January 23, 2017

UPDATE: Students Should Walkout on Divestment, Not Class

Original post (Jan. 22, 8:00 PM): Following Friday’s presidential inauguration, the Divest Student Network and 350.org are organizing several “walkouts” nationwide on Monday, January 23 to “resist and reject the climate denial of the newly inaugurated Trump administration” and to move schools to divest from fossil fuels. Unfortunately, the organizers of the event ignore the fact that divestment has no impact on the environment.

Here are five things to know about Monday’s event.

1) Fossil Free is calling this protest, “the first and largest youth-led mobilization under this new administration.” Yet while this effort has received some pick up on social media, few student divest groups have committed to actually participating in the event so far.  This may be because of the reality that, regardless of your politics and support or opposition for the new administration, these events are attempting to connect a frustration with Washington to an individual economic policy for universities – policies that have real impacts on students and academic funding.

2) Of the colleges that do plan to participate, many are already on the record opposing divestment. Swarthmore College, for instance, rejected divestment in 2015, calling instead to “intensify its sustainable practices as an institution.” Boston College spokesperson Jack Dunn also highlighted in 2015 that the endowment “enables us to hire and retain the best faculty, it enables us to build state-of-the art environmentally sustainable buildings that we’re building around campus,” and most importantly that it is “a resource to support these endeavors, and it’s not intended to be an instrument to induce political or societal change.”

3) The Divest Student Network would like to portray itself as a grassroots student-led movement, describing its mission as “building a powerful student movement” and to “train, mentor, and coordinate students running nonviolent direct action campaigns for fossil fuel divestment and community reinvestment.” Further investigation, however, shows that is not quite the case.  The Divest Student Network is actually a subsidiary of Alliance for Global Justice, and organization that funds various campaigns including the Occupy Wall Street movement.  So what may be branded as a “youth-led” movement, rest assured this effort is being funded and campaigned by an organization with very different intentions.

4) It is well established by now that divestment is ineffective and highly costly for universities.  So while students claim they are walking out in protest of climate denial, the reality is that they’re advocating for higher fees and lower returns for their schools’ endowment.

This an especially ill-advised strategy of late, as universities have struggled to maintain sustainable financial returns. Divesting would only exacerbate that trend.  As Prof. Dan Fischel, of the University of Chicago discovered, divestment hurts a portfolio’s diversification, which in turn leads to substantial losses over the long term.  On top of that, actively managing endowments to remain “fossil-free” increases costs by upwards of millions of dollars, according to a recent study by Prof. Hendirk Bessembinder.

5) Standing in direct contrast with the event’s purpose, divestment does nothing to actually impact the environment or climate change. As Harvard University Professor Director of environmental economics program Robert Stavins sums up, “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.”

Given the high costs and low impact of divestment on the environment, it’s time for universities to walkout on divestment, not class.