This morning, an op-ed was published in the Daily Gazette, titled “Three Reasons to Vote No on Divestment.” The op-ed criticized the lack of prior notice about the referendum, as well as the language of partial divestment. Additionally, this article asserted that divestment would measurably hurt Swarthmore while proving to be of no real benefit to the environment.
While these concerns are valid and there is always a welcome place for criticism in any movement, these arguments fail to take into consideration the unique nature of this referendum, particularly with respect to the process of actually initiating and passing a referendum, as well as the specific requests that Mountain Justice (MJ) is making of the Board in this instance. These arguments also fail to address the actual goals of the fossil fuel divestment movement, and are largely based on outdated and incomplete information. MJ seeks to ensure that every member of our student body feels adequately educated to weigh in on this extremely important issue. We would therefore like to respond point-by-point to the questions raised in this morning’s op-ed.
Objection 1) The referendum is sketchy
The referendum process, which is outlined in SGO’s constitution, prevented us from advertising any earlier. First, 10 percent of the student body must petition SGO to hold a referendum. The referendum must be held within 2 weeks of this petition being submitted. Before MJ publicized the referendum, we wanted to ensure that we knew all of the details — most importantly when it would be and how to vote.
We know that this creates a short time frame in which to learn about the referendum, which is why we are trying to hold as many conversations as possible about it. In addition to our op-ed in the Phoenix, we held an ‘Ask Us Anything’ this weekend with the Daily Gazette. The student body had several questions similar to those posed in the article “Three Reasons Not To Divest,” and we responded to them in depth. The ‘Ask Us Anything’ is still open here. We will also be hosting two informational events while voting remains open:
- Monday, February 20th: Coffee, Cupcakes, & Climate Chat with MJ and SGO, 9-10 p.m. in Shane Lounge
- Come grab some snacks and talk to us about divestment, your questions, and your reservations!
- Tuesday, February 21st: Dogs for Divestment, 3-5 p.m. on Parrish Beach
- Come play with some dogs, eat homemade baked goods, ask us any questions, and vote!
We know that not everyone will be able to make it to these events, but MJ representatives will also be tabling in Sharples and Essie’s, and can answer a few questions or direct you to other people and resources that can provide more information. If none of the options above work, feel free to email us (email@example.com) or reach out to individual members of MJ.
Waiting another year for a referendum would prove disastrous in an era in which climate action is so essential and urgent. We must take immediate action to stigmatize the fossil fuel industry; we have the power and the resources to act NOW. With environmental regulations and agencies being gutted, global temperatures and sea level continuing to rise at an alarming rate, and extreme weather events increasing in frequency and severity, arguing that we can afford to wait yet another year for meaningful and tangible climate action ignores the devastating effects of climate change, and erases the extremely real and urgent struggle of frontline communities being impacted globally.
Objection 2) Divestment measurably hurts the school
The distinction between partial and full divestment is indeed a little technical, so confusion surrounding this point is understandable. However, Mountain Justice has made multiple resources available to learn about what partial divestment is (in addition to tabling and hosting events about it). Partial divestment does not hurt the school’s endowment.
There are three types of funds: index funds, separately managed funds, and commingled funds. Swarthmore’s endowment is currently invested in separately managed funds, which are customized to meet our needs, and commingled funds, in which multiple clients are pooled together to invest in a set of companies.
So what does partial divestment entail?
- That we ask our separately managed funds to screen out the top 200 fossil fuel companies, since these funds are customized for us anyway.
- For our commingled funds, we are asking our managers who already have fossil free accounts to move our money into those accounts.
- For our commingled funds that do not have fossil free accounts, we ask the Board to request that the managers of these accounts investigate the possibility of implementing fossil free accounts in the future.
