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February 13, 2019

The Ivies: Where do America’s Top Colleges Stand on Divestment?

At a recent climate conference at Brown University’s Watson Institute for International and Public Affairs, Brown University president Christina Paxson doubled down on the prestigious university’s prior rejection of divestment and quashed any suggestion that she’d renew divestment efforts in the future.

“Nope. Nope. We rejected that,” Paxson rebutted flatly when asked about Brown’s consideration of the ‘investment strategy.’

Six years ago, Brown rejected a proposal to divest from the 15 largest coal companies in the United States. Paxson said at the time that the investments were too inconsequential to have any real economic impact. Following Brown’s rejection of divestment, the school pivoted towards sustainable campus initiatives to reduce carbon emissions and Paxson’s office sponsored a statewide climate reduction plan with faculty and staff that led to the passage of the Resilient Rhode Island Act of 2014. The law established guidelines for climate-emission reductions and created an oversight body, the Executive Climate Change Coordinating Council.

Brown also recently purchased renewable energy from a solar farm and wind farm, in Rhode Island and Texas respectively, to replace the electricity Brown receives from the regional power grid.

Given the climate action already taken by Brown University, it’s no surprise that the school continues to reject what they view as an empty gesture; for universities, there’s no value in virtue-signaling when they can instead prioritize the practical value of their environmental work to conduct research and develop innovative energy solutions.

Due to their large endowments and general prestige, Ivies have been a favorite target of the divestment movement.  With that in mind, let’s examine each Ivy divestment journey to see how each school handled the pressure; do they cave to the false notion of moral piety or invest in their students, faculty and the environment to craft tangible, actionable solutions?

HarvardBrownUPennYale, Dartmouth and Cornell have already either said no to partial divestment, or to completely selling off fossil fuel assets, and it doesn’t look very promising for the last two Ivy League holdouts.

Columbia University

Now, a couple years ago, Columbia University was unabashedly anti-divestment.  In fact, the university’s Advisory Committee on Socially Responsible Investing has actually rejected blanket divestment not once, but twice; first in 2014 and later in 2015. In the latter instance, the Committee released a report rejecting Columbia Divest for Climate Justice’s proposal to the board of trustees. From the committee’s report:

“The more the Committee has deliberated over the possibility and the scope of a possible divestment recommendation, however, the stronger has become the feeling that divestment is too narrow a lens through which to consider Columbia University’s engagement with the climate change issue.”

Two years later in 2017, Columbia University announced it was “divesting” from a handful of coal companies in a statement from President Lee Bollinger. Some prominent activists praised the decision, but students on campus were quick to speak out against the move, saying it did not go far enough.  Meanwhile, a closer look shows there’s not much substance behind Columbia’s action.

The report itself calls for divestment from coal producers whose primary business is “thermal coal” production.  The committee refused to divest from “metallurgic coal,” because in their words, “there are no adequate substitutes in steel production.” The weak announcement also said the University should recommend to third party managers to “avoid” investments in such companies.  So the takeaway is that this extremely limited divestment announcement only impacts direct holdings in some coal producers.

The narrow scope of this divestment decision was undoubtedly the result of prior rejections of full divestment. The Committee has also blatantly acknowledged that divestment is not an effective strategy for initiating change.  From the report:

“The Committee is aware that divestment from coal producers would be a form of symbolic speech.  Other buyers will step in, stock prices will not directly be affected, and coal producers will not stop producing coal.”

For now, it seems Columbia has opted for tiny sliver of “symbolic” divestment. Their words, not ours.Top of Form

Cornell University

In 2016, the Cornell University Board of Trustees refused to sell its oil assets and instead laid out new guidelines divesting from companies for “socially responsible” reasons.

Initially, the debate was contentious as campus town halls were held to get a pulse of the student and faculty sentiment. A university faculty member, Earth and Atmospheric Science Prof. Larry Brown warned that divestment “undermines the most precious asset a university has in addressing any controversial issue: its reputation as an unbiased source of scientific knowledge.”

