I wanted to begin this column with a brief characterization of the enormous harm the fossil industry has already had and, if left unchecked, will continue to have on our environment. But Swarthmore Mountain Justice does a better job than I can in their “Fossil Fuel Divestment 101”: “The climate is changing because we’re burning fossil fuels… record temperatures, extreme weather events, desertification, displacement of communities, and countless [other issues]. Climate change is already causing 400,000 deaths a year by some measures — more than 100 million people are expected to die by 2030 if we don’t stop runaway climate change.” The dire picture portrayed here probably understates the problem. Ironically, however, it raises the question: is divestment really the best, most appropriate response we have?
Stephen O’Hanlon clarified, in what was one of the most convincing pro-divestment articles I’ve read, the true goal of the divestment movement in his last column: “[To counteract] 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.” To claim these goals, however, and then to concede “the impact of divestment movements, past and present, has little to do with the stocks themselves” is a serious conundrum. The fact is, if divestment cannot do anything to drive down the fossil fuel industry’s profits — a strong proxy for share price — it will in no way be able to limit the industry’s ability to “inject billions, fund, or lobby.”
The stigmatization of fossil fuel companies that the divestment movement hopes to accomplish does have, I hope, the ultimate goal of driving down demand for these firms’ products, profits and share price. Looking at any successful “stigmatization” movement in history — e.g. apartheid, cigarettes, diamonds — shows us that this is indeed the case: the effects of divesting accumulate, profits within the affected industry decline, share prices erode and, finally, companies either burn out or are forced to adopt meaningful reforms.
That blueprint, although promising at first glance, is unlikely to hold true for the fossil fuel divestment narrative. The reason will likely be self-evident after analyzing why stigmatization and divestment was successful in remedying the negative effects of apartheid and the tobacco and diamond industries. In the case of the boycott on South Africa to abandon apartheid, I would argue that the moral imperative to the public was far more clear and convincing. Moreover, the effort required to divest from a single country that provided no unique essential good pales in comparison to what it would take to divest indiscriminately from a global industry. Similarly, stigmatizing the tobacco and diamond industries was a viable option primarily because price elasticity of demand for the two products are relatively high in the long run — i.e. people did not see the goods as strong necessities.
Unfortunately, the political opposition to major climate control reform does not stem only from fossil fuel companies. The stigmatization of fossil fuels is an unprecedentedly difficult task precisely because of the deep reliance that virtually the entire public has on the products of the industry. Consequently, measures like the carbon tax will ultimately drive costs up for everyone. As Phillip Decker pointed out in his latest column, however noble the cause, it will prove immensely difficult to convince the American public that they need to voluntarily increase their own financial burden without any readily available alternative.
Even if we are to suppose the success of fossil fuel divestment, the change that it will affect is simply too far in the future. Given the unprecedented rates at which global climate is deteriorating and extrapolating from the over half-century it took to appropriately stigmatize a product like tobacco, it is clear that we cannot wait or hope for divestment from fossil fuels to be a realistic solution to the issue at hand.
Other solutions exist. Ivo Welch, a finance and economics professor at the University of California, Los Angeles’ business school, suggests one possible idea: petition a consortium of schools committed to climate control to, in fact, pool their resources and increase investments in the fossil fuel industry. Leveraging the voting rights derived from these increased holdings, the group could then directly pressure the boards of fossil fuel firms to revise their harmful extraction processes, increase research and development in sustainable energy or adopt any other appropriate reform.
Another option would be to take the profits from investing in fossil fuel companies — or even the liquidation from divesting — and re-invest them in ourselves. Higher education in America has provided numerous revolutionary solutions to technological and scientific problems in the past. We could leverage this largely untapped ingenuity that still thrives in our country today by providing conditional grants for research in renewable energy, purification methods, alternative extraction methods or any other novel pollution-controlling solution. Both these strategies will be just as expensive, if not more so, to universities than divestment, but the chance for meaningful, successful change is far greater.
The movement for fossil fuel divestment has gained so much traction in the past three years that it would be asinine to abandon or even discount the progress it has made. But given the ultimately slim chance for success it seems to have, we have both a moral and self-interested obligation to begin exploring new, creative and more direct solutions to the crisis at hand.
