Bowdoin Middlebury Williams

Coal Divestment… Worth It?

“No direct coal investment” is what the student leaders of the Williams Divest Coal campaign are proposing.   It might seem bold, but there are two problems.   Firstly, only 3% of Williams’ $1.8 billion dollar endowment is directly managed by the college; that takes $1.75 billion of the table from the beginning.  Secondly, not a dollar of that 3% is invested in coal.   The Investment Office could follow this proposal without changing anything.  So, why bother?

A month back we ran a story on fossil fuel divestment campaigns at NESCAC schools.  In case you missed it, the basic story is as follows.  In the 1970s and ‘80s over 150 colleges and universities divested their endowments from all companies that dealt with apartheid South Africa.  By 1993, the apartheid regime had been largely dismantled, and universal suffrage led to the election of Nelson Mandela.  Obviously there were other causes, but prominent anti-apartheid opponent Desmond Tutu recently said, “We could not have achieved our freedom and just peace without the help of people around the world, who through the use of non-violent means, such as boycotts and divestment, encouraged their governments and other corporate actors to reverse decades-long support for the apartheid regime.”

This summer, in his high-profile Rolling Stone article, “Global Warming’s Terrifying New Math,” Middlebury’s Bill McKibben cited the success of anti-apartheid divestment as inspiration for a new anti-fossil fuel divestment campaign.  McKibben, the same man who led last year’s campaign against the Keystone XL pipeline, leads somewhat of an army of student activists–and many NESCAC students were among those who answered the call.

When our last article was posted, little progress had been made by any of those campaigns, but Middlebury’s President Liebowitz had decided to take the idea seriously, while Bowdoin’s President Mills had come out against it.  I decided to take a look at the range of NESCAC responses, examining the active opposition faced by the Bowdoin campaign, the so-far non-response of the Williams administration, and the enthusiastic progress at Middlebury.

In doing so, I learned, among other things, the tidbit in the lede…and the answer to the question it poses.

Dana Golden, a senior at Williams, is one of the leaders of its campaign.  She’s part of an environmental activism group called Thursday Night Grassroots, which does things like sending buses to the Surround the White House protest against the Keystone XL Pipeline last year.  Before McKibben’s article in Rolling Stone, however, she, like most Ephs, “never talked about the endowment.”  For this reason, at Williams, the campaign was initially about “wanting to be informed.”

Golden, with another student, spent her Winter Study term doing an independent study on divestment with an economics professor, trying to get an economic perspective.   She sits on the Advisory Committee on Shareholder Responsibility (ACSR), which was founded during the apartheid divestment push to allow for more input on the endowment and its management.  Two other students met with Williams President Adam Falk; they were aware that the decision would not be his, but interested in his input.  “He was really excited,” Golden told me, having been “in an apartheid divestment campaign in college” himself.

Educating oneself is hardly activism, however, and that is why the campaign has crafted their proposal.  The idea of stopping direct coal divestment is symbolic and not financial, but even if it was an actual divestment, activists admit that the financial effects would be minimal.  For fossil fuel companies, “most of the revenue comes from actual production,” said Golden. For his part, McKibben says, “I doubt it will bankrupt Exxon.”

There may have been a greater focus on the economic effects earlier in the campaign’s life, but “how people in the movement have been thinking has changed.”  In this, again, Golden and McKibben agree.  “For a place like Williams, it would be symbolic,” said Golden, and even “if a whole bunch of schools divested, it might be a financial hit, but it would be a bigger PR hit.”  “The plan is to help people understand that these are rogue industries, outlaws against the laws of physics,” argued McKibben.  “If we can do that, we can weaken their ability to dominate our political landscape.”

To McKibben, weakening the political power, rather than the revenue streams, of fossil fuel companies is the fundamental goal.  His “Terrifying New Math” centers around three numbers: 2°C, the amount scientists say we can safely raise the atmospheric temperature; 565 gigatons of carbon dioxide, the amount we can release into the atmosphere without hitting that threshold; and 2,795 gigatons, the amount fossil fuel companies already have in their known reserves.  His argument is that the political will needs to be mustered to prevent that carbon from being released, be it by the implementation of carbon taxes or otherwise.   While McKibben continues to “play defense against bad projects,” as he phrases the February 17th anti-Keystone demonstration he’s organizing, divestment is “offense against the fossil fuel industry.”

Golden’s thinking is similar.  To her, the goal of Divest Coal is “to have Williams take a stand.”

“One of the most frustrating things about climate change is that it’s so hard to feel like you’re doing anything,” Golden said, and she’s right.  You or I biking to work and showering with the lights off will not have any effect on our planet’s future.  Furthermore, Golden acknowledged that “we depend so much on the energy,” meaning the institutions have to divest so that individuals have the option to.  Even making our campuses carbon neutral or blocking something as large as a major pipeline is going to have a essentially negligible effect, in the long-term.  For Golden, as for almost all students, her college is “the most powerful institution [she is] a part of,” so her own influence is directly tied to the extent she influences the college.

