Sunrise has had a good week. SGO recently announced that they will invest surplus funds from the student activity budget into BlackRock, an investment fund that prioritizes environmental sustainability and refuses to invest in fossil fuels. While this is not really “divestment” as Sunrise claims, since the money wasn’t invested into fossil fuels in the first place, it’s a good opportunity to talk about the larger issues of divestment that so frequently come up at Swarthmore. Taking strong action to combat climate change is important, and divestment can be a step towards greener institutions and communities, but it has serious limitations.
The first and most important point about divestment is that it has virtually no concrete effect. While institutions of higher education like Swarthmore control enormous amounts of money in their endowments, they pale in comparison to the total capitalization of the fossil fuel industry: 60 trillion dollars worldwide. For reference, the total endowments of every university in the United States make up less than 1 percent of that number — and each school has only a fraction of its endowment invested in fossil fuels. The divestment of such a miniscule amount of equity only leads to its purchase by investors who don’t care that the stocks are in fossil fuels.
There are a few opportunity costs to this course of action, the first being that by divesting, the divester loses all sway with the company in question. Instead of, for example, forming a bloc with similarly inclined investors and pushing for the company to shift away from fossil fuels, divestment leaves the green side out in the cold. Better to stay in, with access to information about the workings of the company and lines of communication with other investors who can make a boardroom push. The resources and institutional knowledge that fossil fuel grants have in research and development can and sometimes are hugely important in developing green technologies. In areas ranging from carbon capture to efficient power storage to biofuels, fossil fuel firms have the ability and — sometimes — the wherewithal to pursue new solutions. And a diversified, dynamic approach to research and development is likelier to be more successful than efforts at top-down investment (see the U.S. government’s disastrous investment in Solyndra).
It’s also needlessly reductive — there are many different types of fossil fuels and ways to produce them, and some are much better than others. Oil is cleaner and less destructive to extract and transport than coal, for example. A pipeline is a lot less likely to spill than a truck or a train is to crash, burns no fuel for transport, and is less ecologically destructive than new rail or road systems, according to a study by the Canadian Fraser Institute. And natural gas, which has led to most of the growth in American energy over the past decade (and a large part of our economic recovery in the Midwest, creating 750,000 jobs), is far cleaner than both. According to Brad Hager, the director of MIT’s Earth Resources Laboratory, it actually reduced our carbon footprint. While gas is by no means a solution to climate change, it is far preferable to other sources that would otherwise supply power green energy still cannot. Wind, solar, and geothermal energy still suffer from serious problems with location, intermittency, and storage; nuclear energy is almost impossible to get off the ground politically.
Campaigns for divestment can also sidestep the problems of consumption. The reason that firms still mine or drill or frack for fossil fuels is because there is a persistent demand for them, which divestment is incapable of addressing. And in developing countries, the problem is both more pronounced and more open to solutions. While countries like India, China, and Brazil will have to deal with population growth, greater industrialization and their accompanying emissions, they also have a more leeway to build greener infrastructure, due to having significantly less existing energy and power infrastructure in the first place. However, it’s just not feasible for fossil fuels to be taken out of the equation completely: we can’t even do that in the U.S. yet.
Governments that are in the process of trying to lift millions of people out of poverty are going to have to use fossil fuels alongside green energy. Trying to incentivize less harmful fossil fuels like shale gas, using safer modes of transport like pipelines, and encouraging companies like Shell that invest in clean energy systems and advocate for action on climate change, are the best methods for dealing with the “mixed” economy we’re stuck with for the near future.
All of this is not to say divestment has no effect. Divestment is a symbolic action. Individual decisions to consume less, to advocate for action against climate change, and work for innovative solutions may come from this smaller action. I just worry that amid all the noise of sit-ins, protest, and public statements, we’ll lose sight of how much else actually needs to be done. There is nothing wrong with a symbol, but we can’t let it get in the way of action.