In Defense of Divestment

Illustrated by Zawar Ahmed

This week, Bill McKibben, an environmental studies professor at Middlebury College and a founder of the international climate action network, contributed a piece to the New York Times on the subject of fossil fuel divestment. Divestment is the process of puncturing the “veneer of legitimacy” that the companies responsible for rapidly rendering the Earth uninhabitable have constructed to defend their bottom lines. McKibben writes that activists associated with the movement—which is less than a decade old—have convinced more than 1,300 institutional portfolios, pension funds, and endowments to commit to keeping nearly $40 trillion out of the pockets of planetary arsonists. 

Last month, Harvard University announced its intention to follow suit with its own $53 billion endowment (the largest associated with an institution of higher education in the world) in response to a concerted and endlessly impressive movement of students and alumni organizing as Divest Harvard

In a year marked by global health emergency, austerity, and human suffering on an incomprehensible scale, Harvard’s returns on investment in fiscal 2020 were an astounding 33.6 percent. Even so, they fell short of Yale’s gains: 40.2 percent, or $12 billion. The resulting outcry has been immediate and justifiably furious, particularly given the synchronization of the announcement with the launch of Yale’s $7 billion capital campaign, which is named—you can’t make this shit up—“For Humanity.” 

Of course Yale should not be profiteering from crisis. But it is dangerous to act as though this is a novel paradigm. Yale’s endowment has generated annual returns averaging an unheard-of 12.6 percent over the last decade; it’s the best-performing university portfolio in the world. Our school is a powerhouse of institutional investing, so much so that the model of diverting cash from stocks into high-risk, high-yield securities is known as the Yale Model. Citing earlier Times reporting, McKibben explains, “[I]t’s private equity funds that have invested at least $1.1 trillion into the energy sector since 2010, overwhelmingly in fossil fuels, trying to make a short-term killing.”

Their killing is in fact a genocide. Climate change is an existential challenge, the greatest humanity has ever encountered. Its impacts will not be felt equally: poor, disabled, and otherwise marginalized people will experience the worst effects. In accordance with our current environmental trajectory, 150 million residences will be underwater within the next thirty years; the people who lose their homes will most certainly be those who can least afford such unimaginable loss. 

The scientific consensus is so strong and so damning that few reasonable people could disagree. Yale’s own Program on Climate Change Communication has documented a surge in public support for international climate action. The recently-launched Planetary Solutions Project, according to a June email from President Peter Salovey, aims “to bring the full weight of Yale’s expertise and resources to bear on… climate change and biodiversity loss.” In the same message, Salovey wrote, “[W]e must act to avoid catastrophic, irreversible damage to our planet due to greenhouse gases.” Indeed, Yale doesn’t exist if the planet doesn’t. 

But this sense of institutional urgency does not extend to the Investments Office, which has approached the pressing moral obligation to put its money where its mouth is with an unthinkable, unconscionable leisure and a total lack of transparency. Its fossil fuel investment principles were released by a subcommittee of a subcommittee, because the appropriate response to a crisis is, of course, to form a lot of committees. The chair, Jonathan Macey, was an alternate for the board of Hess Corporation, a Fortune 500 oil and gas company. (For more on the moral and logical failings of their report, including the failure to consider harms perpetrated by the industry outside of rising greenhouse gas emissions at the expense of taking action on misinformation, contamination, and imperial dominion, read Moses Goren’s “A Half-Step in the Right Direction,” published in the Herald last spring.) 

In this context, the urgency and righteousness of divestment are obvious. Yet many on the left remain unconvinced, or at least disinclined to act. I have been surprised and saddened by the frequency with which I encounter dismissals of divestment among environmental activists. These well-meaning detractors often bring up important points. Divestment is limited in scope to elite, wealthy institutions. It does not center those most impacted by the climate crisis. It says little about how funds should be reinvested or redistributed.

But in my mind, these are arguments for the efficacy of divestment. It is disciplined; it is feasible; it is dead-fucking-easy. It is personalizable to any context; it is accessible to anyone with an account at a major bank; it is demonstrably justified on both moral and economic grounds. (McKibben explains, “Early divestment adopters have been handsomely rewarded; over the last five years, the market has gone up at an annual rate of 16 percent, but the oil and gas sector has fallen at an annual rate of 3 percent. Now many investors are putting their money into clean energy, where returns have risen by an annual rate of 22 percent over the same period.”) 

Since Harvard’s divestment announcement on Sept. 10, other institutions including Dartmouth, Vassar, Reed, and the Ford and MacArthur Foundations have made similar commitments. Now consider again the impact of the Yale Model, our endowment’s annual returns, the singularity of this institution’s name in the world of finance. The time has come and gone and disappeared far into the dust for us to lead on environmental justice. But a principled commitment to stop cashing in on the climate crisis could influence networks of global capital pipelining billions of dollars into fossil fuels. 

Being affiliated with Yale grants us influence and leverage at one of the most powerful entities in the world. I will never have the opportunity to make a difference the way I do as a student here. And I will never organize on an issue as important as this one.

Divestment is not reformist; it is radical. More importantly, perhaps, it’s a fight we can win. But only together. 

On November 5 at 12:30pm on Beinecke Plaza, the Endowment Justice Coalition and its supporters will rally to demand that Yale disclose, divest, and reinvest its holdings in fossil fuels. 

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