November 24, 2015

“No Chance” for Divestment after Stanford Sit-Ins

Last week, unsatisfied members of Fossil Free Stanford (FFS) began protesting, then sitting, singing and sleeping, in front of the school’s administrative building and refused to cease until the university completely divested from all fossil fuel holdings. The protests didn’t last long, but ended on Saturday in a sit-down with President Hennessy who succinctly laid out the facts on divestment to the students. According to Hennessy:

“Quite frankly if I asked SCIR [Board of Trustees’ Special Committee on Investment Responsibility] on to do divestment, they would say no…I will tell you completely honestly [complete fossil fuel divestment] has no chance of passing because it has no background research.” (emphasis added)

Hennessey’s statement is hardly a surprise, considering what other experts, students and academics from California have been saying over and over again in opposition to divestment. In fact, according to a report from Prof. Bradford Cornell of CalTech, divestment would cost schools millions, such as an annual loss of $107.81 million for Harvard alone.

Even if student activists don’t want to take our word for it, here’s what a student writer at the Stanford Review had to say about the recent protests:

“At best, Fossil Free Stanford is leading an economically unfruitful and politically marginal campaign…Politically, they are diverting attention from those fighting large economic interests that control legislation; scientifically, they are not encouraging the development of renewable technologies; and economically, they are not advocating for investment in clean-energy ventures.”

This student not only offers a rational breakdown of Fossil Free’s most worn-out claims, but is also quick to point what financial experts like UCLA’s Ivo Welch have stated before: when stocks are divested, the market and other investors would almost immediately absorb the shares. Likewise, the student echoes, “socially indifferent investors and high-frequency traders make divestment a purely symbolic gesture.”

We’ve known that divestment is nothing more than a symbolic gesture since the beginning, but more and more, students and academics are acknowledging the ineffectiveness of the strategy. As the Stanford Review points out, the university’s pervious decision to divest from coal was purely economic (and some would argue an empty gesture all together). UC Regent Bonnie Reiss and Chief Investment Officer Jagdeep Bachher made the same point when they decided to conditionally sell off a handful of coal stocks solely “on the basis of economics.”

Like the UC Regents, Stanford President Hennessy and the Board of Trustees’ Special Committee on Investment Responsibility made no plans to extend the sell-off to oil and natural gas because they understand the negative financial consequences of such an action. FFS activists were quick to laud Stanford’s 2014 decision as a “groundbreaking victory” when it was really an economically sound act of convenience. When the activists pushed for full divestment, they were confronted with outright rejection based on the logical reasoning of experts and academics across the field who know divestment to be nothing more than a misguided political crusade.