The Case for Divestment

Smoke rises from a brick kiln on the outskirts of Gauhati, India, Monday, Jan. 26, 2015. The White House is hoping that the s
Smoke rises from a brick kiln on the outskirts of Gauhati, India, Monday, Jan. 26, 2015. The White House is hoping that the surprise deal with China late last year setting ambitious targets for cutting greenhouse gas emissions will influence India and others. Heavy reliance on fossil fuels has transformed New Delhi into the planet's most polluted capital and made India the third biggest national emitter of greenhouse gases. (AP Photo/ Anupam Nath)

I respect William G. Bowen for his distinguished leadership in education, but take strong exception to his rejection of the growing movement for university divestment from fossil fuel holdings.

Mr. Bowen argues that that university endowments should resist "extramural battles of all kinds." But the climate issue is not extramural and shouldn't be political; it is an existential matter.

At its core, the climate issue is about science, much of it gleaned from America's colleges and universities. Physics reveals the processes of the Earth's greenhouse effect, which makes life possible; chemistry proves the heat-trapping characteristics of carbon dioxide and other gases; and biology, geography, history and sociology illuminate the impacts of past and projected climate conditions.

The Socratic method and peer-reviewed science has yielded a clear, if imperfect picture of the scale and scope of human-caused climate change. The most significant impacts are well known -- altered weather patterns, sea-level rise, and substantial socio-economic disruption in key parts of the world. There is broad consensus in the scientific community that avoidance of catastrophic climate change will require holding global average warming to no more 2 degrees centigrade, or 3.6 degrees Fahrenheit. Emissions have already built half that warming into the globe's climate system.

So what should we expect colleges and universities to do to about it?

Mr. Bowen suggests that universities should guard against the "insidious moral perils of divestment," which include confusing institutional with individual responsibilities; failing to maximize returns for the educational enterprise; and getting drawn into "extramural" battles.

The moral, institutional, financial, and technical case for divestment is clear.

On the moral question, there is broad agreement that higher education institutions' core focus should be to foster diverse viewpoints in the transmission of ideas and scholarship. But this responsibility does not relieve colleges and universities from any commitment whatsoever to essential social values. Few would argue that Trustees adopt a "knowledge at all cost" posture, foregoing any responsibility to transmit values, ethics or serve a broader social good. University leaders surely can agree that planetary wide social, ecological and economic instability is not an "extramural" concern unworthy of institutional engagement. In fact, universities have a proud history of social engagement in causes of universal significance -- from apartheid to tobacco.

Bowen also argues that advocates for university divestment from fossil fuel are shallow hypocrites who won't look in the mirror at their own carbon emissions. This is not an either/or proposition. In the face of the greatest economic, environmental and social challenge facing humanity can't we expect both individuals and institutions to act responsibly? Further, the leaders of these endowments seek to divorce institutional investment policy (ignoring climate change) from their roles in research and teaching, which, we are often told, puts finding solutions at the top of their agenda. Why should there be a firewall between what a University does in the Boardroom and what its leading scholars and researchers learn in the laboratory?

Bowen's third major argument is financial. He claims that donors expect universities to maximize contributions by investing in high-yield stocks. Setting aside this highly questionable assertion of donor intent, the financial folly of fossil fuel investment is revealed in the poor performance of coal stocks and ongoing volatility of petroleum assets. Long-term, fossil fuels represent an enormous stranded asset. We simply cannot burn all the fuels in the ground without fundamentally damaging our life support systems.

Were the world to burn the fossil fuel reserves already held by energy companies and sovereign funds, global temperatures would increase by over four degrees. The simple fact is that the world has more than enough fossil fuel in reserve; why should any sane institution invest in further exploration and development? This simple question is never addressed or answered by the stewards of the great endowments of our major universities.

Finally, Bowen and many universities cite the technical difficulty of separating investments in fossil fuels from out of hedge and index funds in their portfolio. In other words, there's just too much hard work involved in protecting the planet's life-support systems for future generations. True, it is difficult to disentangle investments, but it has been done by innumerable individuals, scores of philanthropic and non-profit organizations and even a number of colleges and universities. Trustees can simply instruct their investment advisors to phase out investments in fossil fuels over time.

We should expect our major institutions of higher education, particularly those whose huge endowments are models for thousands of other institutions, to act as leaders, and not retreat behind the tired conventional argumentation that has so far characterized their actions and rhetoric on the important issue of divestment.