In April, Yale University, which has one of the highest performing endowments in the world, announced that it would partially divest its endowment from fossil fuels, citing the financial risks of fossil fuel holdings. It began divesting simply by asking managers to sell off fossil fuel stocks. Yale’s steps toward a just and sustainable future fundamentally change the conversation on divestment here at Swarthmore. In fact, Swarthmore’s endowment is modeled on the system of active external managers that Yale pioneered. Similar decisions from the University of Maryland and Syracuse University show that divestment is not only a powerful tool to take action as an institution for climate justice, but also financially prudent, even for our type of endowment, and increasingly popular. Yesterday, we released a report (which can be found at swatmj.org/report) on how these divestment decisions at other schools can apply to Swarthmore and detailed a specific proposal for how Swarthmore could divest over the next five to ten years.
Since students and faculty began calling for divestment in 2011, our Board of Managers has argued that divestment is impractical at Swarthmore due to our complex endowment structure that requires several investment consultants to aid in selecting approximately 70 managers. For years, this issue was a very real and significant, though not insurmountable, challenge for divestment at Swarthmore. Indeed, in 2011, when Swarthmore launched the first ever fossil fuel divestment campaign, there were very few alternative options for fossil fuel free investments that could meet Swarthmore’s performance standards. The Board argued that while small schools with simple endowments might be able to divest, we could not do so at Swarthmore. Specifically, they justified their unwillingness to lead by saying that Swarthmore took direction from schools like Yale, which pioneered the investment model Swarthmore uses, and that the handful of small schools who were divesting had no impact on Swarthmore’s financial decisions.
Today, however, the story could not be more different. Not only has Yale divested, but so have endowments totalling over three trillion dollars, ranging from the Norwegian Sovereign Wealth Fund, the city of Washington D.C., and the Rockefeller Family Fund, which was built off the family’s oil fortunes. Leading universities including Oxford, Stanford, and Edinburgh have all divested. A growing chorus of financial and political leaders, including former Shell Chairman, Mark Moody-Stuart, billionaire investor Tom Steyer, former Vice President Al Gore, and UN Climate Chief Christiana Figueres ‘79, have advocated for divestment as a sound financial decision. Even investment bank HSBC, in a report to investors, advised divestment, warning that investors who stay in fossil fuels “may one day be seen to be late movers, on ‘the wrong side of history.’”
At the same time, the need for Swarthmore to take action is increasingly urgent. Whether it is superstorms like Sandy and Katrina, extreme drought or heat, wildfires, flooding in Louisiana, or rising sea levels submerging homes on coastlines and island nations, climate change is happening in the here-and-now. And it is people of color, low-income people, and young people that are and will be most affected as climate change continues to worsen. 2015 was the hottest year on record. The previous record was set only one year before. We are running out of time, and it is urgent that Swarthmore act now to remove its support from the companies pushing us closer to the point of no return.
Despite this urgency, the fossil fuel industry and their political allies are doing everything they can to prevent the transition to renewable energy because, quite simply, it would be devastating to the industry’s bottom line. In order to keep warming below the two degrees Celsius mark agreed to at the Paris Climate talks, which UN scientists say would give us a good chance of preventing catastrophic, irreversible climate change, humans cannot emit more than 473 gigatons of carbon in the atmosphere. This calculation means over 84 percent of proven fossil fuel reserves, worth upwards of 34 trillion dollars, must be left in the ground.
In the past few months, we’ve seen two examples of just what the fossil fuel industry is willing to do to maintain its destructive business practices. The media has recently picked up on the inspiring indigenous-led resistance to the construction of the Dakota Access Pipeline. If completed as planned, the pipeline would threaten the clean water access of the thousands of residents of the Standing Rock Sioux Tribe’s reservation, as well as the millions of people living downstream. In an attempt to end the protests, the company sent in private security with pepper spray and attack-dogs. Further, Exxon is suing state Attorney Generals for investigating the company’s decades-long cover-up of its research proving the existence of anthropogenic climate change in an effort to silence its critics. Through its investments in the fossil fuel industry, Swarthmore continues to lend its political and financial support to projects similar to the Dakota Access Pipeline as well as to the fossil fuel industry’s stranglehold over our elected officials.
The fossil fuel industry is not a normal industry. It is a one-of-a-kind rouge industry with a fundamental business plan that is incompatible not just with Swarthmore’s values of social responsibility and science, but also the possibility of a livable future for our generation.
The massive shift in investment and policy we need over the next five to ten years is not politically possible in the United States if we do not counter the power of the fossil fuel industry. The divestment movement has already been doing just that, shifting the international political discourse on climate. As early as 2014, an Oxford University study found that “the fossil fuel divestment movement [had already triggered] the stigmatization process, which poses a far-reaching threat to fossil fuel companies and the vast energy value chain.” At the UN Climate Conference last December, world leaders used the divestment movement as a moral imperative for action. NRG Energy, the largest publicly-traded electricity company in North America, committed to reduce emissions by 90% by 2050, cited how the fossil fuel divestment movement was stigmatizing companies that remained tied to fossil fuels. The fossil fuel industry’s own actions show the movement is posing a serious threat to their bottom line. The Australian coal industry has tried to make 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 light of these new financial developments and the increasing urgency of the climate crisis, we request to meet with President Smith to discuss how Swarthmore can align our investments with our values. President Smith herself has previously noted the role that institutions play in moments of crisis like the one we are facing now, saying, “Historically, students in colleges and universities across the globe have risen to the challenge of calling to the attention of their institutions matters of social and political urgency. I think each generation, first of all, needs to be grateful to students for asking us to pay attention to areas we may not have attended to sufficiently.” We agree that the climate crisis is a matter of social and political urgency that requires us to act accordingly.
As the birthplace of the divestment movement and a highly respected institution, Swarthmore’s decisions around the climate crisis hold a lot of weight. As honorary degree recipients Noam Chomsky, John Braxton, Arlie Hochschild, Lotte Bailyn, Lorene Cary, and Barbara Hall Partee noted in their endorsement of divestment last February, “Whether it was divesting from Apartheid, refusing to bow to McCarthyism, developing leaders in the civil rights and peace movements, or admitting women from its founding, Swarthmore has been a powerful voice for justice at critical moments in history. Right now, we are at one of those points.” We look forward to working with President Smith and the Board to develop a plan for how Swarthmore can continue to lead in the fight for a just and sustainable future—a fight that includes the decision to divest from the fossil fuel industry.
If you want to learn more about what this means for Swarthmore and what’s next for the campaign, join us this Friday, September 23rd, at 5pm in Sci 183 for a training on the report and the divestment theory of change.
Works referenced in this piece:
http://www.nytimes.com/2014/05/17/business/a-clash-of-ideals-and-investments-at-swarthmore.html
http://gofossilfree.org/commitments/
https://www.theguardian.com/environment/2015/jun/04/former-shell-chairman-advocates-fossil-fuel-divestment
http://www.newsweek.com/hsbc-warns-clients-fossil-fuel-investment-risks-323886?rx=us
http://www.nytimes.com/2016/01/21/science/earth/2015-hottest-year-global-warming.html
http://www.smithschool.ox.ac.uk/research-programmes/stranded-assets/SAP-divestment-report-final.pdf
http://www.minerals.org.au/file_upload/files/reports/A_critique_of_the_coal_divestment_campaign_Sinclair_Davidson_Jun_2014.pdf
