Editor’s note: This article was initially published in The Daily Gazette, Swarthmore’s online, daily newspaper founded in Fall 1996. As of Fall 2018, the DG has merged with The Phoenix. See the about page to read more about the DG.
Swarthmore Mountain Justice is pushing Swarthmore College to divest from a list of “Sordid Sixteen” domestic fossil fuel companies. These include ExxonMobil, Chevron, Arch Coal, Halliburton, Patriot Coal, and others. For more information, visit their site.
As members of Swarthmore Mountain Justice, our ongoing research, conversations with investment professionals, and communication with institutions that already screen their investments for social responsibility have shown us that Swarthmore does not need to make a choice between socially responsible investing and financial security. However, we have encountered skepticism from various members of the campus community, the most recent instance of which was President Chopp’s Op-Ed “Swarthmore’s Enduring Commitment to Sustainability.”
We are disappointed to see that President Chopp, along with other members of the campus community, have not addressed the justification and research we have laid out on divestment and reinvestment in previous publications and personal meetings. It seems that the conversations stop at the word “divestment,” rather than critically engage with discussions about the effectiveness of divestment as a tactic, or of socially responsible alternatives.
Many of the hesitations we have heard about divestment have revolved around the idea that it is too extreme, too drastic. Divesting from these companies will create too many waves. Shareholder resolutions and moral appeals are how we do business here. If that does not work, then we should go through legislative bodies because they have the power to change regulations. With this column, we aim to clarify our understanding of divestment, and address some of these concerns.
While we appreciate President Chopp’s support of various green initiatives on campus, as we have said in a number of other publications and in our proposal to her, we do not believe those to be enough. Nowhere does President Chopp address the inconsistency of greening our buildings while pouring money into companies like ExxonMobil and Arch Coal. Chevron does not blink when we build another LEED certified building, but when we publicly withdraw our money from funding their destructive practices, they, along with politicians, students, CEOs, and activists, hear and feel the impact.
We have been told by others that we should explore the possibility of a shareholder resolution. President Chopp discusses a shareholder resolution that pushed three Fortune 500 companies to adopt equal opportunity employment practices. While we applaud this effort, we do not believe that a shareholder resolution will accomplish our goals of taking a strong stand against fossil fuel extraction. In our previously published FAQ Sheet, we wrote this of shareholder resolutions:
Shareholder resolutions are useful in cases where a company can reform its practices…but are virtually impossible when the reform undermines the economic purpose of the company in question…Companies can, and frequently do, throw out shareholder resolutions that are “related to the company’s ordinary business operations.”
The link leads to a report on a shareholder resolution proposed by Green Century Capital Management at an ExxonMobil shareholders meeting. The proposal called on ExxonMobil to prepare a report on the possible social and environmental risks of the oil sands. However, the U.S. Security and Exchange Commission allows companies to dismiss a shareholder resolution if it “deals with matters related to the company’s ordinary business operations.” Hence, ExxonMobil dismissed the resolution. This particular shareholder resolution was merely asking for a report on the effects of ExxonMobil’s practices. Now imagine how quickly a proposal to stop drilling for oil, or to even drill for oil more “safely,” would be shut down.
In her Op-Ed, President Chopp also said that divestment is too “divisive and adversarial.” We do not think that taking a principled stance against the unequivocal injustices that these companies perpetuate is divisive or adversarial. What these companies do on a daily basis is divisive and adversarial. Every day, the “Sordid Sixteen” blatantly disregards human and non-human life, violates health and safety regulations, destroys ecosystems, and poisons surrounding communities. Our support of these companies is clearly inconsistent with Swarthmore’s values of social responsibility. However, sometimes we use those values to justify talking about injustice without taking concrete action. We equate taking a strong stand with unreasonable “extremism.” Why do we consider a principled stance against climate injustice extreme, while we consider investing in companies that blow up mountains to be par for the course?
Children are dying of lung cancer in West Virginia, families cannot drink their own well water in Pennsylvania, fishermen cannot find work in Mississippi, all because of the companies we are invested in. What these companies do is atrocious, violently irresponsible, and unjust. As we teeter on the brink of climate crisis, now is the time to act boldly. Swarthmore College has a long history of political confrontation, of courageously moving in directions that others are not willing to go due to their “extremism.”
In contrast to the extreme effects that the fossil fuel industry’s practices have on the planet and its inhabitants, the effect that divestment would have on our endowment would not be extreme at all. In her Op-Ed, President Chopp repeats the Board’s policy that the Investment Committee should “manage the endowment to yield the best long-term financial results, rather than to pursue social objectives.” However, as we have demonstrated in our proposal and in previous publications, this choice between financial stability and social responsibility is a false one.*
Divesting from 16 companies would have minimal, if any, effect on the endowment, as they only make up a small percentage of our total investments. According to Swarthmore’s 2010-2011 Financial Report, the college invested 20% of its endowment in domestic stocks. The “Sordid 16” makes up only a small fraction of the possible domestic stocks we hold. There are thousands of other companies in which to invest our money, and it is a big leap to assume that divesting from these 16 would negatively impact the educational mission of the college.
The political and economic impact that divestment will have on fossil fuel companies, however, vastly outweighs the minimal risks it poses to the endowment, particularly as we continue to work with a growing national coalition of universities fighting for fossil fuel divestment. As more institutions loudly and publicly condemn these companies for their massive contributions to human suffering, environmental destruction, and climate change, the effect of those individual voices is magnified. Swarthmore is a visible, respected institution and has the responsibility to use that power to make waves. It is said that money talks and it is said that money is power. Divestment gives Swarthmore students, faculty, staff, administrators, and Board members a unique opportunity to speak truth to power in a language that power understands. If there ever was a time to use that opportunity in innovative and responsible ways, it is now.
