Navigating the Divestment Maze

Isa Goldberg makes a case for why Amherst students should support the movement for the college to divest from coal. An excerpt of this article appeared in the December 3, 2014 print issue of The Amherst Student.

Is divestment the most appropriate vehicle in the campaign to limit fossil fuels?

My introduction to the vagaries of environmental legislation began rather inauspiciously. In 2007, when I was in seventh grade, former Connecticut Senator Chris Dodd publicly announced his support of a corporate carbon tax to combat global warming. In response, I wrote letters to my five Connecticut state representatives about the proposed carbon tax. I asked them if the tax gained popularity on Capitol Hill, and what they were doing to promote a price on carbon. I was so excited that I forgot to change the representatives’ names at the top of each letter, so five letters went out reading, “Dear Senator Dodd, …”

A month later, I received two generic responses that read, “Thank you for your concern, Ms. Goldberg. Here is a list of legislation that has to do with sustainability in Connecticut.” Though flattered by the mature prefix, I was unimpressed and am not surprised that, six years later, there are still no states that have imposed carbon taxes.

This is a personal example among many unsuccessful attempts by citizens to rouse the government into passing critical climate change legislation. I learned that political lobbying and environmental advocacy alone have proven ineffective in mitigating climate change. Changing our behaviors individually to reflect environmental stewardship, one by one, is too gradual; moreover, only a small percentage of us–according to the Nature Conservancy, five percent at best–care enough to adjust our daily habits in a sustainable direction. In terms of the impact of political lobbying for environmental legislation, the government is hope trapped in a box: though Obama is idealistic in his Climate Change Plan, his voice has gone unheard. The government is blocked by the fossil fuel industry. In the face of political stagnation, activists have turned to divestment as a tactic to protest the fossil fuel companies that influence our energy policy.

What is divestment? How has it been used in the past?

Divestment–or disinvestment–is a tactic organizations use to advance a political or social cause by causing the sales of stock in targeted companies. In the 1970s and 1980s, 155 American universities successfully pressured the South African Government to dismantle its Apartheid system by divesting from companies that traded with or operated in South Africa. Divestment was also used as a tactic by universities in the 1990s and 2000s to protest government-sponsored genocide in Sudan. In the current campaign to divest from fossil fuel companies, 14 schools have at least partially divested funds; 34 cities have divested, including Northampton and Amherst, MA; and more than 50 religious institutions have divested. According to a study by The University of Oxford, the movement to divest from fossil fuel companies is growing faster than any previous divestment campaign, and “could cause significant damage to coal, oil and gas companies”.

What are the arguments for divestment?

To learn more about pro-divestment reasoning, I contacted renowned environmental activist and founder of, Bill McKibben. In an email, McKibben responded:

“I think it’s a very powerful tool. Even the Rockefeller family, the first family of fossil fuel, recently decided to divest their holdings. The point of divestment is not to bankrupt companies; instead, it is to politically bankrupt them, to remove their social license. I think by most accounts it’s working pretty well, and one hopes Amherst will eventually join in!”

McKibben’s mention of the Rockefeller divestment is ground-breaking news: John D. Rockefeller built his family’s fortune on oil, and now his heirs are joining the divestment movement. In an NYT article that Mr. McKibben sent me along with his statement, the Rockefeller Divestment is described as precipitating “a threshold moment,” bringing divestment “from a small activist band quickly into the mainstream.” Stephen Heintz, President of the Rockefeller Brothers Fund, said about John D. Rockefeller, “We are quite convinced that if he were alive today, as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy.”

I also called Deidre Nelms ‘13, former head of the Green Amherst Project and founder of Amherst’s divestment campaign, to learn more about why she brought the divestment movement to Amherst. Nelms explained over the phone that by investing in fossil fuels, and especially in coal, “we send the message as an institution that we believe these forms of energy will continue to be viable, profitable, and socially sanctionable.” Such a message, said Nelms, contradicts the scientific research of our own faculty members. “Divestment would, foremost, signal that we take our own scientific research seriously, and secondly, signal a willingness on the part of students to take critical responsibility for their economic privilege.”

For a financial perspective on the benefits of divestment from fossil fuels, I called Jeff Gang ‘09, currently a Business Development Associate at Green Century Capital Management, a fossil-fuel-free investment advisory firm. Gang told me that Green Century uses shareholder advocacy as a tactic to make changes in a shareholder’s sustainability policies, like when the firm convinced Starbucks to buy 100 percent of its palm oil from sustainable sources. “If we thought coffee was causing cancer,” he said, “we’d have a really tough time persuading Starbucks to stop selling coffee. In the same way, we know that ExxonMobile’s core strategy is causing global warming, but we can’t file with Exxon as shareholders and say, we want you to do less of your thing.” In this case, it’s clear for Gang and Green Century that divestment “is one of the biggest levers we have right now,” and trumps shareholder advocacy as an effective means of protesting the petroleum industry.

