To The Teacher:
Climate change can seem like an overwhelming problem. For environmentalists committed to raising public awareness and forcing action on this issue, it can be hard to find the best place to start. In recent years, however, concerned citizens interested in challenging the power of the fossil fuel industry have turned to a tactic with a rich history: divestment.
Activists are generating public pressure to compel institutions, from universities to local city governments, to withdraw their investments from the companies most responsible for producing greenhouse gases. They aim to hit polluting industries where it hurts the mosttheir bottom lines. Since 2011, the fossil fuel divestment effort has gone from a small campus-based campaign to a worldwide movement that is gaining steam.
As they attempt to address climate change, fossil fuel divestment campaigners take inspiration from earlier generations who effectively used the divestment tactic. The most notable example of this was the campaign to compel international corporations to stop doing business with the apartheid regime in South Africa in the mid- to late-1980s. The South African divestment campaign played an important role in ending the system of legalized discrimination in that country.
This lesson consists of two readings designed to encourage students to think critically about divestment campaigns in general, and fossil fuel divestment in particular. The first reading considers the growing fossil fuel divestment movement and how it is inspired by the divestment campaign in South Africa. The second reading considers both the successes and challenges of the fossil fuel divestment campaign. Questions for discussion follow each reading.
Student Reading 1
Fossil Fuel Divestment: Goals & History
Climate change can seem like an overwhelming problem. For environmentalists committed to raising public awareness and forcing action on this issue, it can be hard to find the best place to start. In recent years, however, concerned citizens interested in challenging the power of the fossil fuel industry have turned to a tactic with a rich history: divestment.
Activists are generating public pressure to compel institutions, from universities to local city governments, to withdraw their investments from the companies most responsible for producing greenhouse gases. They aim to hit polluting industries where it hurts the mosttheir bottom lines.
In a 2013 article in Rolling Stone, author and climate activist Bill McKibben explained the rationale behind pressuring institutions to divest from fossil fuel companies:
The logic of divestment couldn't be simpler: if it's wrong to wreck the climate, it's wrong to profit from that wreckage. The fossil fuel industry... has five times as much carbon in its reserves as even the most conservative governments on earth say is safe to burn - but on the current course, it will be burned, tanking the planet. The hope is that divestment is one way to weaken those companies - financially, but even more politically.
If institutions like colleges and churches turn them into pariahs, their two-decade old chokehold on politics in DC and other capitals will start to slip. Think about, for instance, the waning influence of the tobacco lobby - or the fact that the firm making Bushmaster rifles shut down within days of the Newtown massacre, after the California Teachers Pension Fund demanded the change.
"Many of America's leading institutions are dozing on the issue of climate," says Robert Massie, head of the New Economics Institute. "The fossil fuel divestment campaign must become the early morning trumpet call that summons us all to our feet."
The growing desire among concerned citizens to address the pressing issue of climate change has allowed fossil fuel divestment to blossom. As Time reporter Victor Luckerson writes in a September 22, 2015 article:
A movement that began on college campuses to reverse investments in fossil fuel companies is now measuring its impact in the trillions.
More than 400 organizations and 2,000 individuals across the world with $2.6 trillion in assets have pledged to divest from fossil fuel companies, according to a new report from Arabella Advisors, a consultancy firm for philanthropies. A year ago, the total amount of assets being divested from fossil fuel companies was just $50 billion.
It’s a huge acceleration for a campaign that began at just a handful of colleges in 2011. Back then, students were struggling to convince their universities to reroute their endowment investments away from companies that make oil, coal and natural gas. Today, 40 educational institutions have pledged to divest. They’ve been joined by philanthropic organizations, state governments, faith-based institutions, medical organizations and celebrities.
Fossil fuel divestment campaigners take inspiration from earlier generations who effectively used the divestment tactic. The most notable example of this was the campaign to compel international corporations to stop doing business with the apartheid regime in South Africa in the mid- to late-1980s. The South African divestment campaign played an important role in ending the system of legalized discrimination in that country. Anti-apartheid activists argued that universities should make sure that none of the funds from their endowments were being invested in a country that officially treated people of color as second-class citizens. And they contended that major corporations such as General Motors should cease doing business with the discriminatory regime.
In a December 15, 2013, Op-Ed for the Chicago Tribune, Adele Simmons, the former president of Hampshire College and an early supporter of South African divestment, discussed the origins of the campaign, its growth, and ultimately its contribution to toppling the apartheid regime. Of her experience in the anti-apartheid movement in the 1970s and 1980s, she writes:
Apartheid opponents needed to do something more than protest. The candlelight vigils were not working.
