Does stock divestment matter in fight over carbon-based fuels?

MAKING A DIFFERENCE?
MAKING A DIFFERENCE? "You're not really going to deter Exxon from developing fossil-fuel resources by having a few colleges and universities divest of their stock in Exxon," said URI President David Dooley. / PBN FILE PHOTO/MICHAEL SALERNO

When Emma Beade was a senior at Rhode Island School of Design, she became invested in the idea of getting her school to divest from fossil-fuel-producing companies so it could do its part to save the planet.

The student-organized Divest RISD Campaign in 2013 staged several protests, including a sit-in at then-President John Maeda’s office during the spring semester. Beade said that sit-in, when 11 students sat in the president’s office for 24 hours after reading their statements, ultimately led to a more serious consideration of the issue by the RISD administration and eventual support.

“I think in every generation there are issues that people care about and commit to,” said Beade, who now works as a design researcher for Microsoft Corp. “I saw an opportunity as a student that I had to make a difference.”

The RISD Board of Trustees voted last May after a two-year study to divest direct endowment investments in fossil-fuel extraction company stocks and bonds. But despite growing local and national momentum around the issue, particularly on college campuses, RISD remains the only Rhode Island higher education institution to vote to divest.

- Advertisement -

RISD’s decision was followed in July by an announcement from Providence Mayor Jorge O. Elorza that the city will no longer invest pension funds in the top 15 carbon-emitting coal companies in the country.

“These companies are simply the wrong investments for those who care about protecting our Earth,” Elorza said in a statement.

Student and faculty efforts to convince Brown University, the University of Rhode Island and other local schools to similarly divest have thus far met with resistance, despite the largely symbolic nature of the votes.

“I think it represents, for those institutions who have looked at it, a judgement not as to the desirability of doing something to reduce our dependence on fossil fuels as much as it is a discussion about, is this an effective strategy,” said URI President David M. Dooley.

“You’re not really going to deter Exxon from developing fossil-fuel resources by having a few colleges and universities divest of their stock in Exxon,” Dooley told Providence Business News.

“Exxon exists and all the fossil-fuel companies exist to extract fossil fuels. Whether you hold their stock, that’s largely irrelevant to them at the kind of levels we’re [talking] about here,” he continued. “On a practical basis, it’s the symbolic value I think people are largely arguing is important. And that’s a good debate to have.”

In rejecting a request for divestment last year, however, the University of Rhode Island Foundation cited the inability to prohibit investments in “specific industry sectors” from the foundation’s commingled funds and a “very limited availability of institutional-quality investment vehicles with no fossil-fuel exposure that fit the foundation’s investment strategy.”

The foundation’s March 2014 letter to the nonprofit Fossil Free Rhode Island said that excluding the fossil-fuel-industry sector “would represent a significant reduction in the foundation’s potential investment strategies.”

The foundation was unable to provide a figure to PBN for potential divestment costs.

URI Foundation Executive Board Chairman Lorne Adrain in an email said, “We believe climate change is an important challenge to the welfare of our planet. URI is a leader is sustainability policies, education and research, all of which underscore that belief. The pursuit of responsible consumer behavior at URI and groundbreaking innovation and discovery are our most effective means of making a meaningful contribution to solving the problem.”

In October 2013, Brown University President Christina H. Paxson issued a letter in response to a request to divest from United States companies that mine or use coal to generate electricity issued by Brown Divest Coal, a student organization.

Paxson acknowledged that “companies that produce coal or use it in power generation cause social harm.” However, Paxson wrote that “the existence of social harm is a necessary but not sufficient rationale for Brown to divest,” citing that divestiture must “be likely to reduce the harm” or made because “the harm is sufficiently grave.”

Paxson called deciding whether coal fit the criteria a difficult judgement call because “coal is necessary for the functioning of the global economy.”

The letter, which rejected the request, is, according to a university spokesperson, the last formal communication from the school on the matter. Students have reorganized their group to focus on fossil-fuel divestment and are now known as Fossil Free Brown.

“Our group felt that coal divestment would have been a great first step but we felt that national movement is that as our climate crisis increases, fossil fuel is what we really need to focus on,” said Ruby Goldberg, a rising junior at the university. “Brown really should be following that trend. We just had our 250 years [anniversary] and we’d like to be around for another 250 years.”

But even for some schools that have moved to divest, the votes have had limited impacts on their endowments.

Bloomberg Business in June reported that several large institutions that have voted to divest have had limited investments in fossil-fuel stocks.

The 10 wealthiest schools announcing commitments to divest since April 2014 oversee a total of more than $30 billion of assets, according to the report. Excluding Stanford and Georgetown, which declined to provide exact amounts, the institutions have agreed to sell a total of about $25 million of fossil-fuel stocks, according to a review by Bloomberg.

“These efforts are pure window dressing,” Frank Wolak, an economics professor who directs Stanford’s energy and sustainable development program, told Bloomberg. “And, much to my surprise, the student groups are complicit in this deception.”

RISD’s direct investments in fossil-fuel extraction companies, including exploration and production, oil and gas, oil equipment and service, and integrated oil and gas companies, totals $5.92 million and constitutes 1.8 percent of its $321 million endowment as of June 2014.

While RISD’s vote will have a limited impact on the school’s endowment, it sent a much more valuable societal message, according to Beade.