What are the arguments against divestment?

I discussed the cons of divestment with Professor of Economics Christopher Kingston, who argued that divestment is not a good use of students’ time and effort. Kingston stated that divestment would serve as a political statement, but would not affect the petroleum industry in a meaningful way. If Amherst were to divest its stock, it would still have to sell its stock to someone else; divestment is financially ineffective.

Another common argument is that divesting from coal could set a precedent for future causes.

Others worry that divestment will lose the college money. However, the truth is that divestment from coal would only apply to publicly traded stocks, whose activities are published in an annual report. In truth, divestment would only affect a small fraction of the endowment–about 5%, which constitutes public holdings–and little, if any of it, is currently invested in coal companies. Noah Lerner ‘16, a current leader of the Green Amherst Project, explains that Amherst’s pro-divestment advocates are asking for both divestment from public holdings as well as from investments made through money managers. “Money managers invest more broadly in the market, and these investments make much more of Amherst’s endowment. What we, and what other divestment campaigns are calling for, is for the money managers to apply a ‘screen’ to investments in coal. Also, studies have been done that indicate that the returns from a fossil-free portfolio are not significantly different than the returns of a portfolio the includes investments in the fossil fuel industry.” Lerner cites a study by Aperio Group as a strong example.

How is the divestment movement progressing in American higher education?

The divestment movement started on college and university campuses, and according to Bill McKibben, 256 schools are actively fighting for divestment; but schools have achieved varying degrees of success. Stanford University divested from coal in May 2014, stating that their Board of Trustees reconciled their responsibility to maximize the returns of its investments while taking into consideration “corporate policies or practices create substantial social injury.” The trustees determined that divesting from coal is compatible with its policy, given the existence of renewable energy alternatives to coal on the market.

Harvard University, however, which has the biggest endowment of any university, refused to divest. To learn more about Harvard’s decision, I called Harvard senior Chloe Maxmin, a head coordinator for Divest Harvard and founder of First Here, Then Everywhere, an online environmentalist network.

Ms. Maxmin told me that the story of Divest Harvard began in a small room with 10 students. “At that point, we didn’t know what the divestment campaign was, or its financial ramifications,” she said over the phone. Nevertheless, the group started building the movement, using divestment as a way to spark a campus-wide conversation about environmental awareness.

In 2012, Divest Harvard successfully petitioned 10 percent of its student body in order to hold a referendum. Harvard held the first referendum on divestment in the world. A resounding 72 percent of students voted for divestment from fossil fuels.

Ms. Maxmin emphasized that divestment has proven to be a highly effective tactic in garnering student attention. Rallying for divestment is a fundamentally empowering framework where students are able to take their futures into their own hands. The divestment movement at Harvard focuses on building student power, and exceeds any fringe student movements on campus. “By divesting from fossil fuels, American higher education would be sending strong social signals,” Maxmin said. “It has been really exciting.”

Divest Harvard met with their Board of Trustees three times, and with their president eight times. Unfortunately, little progress was made during each meeting, and they ultimately reached a dead end. The Board concocted new and different arguments during each meeting, and according to Ms. Maxmin, their president stated in one meeting, “What’s next, sugar?”

Harvard’s President, Drew Gilpin Faust, is not known for aligning ethics and economics. In a statement issued by Faust and her colleagues, she claimed that Harvard’s $32.7 billion endowment “is a resource, not an instrument to impel social or political change.”

Maxmin stated, “We are supposed to be educating students for the future, but we are investing in companies that destroy the future. How could we not do everything we can–in this case, divestment–to curb fossil fuel consumption?” We need all tactics, and divestment is one of them. Climate change is an unprecedented social issue affecting widespread civilization. There are few more encompassing issues than global warming.

What is the status of divestment at Amherst?

In November 2012, students met with the Investment Office, the President’s Office and former Chairman of the Board William Ford ‘83, who suggested that the Green Amherst Project’s proposal to divest from coal be put to a vote in January, 2013. Amherst College professors have since published two letters to the board of trustees in support of divestment from coal.

We are now approaching January 2015, and Amherst College has not taken a stance on divestment. I contacted Cullen Murphy ‘74, chairman of the Amherst College board of trustees, as well as to Mauricia Geissler, Amherst’s chief investment officer.

