I wanted to post the full text of a recent academic-oriented article that I wrote for HippoReads. It includes a lot of links to studies on fossil fuel divestment and past divestment movements that may be helpful to people!
By Chloe Maxmin
Climate change policy expert Farhana Yamin, who works with The Elders and the United Nations Framework Convention on Climate Change, wrote in an article on carbon neutrality: “Achieving carbon neutrality by 2050 requires unprecedented political will and cooperation—but it’s not impossible.”
Yet neutrality itself has become a heated word—the conversation around climate change often devolves into a political rhetoric devoid of critical research texts and sources to support argumentation. The nascent fossil fuel divestment movement, which aims to create political space for climate legislation, is changing the conversation around climate change by analyzing the issue through a new lens: how investment impacts climate change.
Currently, around 400 divestment campaigns exist at American university campuses, all asking administration and investment managers to move investments away from carbon-polluting industries. The last time such a widespread divestment campaign existed was during the anti-apartheid movement against investment in South Africa in the 1980s.
Students are on the frontlines of the fossil fuel divestment movement, highlighting the moral urgency of climate change. And this strong moral component is part of what makes divestment so effective, says Marshall Ganz, renowned organizer and senior lecturer in public policy at the Kennedy School of Government at Harvard University. As a generation, we are the first in history to look to the future and wonder whether we’ll have a viable planet to live on. And, as we’re still young, we’ve done little to cause this problem. Yet our generation has been charged with addressing the issue of climate change. Rather than waiting for politicians to listen and take action, students are taking their futures into their own hands.
Identifying the Problem: Why Divestment?
The Intergovernmental Panel on Climate Change, the main international authority on the science, impact, and mitigation of climate change research and policy, published a 2013 report analyzing the scientific evidence underlying climate change and offering directives for policy makers. As the report assesses, burning fossil fuels increases atmospheric greenhouse gas levels and causes climate change—the report cites humans are primarily responsible for this accelerated process. If business-as-usual continues, the planet will warm beyond two degrees Celsius (the UN-sanctioned upper level of warming). The report emphasizes that the world cannot delay beyond 2030 in addressing the climate crisis. More research asserts that extreme natural disasters (heat waves, floods, droughts, hurricanes), diseases, and sea level rise will increasingly impact human health, food systems, infrastructure, and all aspects of human life.
The first major attempt to pass political legislation to limit carbon emissions in the United States was the Waxman-Markey Bill—but it failed.
Investigating the reasons for this failure, Harvard Professor of Government and Sociology Theda Skocpolconducted a detailed analysis in “Naming the Problem: What it Will Take to Counter Extremism and Engage Americans in the Fight against Global Warming.” She cites the force of the fossil fuel lobby as a major obstacle. Exxon’s lobbying efforts alone increased dramatically just before the cap-and-trade bill was introduced. Skocpol further notes that the fossil fuel industry has been able to buy off politicians and delay any meaningful climate legislation in order to protect their business models from a growing force of voices opposed to fossil fuels.
Bypassing Political Capture: How Fossil Fuel Divestment Makes an Impact
In an era of political capture—where corporate lobbyists dictate national policy—the climate movement is using divestment to bypass a broken political system. The goals of divestment are two-fold. First, divestment aims to stigmatize the fossil fuel industry, revoke the industry’s social license, and weaken its political influence. Second, divestment is building a powerful movement, that, at its core, involves an inclusive tactic—everyone is part of an institution that has something to divest (state pension fund, alma mater’s endowment, religious institution, personal investments, etc.)—and the connecting of these institutions to the climate change question has the potential to catalyze an historic social movement.
In August 2012 there were approximately two dozen divestment campaigns on college campuses in the United States. Just two years later, there are over 400 campus campaigns and hundreds of off-campus campaigns. Thousands of stakeholders are supporting divestment as a tactic and joining the movement, creating the most robust climate movement in years. In Fall 2012 a full 72% of Harvard College students voted for divestment; later, 67% of Harvard Law School students voted for divestment. Overwhelming support is apparent at other universities too: 74% at Tufts, 73% at UC Berkeley, 74% at Columbia, and 83% at Yale. To continue, 86% of students at the University of Illinois at Urbana-Champaign and 77% of University of North Carolina Chapel Hill students voted for divestment from coal companies. Faculty senates at Cornell, UC Santa Barbara, University of Vermont, and Northwestern endorsed fossil fuel divestment. So far, 12 higher education institutions, 22 cities, dozens of religious institutions and foundations, and many individuals have also divested.
A recent report from the Smith School at Oxford University lends credibility to the theory of change behind the fossil fuel divestment movement. The report, “Stranded Assets and the Fossil Fuel Divestment Campaign: What does divestment mean for the valuation of fossil fuel assets?” concludes that the tactic of stigmatization poses “the most far-reaching threat to fossil fuel companies and the vast energy value chain.” This, in turn, can lead to meaningful climate legislation. Furthermore, this divestment movement has achieved more in a shorter amount of time than any other divestment efforts in history.
Another report by IMPAX Asset Management provides an economic rationale for fossil fuel divestment. There are three main conclusions from this report: First, the share price of fossil fuel companies is based on carbon reserves owned, but high valuation of fossil fuel stocks will decrease when investors realize the world cannot continue to burn carbon at current rates, therefore exposing the overvaluing of share prices; second, investors should divest from the fossil fuel sector and invest in clean energies; third, divesting from fossil fuels and investing in renewables does not negatively affect returns. In fact, IMPAX found that returns increased when fossil fuels were excluded from the portfolio.
Historical Legacy: Following in the Footsteps of Divestment Activists
The most prominent divestment campaign in the past was the effort around pressuring institutions to divest from companies doing business in South Africa during apartheid. Students on college campuses in the United States were a major lever in forcing companies to distance themselves from apartheid, with over 150 universities divesting billions in assets. When Nelson Mandela was released from prison, he went to California and thanked students for their divestment efforts. Archbishop Desmond Tutu also recognized the important role divestment played in heightening the moral urgency of anti-apartheid efforts and pressuring companies to take a stand against racism. The movement sparked dialogue about apartheid, stigmatized a racist regime, and eventually led to US sanctions against South Africa.
Another prominent campaign centered around divestment from tobacco companies. Like the anti-apartheid movement, tobacco divestment campaigns sparked a dialogue about the role of investments and the ethics of investing in tobacco products. The movement succeeded in stigmatizing the tobacco industry and pressuring them to deal with a public relations crisis.
Signs of Success
In May 2014, Stanford University became the largest endowment—at almost $19 billion—to divest from coal mining companies. As Stanford’s statement reveals, higher education institutions can divest from fossil fuels, have minimal financial risk, align intellectual values, and reinvest in a clean energy future. Many reporters see Stanford’s divestment as a tipping point in the climate movement. As CNBC reports, it undermines the rationale behind fossil fuel investments. Stanford’s bold move is a powerful model for other globally-visible and powerful institutions, like Harvard, where the administration has repeatedly rejected divestment. At the same time, even politicians are taking notice, supporting divestment campaigns in their communities.
By galvanizing dialogue, building a social movement, and targeting corporate power, this new force for change has the potential to achieve the unprecedented—but not the impossible.
- The Guardian’s “Climate Change FAQ” and “Everything You Need to Know About Climate Change”
- Compilation of Resources on Divestment/Reinvestment
- For heavier reading, the IPCC AR5 Report
- “300 Years of Fossil Fuels in 300 Seconds” (a video)
- “Climate Change 101” (a video)
- Climate Change Debate on John Oliver