Since its inception at Swarthmore College just three years ago, the fossil fuel divestment movement has grown to over 500 campaigns worldwide, becoming the fastest growing divestment movement in history, and has begun to shift societal conscience and change the discourse around the climate crisis. In his article published last week in the Swarthmore Independent, Preston Cooper ’15 questioned the efficacy of divestment, arguing that “when an individual sells stock in a particular company, someone else will almost immediately buy it,” thus rendering divestment pointless. While it is 100 percent correct that Swarthmore divesting will not impact share prices, that argument simply misses the point of divestment. The impact of divestment movements, past and present, has little to do with the stocks themselves — rather, it seeks to stigmatize firms, which causes indirect economic consequences. In the case of fossil fuel divestment, the goal is not to hurt share prices, but to erode the fossil fuel industry’s social license. By doing so the movement counteracts the distortion of our political system by the fossil fuel industry’s injection of billions of dollars into our democracy, industry funding of climate denialism, and lobbying efforts to maintain fossil fuel subsidies and prevent a transition to the just and sustainable future we need.
In just the past three years, the fossil fuel divestment movement has begun to actualize this stigmatization process at an unprecedented pace. An Oxford University study, “Stranded Assets,” found that “the outcome of this stigmatization process, which the fossil fuel divestment campaign has triggered, poses a far-reaching threat to fossil fuel companies and the vast energy value chain.” The movement has drawn support from world leaders ranging from the President of the World Bank and UN Climate Chief Christiana Figueres ’79 to South African Archbishop and legendary anti-apartheid leader Desmond Tutu. Institutions including Pitzer College, Stanford University, the city of Seattle and, recently, the Rockefeller Fund — which was built off the profits of Standard Oil Company — have divested funds totalling over $50 billion. By divesting or endorsing the tactic, these leaders and institutions have highlighted the injustices of fossil fuel extraction and climate change and the need for more just and sustainable solutions.
The fossil fuel industry itself has implicitly acknowledged the threat the fossil fuel divestment movement poses to its continued economic dominance. In a December 2013 article, Alberta Oil Magazine warned that “energy executives ignore [divestment] at their own peril.” The Minerals Council of Australia, a coal industry group, is even attempting to render divestment illegal, claiming that it unduly burdens them because “stigmatization makes it difficult for an industry to engage with its customers, attract employees and more importantly access capital for investment purposes.”
Moreover, highlighting the inability of the fossil fuel industry to maintain “safe” levels of warming creates uncertainty among capital investors. As a result of the divestment movement, mainstream financial institutions like Morgan Stanley, Bernstein, Citi, Deutsche Bank, Goldman Sachs and HSBC are now questioning the long-term profitability of fossil fuel investments. “Stranded Assets” predicts that stigma could lead to the “cancellation of multibillion-dollar contracts or mergers/acquisitions,” which are vital to the fossil fuel industry’s capital-intensive production process.
Cooper also asserts that fossil fuel divestment and a carbon tax are diametrically opposed; however, just the opposite is the case. Cooper is right: some kind of price on carbon is probably needed to rein in emissions, but in the current political climate such a policy is unlikely, as evidenced by the failure of the 2009 Carbon Cap-and-Trade Bill in the U.S. Senate. If action is to be taken in the next five to ten years, as science demands, we need to change the political climate. Fossil fuel divestment can help us get there. As “Stranded Assets” notes, “In almost every divestment campaign we reviewed from adult services to Darfur, from tobacco to South Africa, divestment campaigns were successful in lobbying for restrictive legislation affecting stigmatized firms.” By shifting public support and changing the narrative around the climate crisis, fossil fuel divestment can help create the conditions necessary to overcome the power of the fossil fuel industry and to prompt policies like a carbon tax.
Divestment isn’t about reducing share prices of fossil fuel companies; rather, it is about challenging the social and political license of the industry to operate in our political system. The movement is succeeding in that right now. Last summer, Obama proposed the first-ever national carbon regulations. In just the past month, Google, Yahoo, Yelp and Facebook have all cut ties with the conservative group American Legislative Exchange Council (ALEC), which has lobbied against climate action and is trying to mandate teaching of climate change denial in public schools. Google Chairman Eric Schmidt, explaining the decision to a reporter said, “We should not be aligned with such people. They are just literally lying.” ALEC has held similar stances for years, but the growing stigmatization of both the fossil fuel industry and groups that deny climate change pressured Google to finally cut ties with ALEC. Google, Yahoo, Yelp and Facebook’s decisions represent just a microcosm of the large-scale societal change that fossil fuel divestment and the climate justice movement are beginning to trigger.
Swarthmore needs to cut its financial ties with fossil fuel companies that are poisoning communities and wrecking the climate. By divesting from fossil fuels and reinvesting in just and sustainable solutions to the climate crisis, Swarthmore could add its voice to a growing chorus, sending a powerful statement to politicians, investors and the general public: the fossil fuel industry’s business model is incompatible with a just and sustainable future, and if we are to avoid catastrophic climate change, we need to transition immediately from a polluting and exploitative fossil fuel economy to the just and sustainable future we know we need.
I wonder about the third world inhabitants who would benefit from the provision of coal for cooking and heating, versus the current unhealthful burning of animal dung or nothing. Divestment is not always universally beneficial.