Murphy wrote back to me:
“The board as a whole strongly endorses sustainability, both as a value and a practice, and supports measures by the college to advance sustainability along a wide front. The board also acknowledges that people who are like-minded as to goals may and do disagree about what measures are and are not effective–that’s just reality. Various proposals, such as the one from Green Amherst and the one from some members of the faculty, have been taken up at our meetings during the course of the past year and will be taken up again during the next several months. My hope is that the board will be able to come to a decision regarding divestment in January [2015] (or soon thereafter). I and others on the board will be reaching out to members of the Amherst community as consideration of this issue continues.”

Murphy’s email was promising, at the very least, in his final note that the discussion is underway. I was less impressed by the response I received from the Office of Investment. Geissler thanked me for reaching out to her on the issue of socially responsible investing, but essentially declined to comment given the closed, “ongoing investigation”:

The subject is a very complex one, with various dimensions relating to definition, measurement, investment purpose, and opportunity cost, among others. The Investment Office has been, and continues to be, in conversations with the board of trustees through the Investment Committee on this issue. Our understanding is that the board of trustees is likely to discuss the topic at its upcoming January 2015 meeting.

Given the ongoing status of the issue, and the fact that we’re not authorized to speak on behalf of the board of trustees, we’ll have to leave it here for the moment.

I remain wary of people who label the matter of divestment from fossil fuels as “complex.” The decision to divest or to not divest is not complex. It will involve work on behalf of the administration to research existing holdings as well as communicate with investment managers. It will also require the board to examine divestment in relation to Amherst’s fundamental mission. However, Amherst College students will likely have put in an equal amount of time and effort in bringing the matter to the table by organizing events, writing articles, and rallying for support. The complicated part of the matter is the actual process of divesting from the petroleum industry–and in Amherst’s case, just from coal. Evidence suggests that coal causes worse environmental and public health effects than all other fossil fuels. By divesting from coal in particular, Amherst could announce its support of an environmentally responsible transition towards clean energy.

Why should I care?

My last interview for this article was with Environmental Studies Professor Jan Dizard, and he left me with a powerful idea. The LGBT movement progressed rapidly; as of November, 2014, 70% of the States allow for marriage equality. The concept of marriage equality is not abstract for a majority of Americans; many of us have friends and family members who identify as LGBT (or ourselves), and because we love them, we support marriage equality. We want them to be happy. Racism is unfortunately more abstract for people who do not identify as a minority. Those who discriminate against minorities lack exposure to diversity: they do not have an aunt, a brother, a mother, or in some places, a friend, who is a minority. Respecting other people from all walks of life is an abstract idea for them.

As humans, environmentalism is the most abstract idea of all: It’s the future.

As humans, we are more threatened by immediate dangers than by gradual, but equally dangerous problems, like obesity and environmental degradation. A majority of people are distanced from communities that are feeling the immediate impacts of climate change. These people are not psychologically predisposed to care as much about environmental issues. Moreover, Americans spend 90% of their time indoors, causing us to become detached from the natural world.

We are several steps away from victories and disasters in the movement for environmental justice. When I hear that a country has significantly reduced its carbon emissions, that’s great! But it doesn’t bring me as much joy as knowing that my two female friends were able to get married in New York last weekend. When I hear about a terrible environmental catastrophe brought on by global warming, I’m crushed–but not as much as the negative emotions mine and other American communities experienced after reading about the decision not to indict Darren Wilson. Environmentalism simply doesn’t hit close enough to home.

At the very least, you should care because your peers care. In 2013, Amherst held a referendum in which 88% of students voted in favor of divestment from fossil fuels. Moreover, half of the campus participated in the referendum–even more than in our student government elections. As Nelms wrote to me in an email, “we are responsible for speaking out” in the face of investment behaviors that are adverse to our ethical and educational values. Nelms wrote to me a compelling call to action:

“It is easy to distance oneself from global problems on the basis that one’s own personal impact has a negligible effect on say, climate change, or global inequality. As Amherst students, however, we belong to an institution that holds over 1.8 billion dollars in endowment assets–that’s around $1 million per student. As benefactors of this colossal amount of money, we should be aware of how it is being invested, and if we come to realize that this investment behavior undermines our ethics, or undermines the basic tenets of our own education, we are responsible for speaking out.”

A recent MIT study determined that air pollution causes 200,000 early deaths each year in the United States, and vehicle emissions are the largest contributor to those deaths. If you’re on the frisbee team, or any sports team, or if you have left your dorm within the past twenty-four hours, you should care about the movement to divest from the fossil fuel industry. Particulate N95 respirators to minimize pollutant inhalation, although conveniently available for free two-day shipping on Amazon Prime with stellar reviews, are NOT fashionable.