–Hannah Jones ’12 of Swarthmore Mountain Justice
*For more in-depth discussion of how responsible investing could work at Swarthmore, we encourage all who are interested to watch the videos of our panel on divestment. For this particular issue, please listen to Dan Apfel, the Executive Director of the Responsible Endowments Coalition.
Even if divestment this time around doesn’t have a negative financial impact, the decision to divest is itself a violation of a policy that sets aside social objectives. It sets a precedent that the Board clearly doesn’t want to set.
Hi Lisa,
First, I’m responding as Pat, not as Mountain Justice. What I say is not indicative of the group as a whole.
As the group has mentioned before on our website and in other publications, Swarthmore’s Board of Managers has previously set a precedent of divestment in the case of South African Apartheid (in 1989). Divestment has been done before.
Also, although I’ve been told that it’s the Board’s policy to consider investments only in terms of returns, Swarthmore has made explicit its dedication to social responsibility in all areas. As stated on the website of the Investment Committee of the Board of Managers, the committee is charged to “implement social responsibility policies adopted by the Board of Managers as they relate to investments.”
(Link: http://www.swarthmore.edu/board-of-managers/committees-of-the-board/investment.xml )
This seems to suggest that the Board of Managers (at least in theory) is willing to consider the social effects of investment.
Pat, member of MJ
So is Swarthmore Mountain Justice arguing for divestment from the oil companies in general or divestment because they are fracking?
I think a better and more agreeable strategy is if SMJ and the Board work together to gather other investors, colleges, universities to get the oil companies to stop fracking and other harmful actions. I mean, there is only so much we can do to an oil company. We can’t eliminate it even though we’d like to because our economy runs on oil…
Well, I’m sold. Where’s that petition at?
Dear hmmm,
Like Pat, I am writing as an individual who is a member of Mountain Justice. I do not intend to speak for the group as a whole. Hopefully this post can answer your questions and concerns.
We are asking the college to divest from 16 fossil fuel companies. Some of them do fracking, some are involved in other dangerous forms of extraction, such as mountaintop removal. We are not focussed exclusively on fracking, but rather see it as one of many dangerous practices.
Although the idea of working with companies to get them to change their practices may sound nice, it is not feasible in this situation. If a company’s primary business operation is to frack, or blow off the top of mountains, or extract oil, natural gas, or coal in some other dangerous way, getting a group of shareholders together and telling the company that we think they should stop won’t work. They won’t listen to us, because what we are proposing is that they stop doing business. If you tell ExxonMobil to stop being an oil company, they will laugh, because that is the entire way that they make money. If we’re all bark and no bite, we will be ignored, because corporations operate with the sole intent of protecting their bottom line.
You say that we can’t eliminate oil companies because our economy runs on oil. While it is true that oil is a large part of the national economy currently, we propose that the centrality of fossil fuel companies is something that needs to change. Fossil fuels are nonrenewable, so their centrality in our economy is something that is finite no matter what. Rather than waiting until we have used them all up, destroying ecosystems, communities, lives, and the climate in the process, why not start the shift towards renewable energy now? If we invest in companies whose primary business practice is not destructive, we can start a shift away from oil as a central pillar of the national economy.
Earlier in your post, you mentioned the strength of working with other schools and investors. That is exactly what we are doing, but we are doing it in the context of divestment. We are currently talking with students on other campuses with the same goals as ours. While the companies would not listen to our coalition if we told them “hey, we want you to stop doing business because you’re hurting people,” when you have students at schools nationwide getting their institutions to pull their money out of these destructive practices, the companies, as well as the media and the general public, will start to pay attention, and this attention (as well as the money that we move) will enable a larger discussion about the role of fossil fuels in our economy currently, and the best ways to change that role. I truly believe that in this situation, divestment is the necessary way to start these conversations and to help a shift towards less destructive forms of energy.
-Ali, MJ member
^Yes, I see your point. But do you think if only Swarthmore divests from say Exxon, they’ll change their practices. Exxon is a huge, huge company and they will always find new investors.
I really do applaud the efforts of SMJ, but I really think you guys need to rethink your strategies. Isn’t divestment just selling your stock shares? Swarthmore selling its shares in Exxon won’t do anything. I really support green initiatives and I don’t like what the oil companies are doing, but from a realistic, practical point of view, divestment is more of a symbolic strategy rather than a strategy that will produce the results that SMJ wants.
College endowment in the United Stated account for $326 billion dollars. If that money is removed from environmentally destructive companies (like Exxon), that is a considerable impact. If even a small fraction of that was reinvested in sustainable and innovative energy businesses, these businesses would have the capital to develop the technologies that will most definitely be needed in the future.
There’s nothing to be gained by maintaining the status quo. Redirecting the flow of our endowment has the power to generate lasting change. Why wouldn’t we, as a college which consistently draws attention to our commitment to social justice, try to promote that?
Hi hmmm, as both Pat and Ali said, I speak for myself, not SMJ. As this and other articles we have published have said, it won’t make much difference if just Swarthmore divests. That is why we are working with a national coalition of schools interested in divestment. If many high-profile institutions (such as Swat) publicly (emphasis here) divest, it certainly does make a difference. It demonstrates that very visible institutions with a ton of money are willing to withdraw support from these companies, indicating that others might be willing to do so as well. This is the premise behind many “move your money” campaigns. The symbolic impact comes first, but that symbolism threatens future financial impacts. Yes, it takes quite a lot of people/institutions to really make a financial impact on these companies, but someone has to start, and Swarthmore, with its visibility, is a good candidate. Most of our SMJ members are actively reaching out to and working with students at other colleges to make sure that divestment does not stop here. Any change of this kind is a slow process, but unless someone is willing to start moving in that direction, change will never happen.