The claim that Swarthmore will lose $200 million if we divest is no longer applicable with this proposal. As a Daily Gazette article on the loss specified, “The estimate has little to do with the returns of fossil fuel industry stocks and hinges on the argument that fund managers will refuse to select investments based on a particular client’s company-by-company preferences.” Since we are no longer asking to switch to index funds, as the original report assumed, this cost of $200 million does not apply to the proposal of partial divestment.
However, the report makes several other flawed assumptions as well.
- It assumes that there are only 500 securities in the market, and we would divest from 250 of them. Instead, there are over 63,000 securities, and we would only divest from 200 of these.
- It assumes that fossil fuel shares will perform at or above the market average. The expectations for fossil fuel performance are based on the fact that over the past several decades, fossil fuels were very lucrative; but in a time when they are becoming increasingly stigmatized, this no longer holds. Fossil fuels have actually underperformed the market average over the past several years.
Partial divestment is not projected to hurt the endowment and in the long-term will actually help it. For more information on the finances of divestment, look at Gregory Kats’ article on why divestment is financially advantageous, or this collection of resources around going fossil-free, including information on how fossil-free portfolios have been performing relative to the market average.
Objection 3) Divestment makes no tangible difference.
Strictly speaking, it is true that Swarthmore’s decision to divest from fossil fuels would not financially harm the fossil fuel industry in a significant way. Fossil fuel divestment, however, has never been about financially crippling the fossil fuel industry; rather, the fossil fuel divestment movement seeks to isolate and stigmatize the fossil fuel industry, stripping it of its social license to operate. In order to keep the planet below 2 degrees Celsius of warming, we will have to leave 80% of existing fossil fuel reserves in the ground. This goal cannot be achieved unless drilling, fracking, and mining become morally unacceptable. Divestment is a powerful and crucial way to foster that stigma.
Will Swarthmore “be the meaningful tipping point that collapses the stock price of fossil fuel companies”? No, nobody claimed that it would be. Swarthmore is, however, the birthplace of the international fossil fuel divestment movement. We are an institution that prides itself on taking moral leadership, and the immorality of the fossil fuel industry is hardly disputable. Swarthmore divesting will not collapse stock prices, but it will send a clear message that we refuse to be complicit in the destruction of our planet. Divestment, as a strategy, does not operate in a vacuum: it is strong because it is a powerful global movement.
In the same vein of not operating in a vacuum, divestment and other sustainability initiatives are not mutually exclusive; rather, they support one another. While greening our campus is an extremely important step to take, and we applaud the administration for doing so, avoiding climate disaster means more than just shifting a demand curve–it requires the complete rejection of the fossil fuel industry’s business model. As we work towards carbon neutrality and construct more sustainable buildings, we must acknowledge that we need to work on a broader scale beyond just the scope of this campus. Additionally, continuing to invest in companies that have funded climate denialism and carry on extractive practices that poison our air, land, and water actually undermines the important sustainability work Swarthmore is undertaking on campus.
While the goal of the fossil fuel divestment movement is not to financially cripple the fossil fuel industry, the financial success of this movement has been enormous. As of December 2016, over $5 trillion have been committed to divestment. This value is not the sole product of colleges and universities, either– Ireland recently divested, as did the Rockefeller family fund, and Norway divested from coal two years ago. The divestment movement has been growing exponentially, doubling in the last 15 months alone.
What’s more: oil and natural gas companies are taking notice. A study by the Oxford University Stranded Assets Programme found that “the outcome of this stigmatization process, which the fossil fuel divestment campaign has triggered, poses a far-reaching threat to fossil fuel companies and the vast energy value chain,” noting that stigmatized firms “suffer from a bad image that scares away suppliers, subcontractors, potential employees, and customers.”
Divestment is a proven strategy, and a successful one. In an era of inaction from the federal government, institutions must take moral leadership. One institution reducing its carbon footprint is not going to create the massive, systemic change that we need now more than ever before. To effect real, tangible, and meaningful change, we need to send a clear message that the fossil fuel industry is morally unacceptable. That message starts with partial divestment.
Featured image courtesy of www.greenphillyblog.com
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