“Divestment is about leading a moral imperative,” she said. “RISD’s divestment is part of a greater, global movement. This is an ethical battle, and we need ethical leaders to shift our values and, in turn, the policies and economies that will create – instead of destroy – our future on this planet.”

Peter Nightingale, a physics professor at URI, has been making the same argument for years.

“Continuing to invest in companies that make money on fossil fuels is, simply, ethically impossible,” he said. “There is not an ethics system under the sun that gives its blessing to destroying the Earth that we are going to leave for our kids.”

Nightingale also is the spokesperson for Fossil Free Rhode Island, which he helped co-found about two-and-a-half years ago to persuade the state’s three public colleges and universities – the Community College of Rhode Island, Rhode Island College and URI – to join the growing national divestment movement.

So far, though, among those schools only URI has taken a vote on the issue.

In April, Fossil Free R.I. joined the Multi-School Fossil Free Divestment Fund in order to intercept donations to URI, with the goal of persuading the university’s foundation to reconsider the divestment request.

“We’ve asked in a friendly way and they declined, so what do you do next? You either go home or escalate the fight – and [escalating is] where we’re going,” Nightingale said. Last month Nightingale and another man representing a group opposed to natural gas were arrested after locking themselves to the front gate for Spectra Energy’s compressor station in Burrillville to protest the company’s expansion plans. Charges of disorderly conduct were later dismissed.

Nightingale is among those whose scientific thought places a large portion of global-warming blame on the burning of fossil fuels, which trap heat when used to power vehicles and generate electricity. By reducing fossil-fuel emissions, he and many believe, the Earth’s climate stands a far better chance protecting the environment from further deterioration.

“If we keep doing things the way we are doing them for 10 or 15 years, we may reach the point of no return. Ten to 15 years is not a long time,” Nightingale said.

The multischool fund allows donors to give money to a donor-advised fund through Impact Assets, a nonprofit organization based in Bethesda, Md., instead of to a school’s foundation. The donated funds are kept in an account – minus money used to cover Impact Assets’ management fee – until the designated school votes to divest from fossil fuels or until 2017, the deadline given for schools to commit to divestment.

If a school does not vote to divest by 2017, the funds will be distributed to schools that have committed to divest.

The 2017 cutoff represents, according to the fund’s launch release, the cutoff year for building new fossil-fuel infrastructure “if we are to avoid catastrophic climate change.”

Thirteen schools were listed on the fund when it launched in December 2014. Today, there are 24 schools listed from 12 states and Washington, D.C. URI is the only Rhode Island school on the list.

According to the multischool fund’s website, divestment will help stop fossil-fuel extraction and burning, thus helping to prevent global climate change through a “powerful social and political impact.”

RISD Board of Trustees Chairman Michael Spalter said the decision there to divest was made to “participate in the conversation about an issue that has been of great and increasing importance to our community and to RISD itself.”

While acknowledging that divestment may not affect the behavior of fossil-fuel-extraction companies, Spalter said that “as a leader in creativity and creative thought, RISD has a unique opportunity to help design solutions to the challenges of the future.”

Fossil Free Brown wants to see the state’s Ivy League institution follow suit.

“Brown as an institution has acknowledged a responsibility to invest in moral industries. We have a responsibility to ensure that we are protecting our planet,” Goldberg said. “[Divesting] is a way for individual people to make a big statement.”

Fossil Free Brown last spring submitted a petition to Paxson requesting that the university’s Advisory Committee on Corporate Responsibility in Investment Policy study the possibility of fossil-fuel divestment. It’s the same committee that studied the possibility of coal divestment.

Goldberg said the group has not heard back from Paxson, but acknowledges logistics that make progress slow, including that ACCRIP is comprised of faculty and students who have limited time outside of classes to meet. If the group does recommend divestiture, Goldberg expects a board of trustees vote to be slow going, too.

“The board meets three times per year, and they are high-level individuals, and it’s difficult for us to communicate with them effectively,” she said.

The group is working on gathering faculty support to sign a letter backing its initiatives, which would be submitted to Paxson.

Fossil Free R.I. plans to continue its push for fossil-fuel divestment at URI. There is not enough manpower, Nightingale said, to make a similar, simultaneous effort at CCRI or RIC.

“Each school manages their endowments independently, so we’d need three groups to lobby those organizations,” he said.

Nightingale said he and the Fossil Free R.I. members are heartened by the growth of the multischool fund, though it has thus far collected only about $20,000 for all schools, and RISD’s divestiture decision.

“More and more schools are divesting,” Nightingale said, adding that he sees entities like the city of Providence and high-profile decision-makers publicly speaking out in concern of fossil-fuel effects.

“Things are moving slowly, but I’m encouraged by the various developments we see throughout society,” he said. •

No posts to display

1 COMMENT

  1. I think it is important to reduce emissions of greenhouse gases, but I fail to see how university divestments saves even one barrel.

    On the other hand, Brown U by providing free use of RIPTA transit to all students, faculty and staff is making a real contribution, while URI-Providence which provides free (but expensive) PARKING to all students, faculty and staff downtown but no transit incentive is making things worse, especially as the traffic they promote is in the most congested, polluted part of our state, where there is good transit access from almost everywhere.