September 23, 2016

UPenn is Latest Ivy League School to Reject Divestment

Divestment has a terrible, horrible, no good, very bad week

Each new school year presents another opportunity for the divestment movement to gain more momentum, as students return to school and university boards gather for their annual fall meetings.  Safe to say, this week is not what activists had in mind when they started their push for the 2016 fall term–as a string of major divestment rejections have blunted any momentum before it could begin.

Boston University kicked it off when its board announced the adoption of a climate plan that includes “efforts to avoid investments” in coal and oil sands, but included no language that would compel managers to actually sell anything.  This attempt to divest without divesting was so weak that even Divest BU flat out said in their response, “BU remains invested in the fossil fuel industry.”

A day later, Notre Dame, the nation’s preeminent Catholic University, also rejected divestment when the school unveiled its own five-year sustainability plan.  This was a notable announcement, as Catholic institutions as well as the Vatican have come under added pressure to divest as a means of abiding by the teachings in Pope Francis’ encyclical on the environment.  Instead, University President Father Jenkins called out the hypocritical nature of divestment while the school still remains so dependent on fossil fuels to run.

And to round out the week, the University of Pennsylvania just announced the unanimous decision to not divest from fossil fuels.  The main point of contention among the Board was the idea of what constitutes a “moral evil,” a point upon which most divestment decisions are based.  While the divestment movement continually attempts to equate fossil fuel production with truly horrible phenomena like genocide and apartheid, Chairman David Cohen did not seem to buy that argument saying plainly:

“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.”

UPenn is also one of the latest in a string of Ivy League schools to reject divestment.  Due to their large endowments and general prestige, Ivies have been a favorite target of the divestment movement.  Despite activists’ efforts, Harvard, Brown, Columbia, Yale, and Cornell have already said no to selling off fossil fuel assets.  And it doesn’t look very promising for the last two Ivy League holdouts.

Princeton has been relatively mum on the issue, but has not faced as bold of protests as its peer institutions.  However, President Emeritus William Bowen recently wrote an opinion piece for the Washington Post on the matter, 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.”

Here’s another one, regarding the hypocrisy of the movement:

“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.”

Meanwhile, Dartmouth has been facing more student pressure and the Board recently conceded a meeting with Divest Dartmouth about the issue.  Afterward, it appeared that students wouldn’t be getting an answer any time soon.

Generally, it seems Ivy League schools take the responsibility of managing their endowments seriously. And given recent research by Prof. Bradford Cornell, we know exactly what Harvard, Yale and Columbia are set to lose if they gave in to protesters demands.

After analyzing the schools’ endowments, he found that Harvard would lose $108 million, Yale $51 million and Columbia $14 million if they divested.  That’s a steep price to pay for an empty gesture.

Clearly, the Ivy League would rather that money go to scholarships or research rather than disappear into thin air with nothing to show for it, because we know that divesting does not have a tangible impact on the environment or the companies it targets.

Bottom line: This week was a tough one from the divestment movement, and we’re only one month in to the fall semester. Ivy league or not, it is clear universities know divestment is the wrong choice.