5529698153ab13dd4efff65c_IPAA.png

Blog

‹ All Blog Posts



May 29, 2020

Cornell’s “Divestment” Policy Won’t Affect Fossil Fuel Stocks

This week Cornell generated some headlines for moving forward with a divestment regime, even though a closer look shows that the new policy is anything but.  The Board of Trustees officially announced that the school would put a pause on new investments in private equity and bond vehicles focused on fossil fuels, but would not sell any stocks and the policy would not apply to comingled or indexed funds.

Though activists on and off campus framed the Board of Trustees’ announcement as “essentially” divestment, the fact of the matter is, the University doesn’t seem to be changing much about its portfolio.

Cornell characterized its decision as a “moratorium” on fossil fuel investments that affects only a small percentage of the endowment which is directly exposed to invested in fossil fuels—roughly 4.2 percent of the school’s holdings. But the announcement stopped short of mentioning divestment or characterizing the move as such.

Cornell’s avoidance of the word “divestment” is intentional. In 2016, under pressure from pro-divestment activists, Cornell established guidelines to determine the conditions under which it would consider divestment. According to that decision, the board could only consider divestment when a company’s actions were “morally reprehensible,” such as slavery, child abuse, or apartheid.

It seems that the Investment Committee does not think selling fossil fuels rises to that standard.

Cornell administration has been dismissive of divestment for years. During the 2016 divestment campaign, Harrison, the chairman of the board, called divestment “merely symbolic.” Donald Opatrny, then chair of the Investment Committee dismissed the idea that the endowment’s purpose was to promote a particular ideology:

“Cornell’s overriding responsibility is to maintain itself as a neutral forum for analysis, debate and the search for truth,” said Opatrny. “The university’s endowment must not be regarded primarily as an instrument of political or social power; its principal purpose is to provide income for the advancement of the university’s educational objectives.”

On campus, pro-divestment activists aren’t certain how to handle the announcement. In an initial Facebook post,  Justice Cornell, one of the leading divestment groups on campus, called the moratorium, “a victory to say the least,” but wondered if it was really what they had been asking for. The very next day, they gloated over divestment as though it were already accomplished.

At best, Cornell’s decision is not even a partial victory. Despite a massive push from campus activists on campus, including the passing of five student- and faculty-led resolutions in favor of divestment this spring, the Board of Trustees stopped short of a divestment announcement.

Cornell is making headlines, but without much substance.