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The Case for Fossil-Fuel Divestment

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3) Faced with this kind of irrefutable evidence, colleges have led in the past, conceding that their endowments, in extreme cases, can't seek merely to maximize returns.

In the 1980s, 156 colleges divested from companies that did business in apartheid South Africa, a stand that Nelson Mandela credited with providing a great boost to the liberation struggle. "I remember those days well," says James Powell, who served as president of Oberlin, Franklin and Marshall, and Reed College. "Trustees at first said our only job was to maximize returns, that we don't do anything else.  They had to be persuaded there were some practices colleges simply shouldn't be associated with, things that involved the oppression of people." Since then, colleges have taken stances with their endowments on issues from Sudan to sweatshops. When Harvard divested from tobacco stocks in 1990, then-president Derek Bok said the university did not want "to be associated with companies whose products create a substantial and unjustifiable risk of harm to other human beings." Given that the most recent data indicates fossil fuel pollution could kill 100 million by 2030, the coal, oil and gas industry would seem to pass that test pretty easily; it's also on the edge of setting off the 6th great extinction crisis, so everyone over in the biology lab studying non-human beings has a stake too. Here's how Desmond Tutu, Mandela's partner in the liberation of South Africa, put it in a video he made for the DotheMath tour: "The corporations understood the logic of money even when they weren't swayed by the dictates of morality," the Nobel Peace Prize-winner explained. "Climate change is a deeply moral issue, too, of course. Here in Africa, we see the dreadful suffering of people from worsening drought, from rising food prices, from floods, even though they've done nothing to cause the situation. Once again, we can join together as a world and put pressure where it counts." Or, you know, not.

4) And it's not just people at a distance who are in trouble here, though so far they've borne the brunt – young people, the kind of people you mostly find on campuses, are the next chief victims of climate change.

Let's assume the average age of a college trustee is 60, meaning he or she has another two decades on this planet; they may shuffle off to the great class reunion in the sky before climate change becomes unbearable to well-off First Worlders. But your average student has six decades ahead – and scientists say that at our current pace of unrestricted warming, we could see the planet's temperature rise 6 degrees Celsius in that stretch, with consequences best described as science fiction. "By the time we're ready to have kids, buy a home – it's already a radically different world if we don't put the brakes on as quickly as possible," says Cowley, the national student organizer. "It's difficult to plan your life as a young person right now – by the time we get to 2050, we don't even know where we're going to get our food."

It's not like administrators, faced with global warming, are deciding for themselves. Carbon dioxide molecules stay in the atmosphere a century on average, which means, according to the modeling team at Climate Interactive, that "by the time a 55-year-old college president who insists today that a portfolio requires fossil fuel investment reaches the age of retirement, only 11 percent of the CO2 released during the class of 2016′s education will have left the atmosphere." In fact, says former college president Powell, such an analysis suggests trustees have a quasi-legal duty to do all they can about climate change: "The board is supposed to make sure that the endowment allows for intergenerational equity, that the students who are going to Oberlin in 2075 get as much benefit from it as those there now. But with global warming, you're guaranteeing a diminution of quality of life decades out."

At the very least, it feels bad – like the opposite of what college trustees are supposed to be doing. "I see this generation being betrayed on every front," says Klein. "Youth without a future – that's how they feel about the economy. And they when they understand that thanks to climate change they may literally be facing no future, it makes them really, really angry, as well it should." The good news is, lots of people are already reaching across those generational lines. "Sometimes it's dangerous to separate it by generations," says Alex Leff, a freshman at Hampshire College, which effectively divested this spring.  "My family always said, 'You kids have to do something about this.' I really reject that – what if we dismiss it too, and say it's a job for our kids?  Youth can't be the only ones driving this – it helps a lot to see our elders doing their part too." So at college after college, professors (many of whom were in college during past divestment fights) are signing petitions and joining marches. Alumni are starting to pitch in too – these are early days, but campuses report letters arriving from donors asking if they're planning to do the right thing.

5) And in this case, they can do the right thing without great cost.

College trustees, of course, are thinking about their endowments. They worry that they'll lose money if they do divest – that if they can't park their money in Exxon et al., their yields may dwindle.

The fear is almost certainly overstated – energy stocks have outperformed the market index the last few years, but lag if you take the last 30 as a whole. Stephen Mulkey is president of Unity College in Maine, which became the first college in the nation to officially divest its fossil fuel holdings. He stood up to give the news in front of the thousands that crowded into Portland's State Theater for that stop on our roadshow, an electric moment that brought the throng to its feet. "You don't have to do it overnight," he pointed out – indeed, campaign organizers have asked only that colleges pledge to sell their shares, and then spend the next five years winding down their positions so they don't have to sell in a fire sale. "There's abundant academic literature showing that social screening such as this, given the most likely market conditions in the near future, will not result in poor performance. You're not divesting and then just forgoing those profits – you divest from BP and invest in something else. You reanalyze your portfolio." In fact, there's been one academic study of the effects of divesting, and it shows the "theoretical return penalty" at 0.0034 percent, which is the same as "almost none."

At some schools, some of the money can be re-invested in the college itself – in making the kind of green improvements that save substantial sums. Mark Orlowski, head of the Sustainable Endowments Institute, just published a report showing that the average annual return on investment for a thousand efficiency projects at campuses across the country was just under 30 percent, which makes the stock market look anemic. "College trustees often think of a new lighting system as an 'expense,' not an investment, but it's not," he says. "If you invest a million and can expect to clear $2.8 million over the next decade, that's the definition of fiduciary soundness." At colleges – and elsewhere – the potential for significant reinvestment is large: the San Francisco Board of Supervisors, for instance, is considering urging its pension fund to divest a billion dollars. That could do some serious re-greening.

It's also possible that the insights into the future supplied by aroused student activists might actually make for savvy investing advice. As hedge fund founder Tom Steyer, who has advised trustees to divest their stock, put it, "From a selfish point of view, it's very good for colleges that they know something about the future that others don't. Because investing is not about what's happened in the past – all prices are really anticipations of what's going to happen in the future. As soon as the trouble we face is really common knowledge it's going to be reflected in the price. But it's not reflected in the price yet."

Steyer's a good investor – his net worth puts him on the Fortune 400 list, meaning he's worth far more than most college endowments. What he's saying is: Colleges are lucky to have physics departments not just because physics is a good thing. In a sense, universities have insider information – they know how bad global warming is going to be, and hence can get the hell out of fossil fuel stocks before, not after, governments intervene to make them keep their reserves underground. "Once the scientific research filters into the minds of investors around the world, the price won't stand," he says. But since the average investor relies on, say, the Wall Street Journal, which has served as an unending mouthpiece for climate denial, colleges have the advantage.  "The only way you gain an investing advantage over the rest of the world is when you have an edge." As for those who think they'll wait until the last minute, just before the carbon bubble bursts, "That's one of the stupidest things I've ever heard. No one ever gets out at the top. It's worth missing another couple of good years of Exxon to avoid what's coming."

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