The administration ultimately decided that fossil fuel production was not on par with their “morally reprehensible” standard for divesting—which includes “apartheid, genocide, human trafficking, slavery or systemic cruelty to children, including violation of child labor laws.” In the announcement, Chairman of the Cornell Board of Trustees Robert Harrison states, “Other avenues besides divestiture may be more effective and not merely symbolic.”

Similarly to Columbia, Cornell proposed engagement, research, education and other real, tangible solutions that were not merely political or social instruments.

Dartmouth College

Dartmouth College’s journey to divestment was long and repetitive. 2016 saw several rallies and protests from the school’s activist group, ‘Divest Dartmouth,’ pushing the school to divest. The New Hampshire Union Leader editorialized on the absurdity of the Dartmouth’s protest, noting,

“[Divestment] would stifle economic growth across the developed world and rob underdeveloped nations of their chance at prosperity. Moreover, the very companies these students demonize are the ones investing the most in researching alternative and renewable fuels. Divesting college endowments from the energy industry would do nothing but satisfy an ignorant mob.

Following the consistent uproar from Divest Dartmouth, President Hanlon “commissioned a document from the college’s Advisory Committee on Investor Responsibility” to reconsider the issue. This was the third time that Hanlon requested a report on this topic and both times prior, Hanlan rejected them.

The third report issued by the school’s Advisory Committee on Investor Responsibility (ACIR) recommended the University divest its direct holdings.  However, the move wouldn’t mean much as Dartmouth’s direct fossil fuel holdings are a tiny portion of its total investments in fossil fuels.  From the report:

“Of more direct relevance to Dartmouth is the fact that, while Dartmouth directly holds approximately $43M in fossil fuel related assets, the vast majority (>95%) of that amount is held in working capital pools, with only about $2M held in the endowment.”

The report goes on to assert that because the University’s direct fossil fuel holdings are so small and approximately $41M will remain invested in fossil fuels, the financial impact of divesting will be minimal but it will nonetheless “greatly enhance” the perception of the University acting consistently with its moral duty.

…. That sounds more like appeasement than action.

Dartmouth has yet to act on the Advisory Committee’s recommendation, and if they did it would only prove the New Hampshire Union Leader’s assessment to be true: Divesting only serves to placate an “ignorant mob.” Again – their words, not ours.

Harvard University

Late last year, despite numerous rejections, calls for divestment continued at Harvard University once again. The Undergraduate Council, mobilized by Harvard Divestment, inspired a ‘fossil fuel referendum’ to gauge student opinion on the issue. Despite this effort, Harvard chose not to wait for the results and made the University’s stance clear:

  “While we agree on the urgency of this global challenge, we respectfully disagree with divestment activists on the means by which a university should confront it,” she wrote. “Harvard is fully committed to leadership in this area through research, education, community engagement, dramatically reducing its own carbon footprint, and using our campus as a test bed for piloting and proving solutions.”

University spokesperson Melodie Jackson makes clear that the University has chosen to pursue more active forms of engagement to combat climate concerns. Rather than endorsing what would effectively be an empty gesture to silence student concerns, the University is far more interested in pursuing sustainability efforts as an institution that engage student participation and encourage actual change. Visiting the school’s microsite will reveal student-led projects and leadership efforts that focus on quantifiable results instead of self-satisfying symbols.

Given student investment in real sustainable solutions, it’s no surprise that less than one percent of the Harvard community signed the subsequent petition for divestment.

Harvard has made ambitious pledges to cut its carbon emissions and improve the overall sustainability of its campus and supply chains.  According to the university’s designated sustainability website:

“Harvard intends to bring its students, faculty, and staff together, “to use the campus and… surrounding community as a test bed to incubate exciting new ideas and pilot promising new solutions to real-world challenges threatening the health of people and the planet—at Harvard and across the world.”

And how does this lofty goal manifest itself? Not by divesting, but in fact, investing into clean energy research to find solutions instead of more empty-gestures.

