As the push for fossil fuel divestment gains momentum across the country, most institutional decision makers are resisting the call to sell off investments in coal and petroleum (though there have been several brave exceptions). Harvard President Drew Faust wrote an open letter last week reaffirming her administration’s position against divestment and promoting weaker routes for fighting climate change. Some of her initiatives are laudable. She has begun a new fund targeted specifically towards research, which will undoubtedly bolster the climate and energy research conducted at Harvard. Furthermore, she announced that the University has just joined two international organizations that guide responsible investment. But in the short term, only divestment has the potential to be truly effective, by pressuring those in power through stigmatization. Harvard cannot continue to profit from the destruction of civilization and the planet’s ecosystems, especially when the political benefits of divestment could be immediately realized.
Though Faust’s acknowledgement that the university has “a role to play as a long-term investor” is encouraging, it is not at all clear that membership in these organizations will translate into any significant changes to the endowment’s holdings. Harvard is still poised to continue its prolonged moral mistake of profiting financially from the release of greenhouse gases. And though Faust feels that investors do in principle have responsibilities, she continues to view investments in fossil fuels as ethically permissible. The letter’s only mention of fossil fuel divestment is the assertion that the action “would not be wise or effective,” a conclusion that is very likely to be incorrect.
The moral case is clear. When Harvard uses money from the endowment’s interest to fund its operations, it is profiting directly from an industry that has stood in the way of necessary climate legislation and grossly distorted the public understanding of science. Fossil fuel companies have pumped millions of dollars into organizations that promote denial of climate change. Four billions dollars in American subsidies are enjoyed by the industry each year, all at the expense of the taxpayer. Perhaps most importantly, fossil fuel lobbyists have enormous influence over American lawmakers. It seems unlikely that Congress’s failure to pass carbon dioxide cap-and-trade legislation (despite explicit support from both major 2008 presidential candidates) is unrelated to the $100 million the industry spends annually on lobbying.
Not all fossil fuel corporations are the same—our planet’s future has a few promising, if alarmingly weak-willed, allies. For instance, I am encouraged that Royal Dutch Shell’s CEO wants to be more active in mitigating climate change through carbon capture and sequestration (CCS). Further, several petroleum companies have made some investments in solar energy and biofuels. But none are using nearly enough of their unique toolkits to solve the unprecedentedly difficult problem of climate change. These companies’ extensive knowledge of geology puts them in an unrivaled position to spearhead more CCS technology. The refineries that they build and run will be paramount for the production of carbon-neutral liquid fuels. Additionally, they have the option of spending billions of dollars more on green technology if they so choose; few organizations have this kind of financial power. Petroleum companies’ experience, influence, and capital give them not only the ability to make paradigmatic changes to the global energy landscape, but also the reason that they hold special responsibility in this field.
As for the question of divestment’s efficacy, there is every reason to predict that selling fossil fuel holdings will have a lasting effect on corporate behavior. Several past divestment campaigns have led to political change, largely because shame is such a strong human emotion. The decision-making employees of these companies are people at the end of the day. Like the rest of us, they are fallible mammals bound to their own insecurities and social relationships. Like the rest of us, they value the respect of their peers at least as much as they value material wealth. When Harvard demonstrates through divestment that we disapprove of their businesses, they will become more self-critical.
At what point will it be acceptable to re-invest in these companies? Supporters of this movement will have different answers. My personal criteria is this: at a minimum, a fossil fuel company must demonstrate seriousness in mitigating the destructive effects of its product by aggressively advocating a carbon tax or cap-and-trade program that reflects the social costs of carbon. It also must increase its spending in alternative energy, so that green technology becomes a large percentage of its total expenditures. On the topics of energy and energy economics, most politicians, businesspeople, and regular citizens listen to members of the energy industry because they are experienced and knowledgeable. Let’s see them use their technological and political arsenal to help us move to a green economy.
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