Divesting from Oil, Gas and Political Reality

The
growing fossil-fuel divestment movement on campus is the “first effective
opposition” to the fossil fuel industry, according to writer and activist Bill
McKibben. Across the country, students alarmed about climate change are urging
their colleges to disinvest their endowment funds (“divest”) from
petroleum-extracting companies. They have been garnering headlines in recent
months, and, according to The Nation, the campaign is “engaging more students than any similar campaign
in the past 20 years.” 

However,
the idea that activists represent “effective opposition” is questionable.

The Movement Spreads 

The
divestment campaign began a couple years ago with student groups at a handful
of schools, such as Swarthmore College. Last November, the movement took off
nationally when McKibben and his group 350.org
went on a 21-city promotional tour called “Do the Math.” McKibben’s frequent
refrain is “If it’s wrong to wreck the climate, then it’s wrong to profit from
that wreckage.” (As far as I know, McKibben does not explain how he would have
engaged in his promotional tour without fossil fuels).

Since
the tour, 350.org has been coordinating the divestment campaign. Students on
more than 300 campuses, either individuals or groups, have urged their
administrations to divest. (A few cities and church denominations have signed
up for the campaign too.) According to 350.org spokesman Jamie Henn, activist
students have met with boards of trustees on 40 campuses in the last few
months.

So
far, despite the popularity, only a few colleges with tiny endowments have
complied with demands for divestment. These include Unity College, Hampshire
College, Sterling College, the Santa Fe Art Institute, the College of the
Atlantic, and Green Mountain College. No college with an endowment of over $1
billion has divested.

That
may change with Swarthmore, which could be the first divesting institution with
a big-league endowment–$1.5 billion. Students have been agitating at Swarthmore
for a couple years, and they are still upping the ante: activists stormed an
administrative meeting at the school in early May, preventing school leaders
from discussing the potential costs of divestment. Columnist Thomas Sowell
wishes administrators had not caved so easily, taking the occasion to criticize
them for their limp backbones.

Does Divestment Even
Work?

The
divestment campaign is based on a similar campaign in the 1980’s aimed at
ridding South Africa of apartheid. According to one estimate,
155 institutions had divested from South Africa by 1988, after several years of
activism. Nelson Mandela, the long-time political prisoner who became president
of South Africa, said on the record that the divestment movement contributed to
the end of apartheid in his country.

However,
available scholarship
indicates that even the South Africa campaign wasn’t very effective
economically, and had almost no impact on the country’s economy. “Corporate
involvement with South Africa was so small,” wrote the authors of a 1999 paper,
“that the announcement of legislative/shareholder pressure or voluntary
corporate divestment from South Africa had little discernible effect either on
the valuation of banks and corporations with South African operations or on the
South African financial markets.”

Student
activists have since tried to get
colleges to divest from tobacco companies, from companies that profit from the
Darfur region of Sudan, and even from the nation of Israel. However, none of
the copycat campaigns appear to have been as successful as the one focused on
South Africa.

McKibben
and company recognize that they can’t have an economic impact.

Since
about $3 trillion worth of crude oil is produced each year (much of it by
governments), divestment isn’t likely to have much effect, especially since a
far more morally persuasive campaign didn’t dent South Africa’s economy, which
is only $400 billion.

But
they still believe they can have an impact socially and politically.

“We
know that we can’t bankrupt ExxonMobil,” said spokesman Henn in an email
exchange with the Pope Center, “but we can show that they are morally bankrupt.
Our goal is to turn Big Oil into Big Tobacco, a pariah industry that loses its
political stranglehold over our government.”

Success is Unlikely 

So
they’ve set their sights lower, but the divestment movement will likely face
difficulty meeting even the relatively low bar of making oil companies
political lepers.

For
one thing, oil companies are already unpopular, and it doesn’t seem to have had much effect. According to Gallup’s
latest survey, the industry has a
61 percent disapproval rating, the worst of all industries listed in the
survey–even worse than lawyers and the federal government. If their political
influence hasn’t diminished by now, what more could do it?

Resistance
comes from money-hungry college administrations too. Students at both UNC-Chapel
Hill and Harvard have voted overwhelmingly to divest from fossil fuels.
Seventy-seven percent and 72 percent of students voted for divestment at each
school, respectively, but neither has divested. In fact, in a wonderfully
condescending email, a Harvard spokesman told the New York Times that, “We always
appreciate hearing from students about their viewpoints, but Harvard is not
considering divesting from companies related to fossil fuels.”

Harvard
later made a perfunctory symbolic nod to the protestors, hiring
a “vice president for sustainable investing” for its investment management
team. But the school has still not committed to divesting.

Even
though Swarthmore’s leadership is politically sympathetic to the
divestors–Swarthmore puts the “liberal” in liberal arts colleges, you might
say–the administration is holding firm, arguing that divestment would be just
too expensive and, therefore, disrespectful to donors who had no intention of
activism. A study they commissioned concluded that the school would forfeit
$204 million over 10 years by changing its investment strategy. Inside Higher Ed calculated that this
would cost students $13,000 each per year, on average (although there were some
questions about the accuracy of the study).

Finally,
the politics of fossil fuel divestment are different than the politics of
apartheid or tobacco. Even if the science were as settled as activists claim,
the moral equation is less clear compared to other divestment issues. Whereas
pretty much everyone agreed that a small group of anti-democratic, murderous
racists in a far off country were in the wrong, not everyone is ready to take a
financially painful stand against driving their own car to work.

Similarly,
the consequences aren’t as bad. The idea of something killing grandma or
yourself (as in the case of cigarettes) has more emotional weight than the idea
of something killing polar bears (as in the case of oil and gas, although I
hear the polar bears are doing quite well lately in spite of increased carbon).

Duke Cheston is a reporter and writer for the Pope Center.

(Photo: Students at the Swarthmore divestment conference. Credit: Yale Daily News.)