Why does Swarthmore invest in a rogue industry?

In his op-ed earlier this month, Professor Tim Burke questioned the efficacy of divestment, suggesting that instead of divestment, we should focus on changing consumption, arguing that doing so would have more symbolic impact than divestment. Specifically, Professor Burke suggested that it would be better if “students, faculty, and staff agreed, for example, to forgo 20% of their previous travel by air during an academic year.” This should not be an either/or. Climate change is one of the most serious threats our generation faces and the fossil fuel industry — one of the most profitable industries ever — is doing everything it can to stop climate action. Sustainability must be embedded in every aspect of our institution, and that must include our endowment.

I agree with Professor Burke — social movements “succeed when they are truly multi-sited” campaigns that include civic institutions, individuals, and popular culture as well as higher education. If fossil fuel fuel divestment had never grown out of elite academic institutions, its political efficacy would be relatively marginal: divestment works only when it galvanizes broader shifts in the political and social climate. However, the fossil fuel divestment movement has, more effectively than any climate campaign before it, grown into an international movement comprised of an unprecedented coalition that brings in all parts of society. Thousands of individuals and hundreds of institutions around the world have divested, collectively declaring that continued investments in fossil fuels are antithetical to a just and sustainable future. Institutions ranging from Norway’s $850 billion sovereign oil wealth fund and Sweden’s $34 billion AP2 public pension fund to the city of Seattle and the World Council of Churches have committed to divestment.

Due to this growth, the fossil fuel divestment movement has eroded the power of the fossil fuel industry and shifted the conversation on climate. A recent study from Oxford University found that the fossil fuel divestment movement concluded 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,” going on to call this the fastest growing divestment movement ever. The movement has been able to shift the thinking of the world’s largest asset manager, BlackRock, which now offers fossil-free investment options, and the Rockefeller Brother Fund, which recently divested its endowment built off oil fortunes. NRG, the nation’s largest publicly traded independent power producer, just committed to reducing emissions 90 percent by 2050, citing the pressure created by the fossil fuel divestment movement.

The fossil fuel industry’s recent attacks on the divestment movement are a testament to its success. The Minerals Council of Australia, a coal industry group, is even attempting to render divestment illegal, claiming that it unfairly burdens them because “stigmatization [from divestment] makes it difficult for an industry to engage with its customers, attract employees and more importantly access capital for investment purposes.” In December 2013, Alberta Oil Magazine was more blunt, warning that “energy executives ignore [divestment] at their own peril.” The Independent Petroleum Association of America even funded a recent study arguing that divestment would hurt endowments. Interestingly, our Investment Committee Chair Chris Niemczewski’s intellectually dishonest arguments claimed that divestment would cost more than this report from the fossil fuel industry themselves did. (His arguments made unrealistic assumptions, such as claiming that, in order to divest, we would need to radically change our endowment structure, and relying on discredited studies to support his claims).

I also agree with Professor Burke’s calls for reductions in consumption, but given the short timeline on which we have to act, we must directly challenge the fossil fuel industry’s political power. Because of that power, the political playing field is not level and we, as consumers, do not have as many options as we should. The fossil fuel industry distorts our political system, by injecting billions of dollars into our democracy, which is used to fund climate denialism, lobby to maintain fossil fuel subsidies, and prevent policies, such as a carbon tax, that would help transition us to the just and sustainable future we need. In 2013, one industry-backed group, ALEC, pushed 70 state-level bills to hinder the development of renewable energy. Even during the non-election year of 2013, the industry spent $156 million on direct lobbying efforts alone (not including research or campaign contributions).

The fossil fuel industry corrupts not only our political process, but the academic research that informs political discussion. Just last week, The New York Times exposed how Harvard climate researcher Wei-Hock Soon received more than $1.2 million over the past ten years and that he did not disclose this conflict of interest in most of his scientific papers, violating ethics rules for multiple academic journals. Dr. Soon, a researcher at the Harvard-Smithsonian Center for Astrophysics, is one of the most-cited climate change ‘skeptics’ by conservative politicians and news shows. In correspondence with his industry funders, Dr. Soon referred to his papers as “deliverables” in exchange for payments. Dr. Soon’s research contradicts the values that Harvard and many other institutions of higher learning are predicated on: truth, science, and leadership for the common good. This is just one of many acts by a rogue industry that puts its short-term profits above the livability of this planet for our generation, and generations to come.