This symbolic motivation explains the low bar set by the campaign’s proposal.  It does not matter whether anything is changing, because Williams still has to make an open commitment to something on the topic of climate change.  Professor Swamy, Chair of the ACSR, encouraged them to “go for a small ask, rather than go big and get disappointed,” which it looks would be highly likely.   As is, the ACSR has been supportive, but a broader scope would present major concerns.   Abigail Wattley of the Williams Investment Office told me that their “number one goal is supporting the college,” and that they “hopefully will be here for perpetuity.”  Even if the fossil fuel divestment commitment is small, the risk might be large, as the endowment “supports about 40 percent of the operating budget of the college.”

Furthermore, as implied before, most of what the investment office does is selecting investment managers, not investing directly.  The office would not disclose the numbers on how much of the externally managed 97 percent of the Williams endowment is invested in fossil fuels, but the key problem is that the entire system would have to change if this part of the portfolio had to be restricted from fossil fuels.  Of course, the office will “follow the instructions given to [them],” and Wattley seemed very excited about the student interest, but to take broader actions, a lot of questions must be asked.

At the moment, Middlebury is the college that is asking them.   Last Tuesday, January 22nd, the college hosted a panel (video here) on the college’s endowment, notable for its inclusion of not just their resident environmental activist, Bill McKibben, but also people like financial managers.  Before the panel, I talked to Bill Burger, Middlebury’s vice president for communications, about the administration’s actions.  “Middlebury has a history of engagement on environmental issues,” Burger told me, so “it seemed natural to [them] that [they’d] take the lead on talking about this.”  Key to this position is the fact that the college has not yet decided to divest; it is merely in a discussion stage.  The college recognizes that “the issue’s not going to go away,” but, like at Williams, there are serious concerns.

Middlebury’s endowment is managed through a consortium, pooled with the endowments of a number of other schools and organizations.  It’s a “very efficient way to manage money,” Burger said, but it works poorly with a focus on socially responsible investment; when one’s money is pooled with that of others, one loses a lot of control.  This means that one of the serious questions if anyone is to go forward with divestment is “what sort of vehicles can we create” to maintain revenue without losing control.

Folks at the panel, aside from McKibben, were very much in agreement with Burger’s concerns.  Mark Kritzman, the CEO of Windham Capital Management and a finance lecturer at MIT, argued that it is “an inarguable mathematical truth that socially responsible investment is costly.”  Ralph Earle, a venture investor who focuses on renewable energy, went even further, saying, “I don’t think divestment from fossil fuel stocks will be effective in reducing climate change.”  He supported this with counterexamples to apartheid where divestment was not effective, such as the tobacco industry and the Sudan.  Another issue is that the world’s largest fossil fuel companies, namely state-owned ones like PetroChina, are not publically traded.

At the panel, McKibben emphasized that “endowment return is not the only financial indicator to worry about,” indicating his belief that donations in response to divestment might rise to make up for the potential lost return. “It makes no sense to green the campus without also greening the portfolio.”

It would seem that Bowdoin’s administration sides with the arguments of Kritzman and Earle over McKibben’s.  In a statement released in early December, the Bowdoin Orient reported, Bowdoin’s President Mills announced that no divestment would occur in the immediate future.  “I would never say never,” said Mills, but the endowment “is not something which at Bowdoin-or frankly any other institution-is subject to a large democratic effort as to how money is invested.”

While Mills declined to comment, Matthew Goodrich, who led the group that petitioned and met with the president, did not seem too distraught.  Mills  “did arrange for [them] to meet with them again” later this week, and they still plan to put divestment on the agenda for the next meeting of their board of trustees, from February 7th to 9th.  They have plans in place for a series of divestment-focused events the same weekend, include a panel that will bring in McKibben, the president of Unity College, multiple groups focused on sustainable endowments, and student activists from other schools.

Golden has high hopes for Bowdoin’s campaign as well.  “It’s going to make students more active,” said Golden.  “One of the things that is really important for schools like Williams and  Bowdoin is… what peer institutions are doing,” so if “other colleges are starting to talk about it,” prospects are good.  McKibben, for his part, essentially dismissed the president’s statement, saying, “The most important questions have to do with the students” when I asked him about Mills.  Bowdoin is in good company, anyway; Harvard’s students are facing the same administrative opposition.

From February 22nd to 24th, divestment campaigns across the NESCAC and the country will be sending students to the Fossil Fuel Divestment Convergence at Swarthmore College, and all have plans for proceeding at home. These students are not taking any victory for granted, even a symbolic one.

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