossil fuel divestment and uphold our values.
By: Chris Crews
[Update: Here’s the link to the final published version in the The Free Press. You can also read about the recent New School Divestment forum here.]
In January of this year, I joined a small group of students and faculty at a meeting of our Board of Trustees, whose job is to oversee the management and direction of The New School. Our group spent an hour presenting a strong case for why The New School should move all of our endowment investment out of fossil fuels. As a member of our Advisory Committee on Investor Responsibility (ACIR), which gives advice on our endowment, I am confident that we could divest all of our fossil fuel holdings, which represent less than two percent of our endowment, if there were political will to do so. The time to act on climate change is now, and so we are calling on the university leadership to move immediately to divest from all fossil fuels.
While there was support for the proposal from some board members, there was also a vocal minority opposed to divestment. For the benefit of the university community, here are the main thrusts of the arguments we heard. The first argument goes something like this: we can be better advocates for change by keeping our shares in companies whose practices we have concerns about, and use our power as shareholders to create change. I call this the “engagement not divestment” argument. The second argument claims that, even if we did want to divest from fossil fuels, there are no comparable fossil fuel free investment funds to put our money in, so divestment is financially impractical. I call this the “profits before people” argument. Both of these positions rely on deeply flawed logic and faulty assumptions, and I’ll tell you why.
The “engagement not divestment” argument requires our fund managers, or someone in the university, to engage these companies and convince them to stop producing fossil fuels, or switch to an alternative energy strategy. Let’s look at the primary business services of the top ten fossil fuel companies we hold shares in and consider if this is a viable strategy: Devon Energy, BG Group, CNOOC Limited, Pioneer Natural Resources Co., Royal Dutch Shell, PetroChina, Gazprom, Inpex Corporation, LukOil, Petroleo Brasileiro and Sasol Limited. Whether we are talking about American, Brazilian, British, Chinese, Japanese, Russian or South African companies, their primary or sole business involves producing and selling oil, gas or coal.
When a trustee tells us we should “engage” these companies on climate change, it’s not clear what we hope to gain. We have no interest encouraging superficial public relations shows, such as another “community education” fund aimed at whitewashing coal slurry contaminated rivers in West Virginia, or water well poisoned by fracking in Pennsylvania, or offshore platforms leaking oil into coastal waters in Alaska or the Gulf. There have been several news stories in 2014 about these leaking pipelines (oil and gas) or ruptured containment ponds (coal slurry). Such stories are becoming more common and will only get worse as fossil fuel demands increase. These problems can’t be solved by shareholder engagement, which is why we are calling for divestment.
To the second argument, that equally profitable alternative investments don’t (and implicitly can’t) exist in the market, we reply in two ways. First, that didn’t stop universities divesting from South Africa or tobacco companies and it isn’t a valid defense against fossil fuel divestment today. Secondly, our brand, as stated in the university mission, is to foster “creativity, innovation, and a desire to challenge the status quo.” We have a heterodox economics department at The New School of Social Research, a graduate program in sustainability at The New School for Public Engagement and a leading design school called Parsons, and yet we are told it’s impossible to imagine a viable, fossil fuel free endowment? Oh ye of little faith.
In case the trustees have forgotten, our mission is defined in part by social engagement, which means fostering an academic culture of “critically engaged citizens dedicated to solving problems and contributing to the public good.” I can think of no better way to demonstrate that mission and put those values into action than by using our resources (both intellectual and financial) to lead the way on fossil fuel divestment.
Chris Crews is a PhD student in Politics at the New School for Social Research. He is also the student co-chair of the university Social Justice Committee.