They have the money, the lobbyists, and the infrastructure, but they do not have a monopoly on legitimacy. The most important social movements of the past century — civil rights, women’s suffrage, environmentalism — did not transform society by bankrupting or out-lobbying the segregationists, the patriarchs and the industry barons. They won because they delegitimized an unjust status quo, they shifted an entire political culture and opened the door to previously unwinnable change.

By repeatedly refusing to even seriously engage with our proposal for divestment by 2020, Chris Niemczewski’s Investments Committee has repeatedly chosen to lend Swarthmore’s legitimacy to this rogue industry. Again and again, the Board of Managers has been told that divestment is possible, and it is powerful. Cambridge Associates, our largest financial advisor, announced last fall that it is willing to help us divest. Financial leaders such as former SEC Commissioner under Ronald Reagan Bevis Longstreth are warning that the top 200 fossil fuel stocks are “severely overpriced in the market” and arguing that colleges and universities have “a compelling reason on financial grounds alone to divest these holdings before the inevitable correction occurs” and the carbon bubble pops.

Even the experts the Board brought in for this month’s Sustainability Charrette implored them to respond to the community mandate for divestment. Hunter Lovins told Board Chair Gil Kemp that “[the world is] watching you. You are on notice.” John Fullerton, former J.P. Morgan Managing Director, expressed surprise that Swarthmore had not yet divested and disagree with Chris Niemczewski’s logic for not divesting. As he explained, divestment is possible, financially practical, and that all the Board needs to do is choose to act. Yet, time and time again, Chris Niemczewski’s Investments Committee has stood in the way of Swarthmore seizing this historic opportunity to show international leadership on climate by committing to divestment.

The divestment movement has put fossil fuel investments in the public eye and, as the college where this movement began, the world is watching our next move. By remaining invested in fossil fuels, we are saying that they are good investments, that the carbon bubble does not exist, and that the fossil fuel industry’s business plan to burn over five times as much carbon as is safe to burn is compatible with our institutional values of social responsibility, truth, and leadership for the common good. This is the wrong message for us to be sending, and as the world prepares to draft the most critical climate agreement ever, it comes at the worst possible time.


  1. Stanford Plan for 100% Wind Water and Solar for all global energy purposes by 2030-2050.

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    Bio fuels cause as many or more air pollution deaths than gasoline
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  2. Thank you, Stephen for articulating so clearly what I have been thinking. I’m a professional investment analyst covering the energy industry and working for a public pension fund. Thinking narrowly of my fiduciary responsibility to the fund, I could argue that anything that restricts our investment choices is likely to have a cost in terms of foregone investment income. However, I try to remember that the beneficiaries of the fund are human beings and that as such they care about their children and grandchildren and great-grandchildren and may care quite a bit about preserving the environment they are accustomed to. To be honest, I used to use Professor Burke’s argument myself. It’s obvious to me that divesting from fossil fuel producers will have little or no direct impact on the companies. They have no trouble accessing capital at favorable rates, nor will they have trouble if every university in the world sells their fossil fuel investments. Now, however, I firmly believe that divestment plays a vital role in a larger social movement to change the way energy is produced and used throughout the world. A good analogy is the movement to divest from South Africa. The economic impact on South Africa was minimal, because the domestic economy was small and relatively isolated from the global economy, and the mining companies that powered the economy had no problem raising capital on a global basis. Nevertheless, the worldwide campaign to isolate and stigmatize the apartheid regime clearly was part of the political pressure that caused the regime to hand over power. Swarthmore’s tradition really requires divestment from fossil fuels. After all, the college was founded by leaders of the first and arguably most successful social movement in history, the movement to abolish the use of Africans and their descendants as slaves.

  3. Hey Stephen, this is an interesting topic I hear from traders and investors. Clients wish to only invest their money in green or socially sustainable businesses. The issue here is that as traders we often aren’t reviewing potential investments from this standpoint. Sometimes the best investments are not green or socially sustainable. On the other hand, with careful due diligence, you can design a portfolio based on your philosophical beliefs. Thank you for the article!

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