Divest from divestment

Argument for divestment at odds with the facts.

By Patrick Reilly

Every Wednesday at 6 p.m., the UChicago Climate Action Network (UCAN) gets together in Harper 145. As Maroon readers learned on Tuesday, these environmentalists have been busy lately. According to Sam Zacher’s excellent op-ed (“Divestment Is Not Only Necessary, But Feasible 2/18/14), an affiliated group called Stop Funding Climate Change (SFCC) is preparing to issue a Divestment Report that urges UChicago to sell off its investments in the fossil fuel industry. “Imagine a world,” he wrote, “in which universities divest (without losing any money), and oil and gas companies are socially stigmatized and influenced to shift their focus to renewable energy…. This is the fast track to renewable energy that our planet needs.”

Is it? Despite Zacher’s inspiring battle cry, a closer look at the facts suggests that SFCC’s energies could be better spent elsewhere.

For starters, UChicago’s investment portfolio has proven difficult to crack. Students here tried and failed during the first divestment campaigns of the 1980s, even as other elite universities shunned companies connected with South Africa’s apartheid regime. During the Darfur crisis of the mid-2000s, the administration resisted a similar campaign to divest from Sudan. Even divestment’s supporters are quick to admit that they face an uphill battle. “It’s difficult with a big school like UChicago,” said second-year UCAN member George Abitante. “Fossil fuel investments are usually tied up with other funds.”

Despite these challenges, first-year UCAN leader Johnny Guy makes the case that with a crisis as grave as climate change, students are right to pursue such an ambitious goal. More modest campus sustainability campaigns, he argued, have fallen woefully short. “We’ve tried for the past decade to make UChicago greener,” he said. “But those solar panels on Logan, for instance, only provide six percent of the building’s electricity.” Rather than make piecemeal improvements, he continued, divestment aims to shift public opinion. If an institution as large and prestigious as UChicago can be persuaded to divest, others will presumably follow, leaving big coal and big oil with little support.

Backers of this public-shaming strategy claim to have history on their side. “Thirty years ago, students helped expose South African apartheid by demanding University divestment from companies operating there,” fourth-year Paul Kim wrote in the Maroon last May. They may have fallen short at UChicago, but “international scrutiny made apartheid increasingly costly for South Africa and contributed to its fall.”

That’s an inspiring legacy, but does it really make an accurate comparison? Historians continue to debate divestment’s role in forcing the South African government to its knees, but at least one fact is clear: The campaigns of the 1980s targeted a brutal, isolated regime that could easily be singled out and kicked out. In seeking to divest from fossil fuels, today’s students are targeting a trillion-dollar, public-private industrial system that connects and supports every individual on the planet.

The numbers speak for themselves. The New York Times reported last year that 831 U.S. colleges—about 300 of which currently have divestment campaigns—have a combined endowment of just over $400 billion. That’s a hefty sum, but by activists’ own estimate, colleges only invest about 3 percent of their cash in fossil fuels, making for a total potential divestment of about $12 billion. If you think $12 billion can sway Big Oil, think again; ExxonMobil alone has a market capitalization of $411 billion.

It also has something even more valuable than investors: customers. I suspect that Exxon’s executives, sitting around a conference table in Irving, Texas, are smugly watching our divestment campaign unfold. However it turns out, UChicago will still need Exxon’s oil to fuel its shuttles, heat its buildings, and cook the food over which you may be reading this column. Exxon and its ilk may be “socially stigmatized,” but they’ll still get paid.

If we’re truly going to “stop funding climate change,” we need to pay these companies for a different energy source. Don’t take my word for it: After former Secretary of Energy Steven Chu finished his talk at the IOP on February 13, I raised my hand and asked if he thought divestment was a viable strategy to combat climate change.

“No,” he answered. “I’m trying to not paint oil and gas into a bad-guy corner. If you do, you set the battleground, and I’m trying to give them ideas. If there’s a chance to bring them on board, let’s do it.”

UCAN and SFCC can give oil and gas “ideas” by demanding fundamental change in energy policy at all levels—campus, city, state, and federal. The risks of climate change are real; the notion that a symbolic public relations campaign can resolve them is not.

Patrick Reilly is a first-year in the College.