In the mid-1970s, students began to demand that their universities divest stock in all companies doing business in South Africa, but they made little progress. How could Harvard sell its stock in IBM, not to mention General Motors, Polaroid or Shell? But the argument that universities should not bring politics into their investment decisions carried little weight with the activists. They believed that a university's investment policy should reflect its values....
In the fall of 1977, urged on by students, I asked the Hampshire College board of trustees to divest. They agreed, and Hampshire College became the first U.S. college to divest completely from companies either trading with South Africa or doing business in South Africa....
Other schools followed. The protests at the University of Michigan, Michigan State, Columbia University and the University of Wisconsin attracted the greatest attention.
By 1988, 155 universities had divested, and the dollars were significant. In 1986, the University of California divested, selling $3.1 billion worth of stock.... [F]aith organizations, unions, cities, counties and states joined in. Investment funds started to take a careful look at companies in their portfolios that had South African ties.
In 1986, in response to increasing violence in South Africa and protests in the United States, Congress passed the Comprehensive Anti-Apartheid Act that banned new investment in South Africa, sales to the police and military, and imports of a number of products. President Ronald Reagan vetoed the bill, but Congress overrode him.
Companies began to withdraw from South Africa. General Motors sold its plant in 1986. IBM left South Africa in 1987. Locally, Sara Lee and Borg-Warner got out. Doing business in South Africa became too expensive for U.S. companies. Moreover, it did not impact their core business. Eventually, many of the companies that had signed the Sullivan Principles went further and closed their operations.
One expert at the time argued that companies were leaving because of the ailing economy, not because of pressure. But the weakness of the economy had a lot to do with divestment, which caused a flight of capital, declining exchange rate and inflation. In South Africa, the government realized the damage of being isolated.
When I met F.W. de Klerk, the last president of the apartheid regime, in Chicago two years ago, he was clear: "When the divestment movement began, I knew that apartheid had to end." And when I met with Mandela in 1990 in New York, he said that divestment was a crucial factor in ending apartheid. The movement against apartheid was led by South Africans, and Mandela was an inspiration throughout the decades, but the actions of U.S. investors gave the movement both visibility and legitimacy and had a decisive economic impact.
Divestment was only one of the many tactics that opponents of apartheid used to end the system of legalized discrimination in South Africa. However, it was an important one. Fossil fuel divestment campaigners of today hope that their efforts can make a similar impact in ending the dominance of fossil fuel corporations and stirring action to prevent climate disruption.
For Discussion:
- How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?
- What is divestment? How does a divestment campaign work?
- We read about campaigns for divestment from fossil fuels and South Africa. Can you think of any other divestment campaigns? What were their goals? How did activists fare?
- How does pressuring institutions to change their investment patterns compare with a personal decision to change what products you buy and what corporations you support with your business? How is divestment similar to or different than personal lifestyle decisions? What do you think is the importance of the differences?
Student Reading 2
Divestment Movement Critics and Potential
In the last four years, the fossil fuel divestment campaign has gone from a small campus-based effort to a worldwide movement that is gaining steam.
Nevertheless, the divestment campaign has also encountered criticism. In a July 7, 2014, op-ed for Al Jazeera America, journalist Matthew Cunningham-Cook argued that divestment is an ineffective tactic. He contended that the divestment movement had little ability to affect the financial resources of the fossil fuel industry. Cunningham-Cook wrote:
[Divestment] appears to be a noble, even necessary idea...
But the fossil fuel divestment movement is, at best, a misguided endeavor and, at worst, a self-defeating roadblock. The changes being proposed will do little to stop investment in the fossil fuel economy. Severely hampering the campaign is its focus on publicly traded securities such as stocks and bonds when much of the fossil fuel investment today is taking place on private markets....
[F]ossil fuel divestment would target only major corporations that are listed on the stock market. But pension funds and endowments, the entities largely targeted by the 350.org campaign, invest hundreds of billions of dollars in privately traded securities, such as hedge funds and private equity vehicles that are invested at all levels of the fossil fuel economy....
The divestment campaign argues that 200 publicly traded fossil fuel companies dominate the fossil fuel exploration market. But they ignore that such companies frequently depend on private equity and hedge funds for financing new investments when large banks are uninterested in taking on further risk. The public can rarely (if ever) verify that these types of arrangements take place, even if it is a teacher attempting to verify what her pension fund is doing with her money....
For the climate justice movement to gain any ground, it will require what Martin Luther King Jr. called "a revolution of values." Hedge funds and private equity must be held to the same standards as the retirement funds of millions of working-class Americans.
