Radical climate activists’ latest campaign is a transparent ploy to boost its own power, not caring that it would harm more than help what it claims to protect.
Global Divestment “Day” (actually a two-day event, Feb. 13 and 14) marked the culmination of a three-year Fossil Free campaign, launched by the organization 350.org, to get organizations, institutions, and individuals to get rid of fossil-fuels related investments.
The divestment campaign has specifically focused on universities, tapping into student activism and calling for administrations to sell off the fossil fuel-related stocks in their endowments. Such divestment would put students’ education at risk, with little to show for it. If divestment actually occurs, the oil companies would not feel the costs of Global Divestment Day; they would be felt by the educators and the students.
Leading divestment advocates commonly claim that fossil fuel stocks can be excluded with almost no loss. Spokeswoman for 350.org Naomi Klein asserts that fossil fuel stocks will decline due to changes in consumer behavior and regulatory policy. She further claims it would be riskier for universities to continue investing in fossil fuels than to divest.
Klein’s argument contains a few pitfalls. First, current stock prices already anticipate consumer behavior and regulatory changes, so the prediction that fossil fuel stocks will decline as a result is an unreliable assertion, according to business professor Daniel R. Fischel’s recent Compass Lexecon study.
Second, divestment from fossil fuels in fact would put university endowments at great risk. According to the National Association of College and University Officers, the total estimated assets in university endowments is $456 billion, including $22 billion placed in energy stocks. Fischel’s study reveals that divesting from fossil fuels would lead to a loss of about $3.4 billion every year.
Responding to a call for divestment from fossil fuels, Harvard University President Drew Faust wrote an open letter discussing the endowment’s importance to achieving institutional ambitions and creating intellectual opportunities for students. If Harvard were to divest, she stated it would “come at a substantial financial cost.” Divestment is simply not worth the risk.
Divestment activists appear willing to jeopardize university assets in the name of saving the planet. Yet they may not realize how ineffective their project would be.
A new report by the American Security Project found that university divestment from fossil fuels will have no mitigating effects on carbon emissions. Divestment does not decrease the demand for fossil fuels; it merely moves the money around. The campaign additionally ignores the complexities of transitioning to a “renewable and emission-neutral economy.”
Another study by University of Oxford found that, even if all capital were divested from university endowments and public pension funds, it would be such a small percentage of the market capitalization of traded fossil fuel companies that the divestment would barely impact the fossil fuel industry.
But the divestment of fossil fuel assets might not be the real goal of the campaign. In a video interview, Klein states that they are using the movement to create a space where it is easier to tax, nationalize and undermine oil companies. She claims that the people have a right to the oil industry’s “illegitimate” profits to make up for the crisis created by this sector.
As well, numerous articles by 350.org co-founder Bill McKibben have outlined ways to bring down the fossil fuel industry, turning it into an enemy of society. The forces behind divestment clearly are attempting to stigmatize fossil fuels, in complete disregard for the many positive advancements fossil fuels have helped make possible.
The campaign’s ultimate agenda is not to divest from, but rather to demonize, fossil fuels, and eventually to control their assets. It is a symbolic movement that hopes to shame the fossil fuel industry out of business.
Unfortunately, though, radical climate activists are pursuing a costly and risky political strategy that offers no real progress in decreasing carbon emissions.
Time will tell if they’re willing to pay the price.
Lexi Osborn graduated from Northwestern University with a degree in political science. She is currently a Future Leaders intern with the Independence Institute’s Energy Policy Center.
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