Johns Hopkins University (JHU) is expected to make a recommendation on divestment by September 5, just as students are arriving back on campus. According to campus divest group Refuel Our Future, the University’s Public Interest Investment Advisory Committee (PIIAC) will be providing a response to their divestment proposal and sending its recommendation to the full board for their ultimate decision.
The on-campus divest group has issued a number of demands to the University: divesting from all direct holdings in the Carbon 200, ceasing investment in those companies in the future, investigating how to move its commingled funds into more sustainable portfolios and to move the divested funds into more “sustainable” and “responsible” industries. While well-intentioned, the proposal tends to lean heavily on claims originating from activist groups like 350.org, which have ended up being debunked in the past.
Claim: 73 percent of Johns Hopkins students came out in favor of divesting from the Carbon 200.
Fact: That may seem like a big number, until you look at the participation rate. The referendum was open to all undergraduates, of which there at about 6,500 at JHU. Yet only 397 actually responded to the vote. So at the end of the day, only about six percent of the student body actually voted one way or the other on divestment.
Claim: “Fossil fuel divestment is an effective method” to impact climate change.
Fact: On the contrary, we know that divestment has no impact on the environment, a fact attested to by numerous high profile scientists and academics. Take the comments from Robert Stavins, director of Harvard’s environmental economics program: “The concerns of the students are understandable but the message from the divestment movement is fundamentally misguided. We should be focusing on actions that will make a real difference.” Ultimately, divestment just means the transfer of stock ownership. It does not have any direct environmental benefit.
Claim: If Johns Hopkins divests, the school “will be effectively stating to the world that fossil fuel use as it is now is detrimental and unsustainable.”
Fact: Not exactly. First of all, as we mentioned, divesting from fossil fuels does nothing to impact the climate or emissions. It is a little hypocritical for a school to say that divestment is what will show the world that the use of fossil fuels is detrimental and unsustainable, while at the same time still using said fossil fuels to power its campus. When Notre Dame was debating divestment, University President Father John Jenkins highlighted this very point when he said:
“We’re sitting in a room that’s heated and lighted, and when we drive to where we go, we use fossil fuels. It seems to me that it would seem to be hypocritical to say, ‘we’re going to divest from the companies we rely on for the energy, what we need to do business.’ So I think what we need is a gradual but more determined effort to make our use of energy sustainable.”
Notre Dame ultimately rejected divestment last year.
Harvard University President Drew Faust also made a similar statement when the school rejected divestment in 2013:
“I also find a troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies’ products and services for so much of what we do every day. Given our pervasive dependence on these companies for the energy to heat and light our buildings, to fuel our transportation, and to run our computers and appliances, it is hard for me to reconcile that reliance with a refusal to countenance any relationship with these companies through our investments.”
Claim: Many schools have successfully divested.
Schools like Syracuse, Georgetown and Stanford are frequently used as prime examples of schools that had successfully divested. Refuel our Future also cited these universities as success stories when they wrote:
“…in conjunction with other similar institutions like Georgetown and Stanford, will exert tremendous social pressure on other elite, private universities to divest as well. Many have called Harvard University a “hedge fund with a university attached to it.” The force of Hopkins divesting alone may not force fossil fuel companies to alter their practices. However, the critical mass of Hopkins divesting in concert with Georgetown, Syracuse, Stanford, the University of California, and other institutions such as Harvard and Princeton certainly will.
Fact: None of these schools has actually divested from the Carbon 200 and several have rejected divestment outright. Syracuse is actually the namesake of the “Syracuse Model” for divesting—the notion of only agreeing to sell direct holdings in fossil fuels. This is an empty gesture, as most schools don’t have much in direct holdings to begin with, instead investing the bulk of their portfolios in commingled funds. Georgetown only agreed to divest from coal, despite those investments making up a minute portion of the school’s $1.5 billion endowment. Stanford gets the most fanfare for their 2014 announcement pledging to divest from coal. Yet a mere two years later, the school voted to reject full divestment. Harvard has repeatedly rejected student attempts to force divestment, and Princeton continually resists the small movement on campus. Activists like to point to the University of California as an example of divestment, but officials made clear the decision to sell the fund’s coal and oil sands investments was “absolutely” made “for economic reasons” and not social ones.
Claim: Johns Hopkins should divest.
Fact: Johns Hopkins held a divestment forum back in April to explore the issue where several panelists spoke to how the act is ineffective and costly.
Frank Wolak, head of Stanford’s energy and sustainable development program, spoke at the event regarding the limited financial impact of divestment on targeted companies, saying, “Even if all universities decided to divest, this would have no effect on global equity markets and no effect on the ability of these companies to raise capital.”
Rafael Castilla, who is in charge of investments at the University of Michigan’s Investment Office, mentioned the hypocrisy of “demonizing” fossil fuels, while at the same time using them for a vast majority of our energy generation.
The Johns Hopkins administration has also been leery about committing to divestment. University President Ronald J. Daniels recently told the school newspaper:
“It’s important to figure out how to draw principled lines around what you would want to divest if you decide to divest. If you are going to think about divestment, is it just coal? Is it all fossil?’ …One could go on and on in terms of things that we find odious about types of corporate behavior. But then the question is ‘are every one of these going to be a target?’ That was an important theme that came up in the session last night.”
Bottom Line: Clearly divestment is not in the best interests of JHU. While it’s laudable that students are trying to better their communities and the climate, unfortunately divestment isn’t the solution they’re hoping for.