December 14, 2015

University of Michigan Latest to Reject Fossil Fuel Divestment

In a little noticed December 4, 2015 statement from the University of Michigan Office of the President, Dr. Mark Schlissel explains his reasoning for opposing fossil fuel divestment. The rejection by the University of Michigan is the latest blow for the national divestment campaign, which has suffered several setbacks this fall from New York to California. From Dr. Schlissel:

I very much appreciate the commitment and passion exhibited by students who have steadfastly advocated on the issue of climate change, specifically that U-M divest from fossil fuel companies in its endowment.

 In the previous two instances where we eventually divested, the investments – in tobacco and in South African corporations under that nation’s system of apartheid – were inextricably linked to immoral and unethical actions and ideologies. There was little to no redeeming social value related to the investments or the industries.

 In the case of the fossil fuel industry, it is a very different matter. Fossil fuels enable us to operate the university, to conduct research and to provide patient care. At this moment, there is no viable alternative to fossil fuels at the necessary scale. In addition, most of the same companies that extract or use fossil fuels are also investing heavily in a transition to natural gas or renewables, in response to market forces and regulatory activity. I do not believe that a persuasive argument has been made that divestment by the U-M will speed up the necessary transition from coal to renewable or less polluting sources of energy.

 For these reasons, I do not think that consideration of divestment from fossil fuels is the right step. We made a commitment to our donors to use income generated from the endowment to support our mission for today and for future generations –academic and research programs, student support, and life-saving patient care. The endowment should not be used to further other causes, however noble. 

The statement was made just ahead of the release of a poll commissioned by the Independent Petroleum Association of America (IPAA) which surveyed 275 major, individual college donors and found that 79 percent of donors did not expect divestment to have any “tangible impact” on the environment or climate change. What’s more, nearly two-thirds indicated that they would be less likely to donate to their college if they found out it had divested its endowment from fossil fuels.

Meanwhile, experts such as Professor Bradford Cornell of CalTech and Professor Daniel Fischel from the University of Chicago, have outlined the clear financial costs of divestment on university endowments. And, as Divestment Facts reported recently, the administration and students are listening. President Schlissel is only the latest to join the growing ranks of top-tier university presidents who have all voiced their opposition to the movement.

In fact, Schlissel calling divestment nothing more than a “symbolic action” and a “political argument” reinforces similar points made by Harvard President Drew Faust earlier this year, in which she stated:

“I don’t think that divestment is an appropriate tool, because I don’t think the endowment should be used for exerting political pressure. It is meant to fund the wide range of activities that the University undertakes.”

The University’s fossil fuel divestment campaign, Divest Invest, has reacted by calling President Schlissel’s arguments “unsound,” but it is clear from the overwhelming consensus among college donors, presidents, students and financial experts that divestment an ineffective and costly strategy with no real impact.