New York University has officially announced it is rejecting divestment in a newly released memorandum to the NYU community. This spring, student activists and campaigners in support of the divestment movement called upon the university to divest its holdings in fossil fuels, despite the costs of such a decision. Luckily for the NYU endowment and its beneficiaries, the school has rejected such a decision.
As previously featured on DivestmentFacts.com, a report from Prof. Bradford Cornell of UCLA specifically determined how much divestment would cost at NYU and four other leading universities. According to this report, NYU’s endowment would lose $4.16 million every year if it divested from fossil fuels. In addition a recent report by Prof. Bessembinder of Arizona State University finds there are serious fees to consider in regard to the transaction and management fees of divesting, and keeping a fund divested. NYU agreed today, noting “to accomplish the goals proposed in the Senate resolution would require us to invest only with firms that have renounced fossil fuel related investments. This would significantly limit the choices we may make in investment managers, thereby limiting our ability to seek out the best long-term investment opportunities for the endowment.”
According to NYU’s announcement, “the Board carefully studied the arguments presented in favor of divestment. Notwithstanding this, and the concerns the Board shares about climate change, the Board does not believe divestment is the proper action to take. Regardless, the University will continue to take steps and look for concrete ways to enhance sustainability and reduce its greenhouse gas emissions, which it has reduced by 30% since 2007.”
In a response to members of the University Senate, the Board highlighted that it was “not persuaded” by the argument that “divestment in and of itself can help to advance the use of renewable energy sources and reduce dependency on fossil fuels.” From their remarks:
“First, divestment does not reduce the amount of capital or funding available to fossil fuel companies; rather, it simply transfers ownership of stock from one holder to another. Second, the decision to support investment in alternative energy technology is not mutually exclusive with investment in fossil fuel companies; in fact, many of the fossil fuel companies listed on the ‘Fossil Fuel 200’ are major investors in alternative energy research and ventures. And third, divestment is neither the only nor even among the most impactful steps NYU can take to address the underlying issue: atmospheric CO2 and climate change. The actions and research noted above, among other efforts, all have a far greater impact on NYU’s greenhouse gas emissions and sustainability than would divestment. We believe that further action by the University in this regard is warranted, and we support it.
“Moreover, it seems disingenuous for NYU to, on the one hand, deem the fossil fuel industry morally reprehensible—the clear implication of a decision to divest—while on the other hand continue to regularly and willingly use their products to power and heat our campus and to transport our students and faculty (albeit in ways that are more efficient and less carbon intensive than in the past).”
NYU’s announcement instead highlights proactive steps the university will take to reduce its energy use and environmental footprint, noting “these steps have enabled NYU to embrace the NYC Carbon Challenge, meeting the initial goal of reducing greenhouse gas emissions by 30% five years ahead of schedule, and permitted us to accept the more ambitious goal of a 50% reduction by the end of 2025.”
Given that divestment has no tangible impact on reducing carbon emissions, is costly for universities to undertake, and has no impact on targeted companies, it is not surprising the university came out in rejection of this movement.
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