Princeton University

Princeton has been relatively mum on the issue but has not faced as bold of protests as its peer institutions.  However, former President Emeritus William Bowen wrote an opinion piece for the Washington Post on the matter in 2015, and if his assessment is any indication of what’s to come, Princeton will most likely follow in the footsteps of schools that have rejected divesting. The whole thing is worth a read but here’s an excerpt:

“One argument in favor of divestment that I find entirely unpersuasive is the claim that a university is obligated to take a stand on any issue of broad social import that individuals — including, not infrequently, the president of a university acting in citizen mode! — regard as highly consequential. This is nonsense. To abstain is both a legitimate and appropriate action when the issue is not central to an institution’s educational mission.”

Former President Emeritus Bowen then went on to touch on the movement’s hypocrisy:

“But my main quarrel with current debates over divestment is that they pay too little attention, if any attention at all, to what I regard as the insidious moral perils of divestment. There is, first of all, the sometime hypocrisy of seeking institutional “purity” while failing individually to reduce consumption of fossil fuels or, for a faculty member, to divest one’s personal stake in investment vehicles, including index funds, that contain questionable holdings.”

University of Pennsylvania

In 2016, UPenn joined its’ Ivy League counterparts in rejecting divestment by a unanimous decision. Similar to Cornell, the UPenn Board ultimately concluded that fossil fuel use simply cannot be placed on the same moral plane as other social issues the university has taken a stance on, such as genocide and apartheid. In an official letter to Fossil Free Penn, Chairman David Cohen explained:

“The Committee unanimously found that the Fossil Free Penn proposal does not meet the established criteria for divestment. As a result, the Committee did not recommend divestment… While the Trustees recognize that the ‘bar’ of moral evil presents a rigorously high barrier of consideration, we are resolute in our belief that such a high barrier must be maintained so that investment decisions and the endowment are not used for the purpose of making public policy statements.”

Two years later, like Dartmouth College, UPenn had to repeat itself. In late 2018, Fossil Free Penn called on the University to divest from coal and tar sands, a specific type of fossil fuel, focusing its argument primarily on how Penn would benefit financially from divestment.

The University Council Steering Committee dismissed Fossil Free Penn’s second official attempt to achieve, at least partial, fossil fuel divestment and pointed to the school’s green initiatives that will have more of a tangible effect on climate change than divestment ever could.

Yale University

In August 2014, Yale’s Corporation’s Committee on Investor Responsibility recommended against divestment, stating it was not “the right means” of addressing concerns related to climate change. Yale has instead focused on tangible efforts to support the environment, including sustainability initiatives on campus.

In April 2016, Yale again made it clear it would not engage in divestment. University President Swensen stated in a letter to the Yale Community this week that the school was selling its holdings in three companies it found “inconsistent with our principles.” According to the letter,

“As of June 30, 2015 the Endowment had de minimal exposure to {thermal coal miners and oil sands producers}. One manager held a small position in a publicly-traded company that engaged in the production and sale of coal. Another manager held interests on Yale’s behalf in two publicly-traded oil sands producers. Combined, these investments represented less than $10 million of exposure to Yale.”

Compared to Yale’s nearly $24 billion endowment – the second-largest university endowment in the country – the decision represents a minute portion of the school’s holdings. In fact, as we’ve seen time and again in the divestment movement, often endowments make headline-grabbing announcements in selling of their holdings in coal companies, while they hold little to none of these stocks in the first place.

And that wasn’t the last time Yale had to said no to empty gestures and futile, symbolic measures.

June of 2017, the Yale Daily News announced that the University’s Advisory Committee on Investor Responsibility will not recommend divesting from Exxon Mobil after Fossil Free Yale demanded it. According to the Chairman of the committee, “Exxon does not appear to be engaging in any conduct or activity that would warrant divestment…There doesn’t seem to be any basis for singling them out for divestment.”

Yale University, like most other Ivy League members, came to a succinct and pragmatic conclusion:  divestment has nothing to do with climate action or supporting the environment. It is a game of posturing and placating those who yell the loudest, even if those yells aren’t exactly facts. Giving into demands targeting an entire industry and the holdings of university endowments may quiet the protests and curb the rallies, but it will not change the amount of gas pumped, electricity used, or heating oil needed to power the world.

The Ivies have the right idea about divestment – reject the empty gestures and political maneuvering and channel that concern for the environment into real, actionable solutions that will make a difference.