To many divestment activists, however, this argument misses the larger point of the divestment campaign. Of course climate justice cannot be achieved with divestment alone, they argueit’s just one tool of many. But a divestment campaign can greatly influence public opiniondrawing attention to the issue and drawing in more activists to fight for the cause. Climate activist and journalist Kate Aronoff makes this point in a July 10, 2014, article for Waging Nonviolence in response to Cunningham-Cook’s argument:
Criticizing divestment for not taking on privately traded stocks is akin to criticizing the civil rights movement for in 1955 for not focusing its energies exclusively on the state courthouses that ratified racist laws in the Jim Crow South. Why boycott a bus system in Selma? The real power is in the Montgomery legislature!
Similarly to that movement, fossil fuel divestment has rallied 400 campus campaigns across the country around a symbolic demand. As 350.org’s Jamie Henn explained ... the goal "isn’t to make a direct economic impact by selling stock, it’s to stigmatize the industry to the point they start losing political power." Were divestment an instrumental demand, then the critique would be spot on: the goal would be to move as much capital as possible out of the fossil fuel industry, and the movement would be failing. On numbers alone, divestment will not be the campaign that defunds either the fossil fuel industry or a global capitalism that deals in increasingly risky and volatile financial products; no single tactic can.
Campus divestment is one blunt tool that taps into a sizeable base of people in higher education, and leverages the cultural, social and to a certain extent economic capital of colleges and universities. It’s just one in an expansive toolbox that includes a range of work on climate justice looking to move all sectors of society. The sort of broad-scale societal transformation required to upend the fossil fuel economy will require mass participation-across race, class, generation and so much more....
In imagining a way forward, I could not agree more that achieving climate justice will require a "revolution in values" against not only the fossil fuel industry, but the extractive economy as a whole. Fossil fuel divestment is not that revolution, but it is a vital and fighting part of it.
Indeed, it seems that the divestment campaign has already had a significant impact on public opinion, as Rhiannon Meyers reported for the Houston Chronicle, in a May 29, 2015 article:
The divestment movement's formation on college campuses underscores how a generation of young people has taken a more organized and formal approach toward reducing their carbon footprint, a troubling trend for industry, [divestment activist Karthik] Ganapathy said.
"If you have an entire generation feeling about climate change the way a couple of generations felt about the atomic bomb, that is a deeply powerful thing," he said. "I don't think the industry understands that's not just something you can do away with by mocking and saying, 'You need us.' That's something you have to tap into and address in a meaningful way."
Some fossil fuel companies are taking notice.
Peabody Energy Corp., the world's largest private-sector coal company, listed the divestment campaign among the risk factors affecting its business. As climate change continues to garner public attention, the environmental campaign against coal combustion has led to increased government scrutiny and "unfavorable lending policies," the company said in its annual report to SEC.
And when prominent electricity provider NRG announced last fall plans to cut the company's carbon emissions in half by 2030, CEO David Crane said that the college campus divestment movement was weighing on his mind.
"I don't relish the idea that year after year we're going to be graduating a couple million kids from college who are going to be American consumers for the next 60 or 70 years that come out of college with a distaste or disdain for companies like mine," Crane said back in November.
If the response of the fossil fuel industry to the divestment campaign is any indication of its power, the potential impact of the tactic should not be underestimated.
For Discussion:
- How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?
- Do you think the divestment campaign is a worthwhile use of time for climate change activists?
- What is Matthew Cunningham-Cook's argument against the fossil fuel divestment campaign? How do environmentalists respond to this argument? Which position do you find more convincing?
- Environmentalists contend that divestment is an important tactic for the symbolic value it carriesthat the goal of withdrawing money from the fossil fuel industry is secondary to the goal of drawing attention to the industry's role in contributing to climate change. What are some other symbolic tactics activists have used? How important do you think these tactics were to the cause they supported?
Extension activity
Have students research whether any fossil fuel divestment campaigns are underway in their area, perhaps on a nearby college campus. One place to start is this website, sponsored by the climate change organization 350.org: http://gofossilfree.org/usa/
Ask students to find out:
- What actions have the activists taken as part of the divestment campaign?
- What has the response been to the campaign?
- Is there evidence that the campaign has drawn public attention to the issue of climate change?
If possible, invite local divestment activists to your classroom. Have students prepare interview questions and consider how they will share what they’ve learned with schoolmates or the community.
If students are interested, support them in deciding on and implementing an action to support the divestment campaign.