Divestment is becoming an increasingly salient issue both at Swarthmore and at colleges and universities around the country. The movement, which aims to compel colleges and universities to stop investing in companies that produce fossil fuels, has grown rapidly over the last few months. Early in December, the New York Times published an article detailing how the campaign has expanded. Indeed, Mountain Justice, the group fighting for Swarthmore to divest, is hosting a convergence this month in which representatives from multiple schools will come to campus to learn about the divestment efforts and how to run a divestment campaign.
Inspired by the growing prominence of the movement, a group of professors held a teach-in about divestment. The event, which took place on Feb. 11, entailed a variety of professors giving brief presentations on different aspects of the issue, followed by questions from audience members.
The aim was to explain and discuss what the process might mean for the college, the fossil fuel industry, and the world. “I was trying to provide some information,” said Philip Jefferson, an economics professor and participant. “I took the ‘teach’ part of it very seriously.”
Cynthia Halpern, a political science professor and another participant, gave a slightly different reason for participating — to encourage dialogue about divestment. “I think the importance of the teach-in is to have a conversation on campus,” she said.
But while participants may have agreed that the teach-in was important in order to share knowledge, it was readily apparent from the presentation that different speakers were approaching the issue from different angles.
Jefferson, for his segment, discussed the effects divestment might have on the endowment. According to his analysis, since divestment would result in a less diverse portfolio of assets, it could cause the endowment to shrink. “If you want to keep the variability the same, the risk the same, you’d probably have to accept a lower average return,” he said. The alternative would be to accept greater risk. “What that means is that we’d have some good years and some bad years in an effort to maintain the average return.”
“Other things being equal,” Jefferson said, “the operating budget is going to be impacted.” As a result, the college would have to find a way to accommodate. The school could see less funding for certain departments, lower salaries, higher tuition, and less monetary assistance to students. “The opportunity costs of divestment might include reduced financial aid,” Jefferson said during the presentation.
But Halpern, who supports divestment, disagreed that financial aid would be at risk. She pointed out that the faculty was willing to take salary cuts during the financial crisis rather than risk a reduction in financial aid to students. “There’s a lot of ways the college can juggle its money,” she said. “I think the bigger problem is it’s complicated to cut particular investments if you’re using large, managed funds.”
Jefferson agreed that this could make the situation more difficult. Because the investors who manage Swarthmore’s endowment invest in a variety of assets, it would be very difficult to separate out money invested in fossil fuel companies. “The reason why they do that is that’s how they keep fees down, that’s how they keep transaction costs down, and that’s how they maximize return,” he said. “The college would have to go to a different set of investment managers. And the fees, transaction costs, and returns are likely to be lower.”
He compared the process of divestment to switching from ordering food at a restaurant à la carte versus prix fixe. A la carte allows for choice, as opposed to prix fixe. But it also tends to cost more. The same, Jefferson said, is true for investing. “Investing à la carte is more expensive.”
While Jefferson’s analysis suggested that divestment might negatively impact the endowment, Professor of Economics Mark Kuperberg concluded it would not likely impact fossil fuel companies in any direct or immediate economic way. “I don’t think it’s going to affect the firms,” Kuperberg said. He pointed out that if divestment were to cause stock prices for oil companies to drop, other “less ethical investors” would buy them.
Furthermore, he drew a distinction between the divestment that took place during the anti-apartheid movement and the divestment that would take place here by pointing out that companies threatened with divestment during the apartheid had very small parts of their businesses in South Africa, meaning it was easy to force them to sell it off. But effectively, the sole aim of oil companies is fossil fuel production. “There’s just a tremendous incentive for them to stay engaged in fossil fuel production,” he said.
But others felt that the issue must be considered in a way that is not financial. “There are consequences of our actions that are more than just economic,” said Ben Bernard-Herman ’14, a member of Mountain Justice. “Even if we don’t reduce the bottom line of those companies, it opens up political space to make decisions that our hope is slightly less bought out by the fossil fuel companies.”
Halpern agreed. “It’s only if you look at economic consequences that you can say there are no consequences,” she said, arguing that even if there is no immediate economic outcome, the move has symbolic power. “The consequence is to create a consciousness change.”
Bernard-Herman saw divestment as a potential catalyst for a larger movement. “One of the thing I believe divestment does is it opens up the conversation,” he said. “It gets people in Congress talking about passing climate legislation in a way they have not before.”
Kuperberg and Jefferson, however, both felt divestment was not the best way to do that. “I like the idea of the college staying focused on education,” said Jefferson, who suggested that the college ought to use education as a tool to help students to work on climate change. Kuperberg emphasized the need for reform in government. In particular, he advocated for a carbon tax.
But Bernard-Herman disagrees with this view. “Education doesn’t exist in a vacuum. In order for knowledge mean something, you have to do something with it,” he said. “We make decisions with that, and one of them being that it’s immoral to support the fossil fuel industries that are destroying the planet.”
Whether the movement is ultimately successful remains to be seen. “I think it’s a long process,” said Halpern. “I think it’s something that happens as consciousness changes.” But she believes it will require wider support in order to be successful. “It’s not going to move if there’s a small group of activists who are pushing.”
But Bernard-Herman is more optimistic about the future of the movement. “I feel very strongly that we’re going to win,” he said. “I do believe that this movement is going to have a substantial impact.”
