Divestment Campaign Reaches Yale

by Eric Ellman

In August, 2012, Bill McKibben published an essay in Rolling Stone calling for the nation’s universities to divest their oil and gas holdings. Within a year, seven universities agreed to stop purchasing energy stocks and to start a staged sell-off of those they own. For San Francisco State, Hampshire, Unity and Sterling Colleges, the College of the Atlantic and Green Mountain College it is a collective effort to get the fossil fuel industry to leave 80% of their CO2-producing inventories1 underground, climate science’s best estimate of what is required to avoid irreversible environmental catastrophe.

Recent decisions not to divest by Brown and Harvard have cost the divestment movement significant momentum. Student leaders at Yale hope to recapture that momentum following a successful student referendum and faorable op-ed piece in the Yale Daily News by John Macey, one of the members of Yale’s Advisory Committee for Investor Responsibility appeared in November.  Plans are currently underway to convene panel of Yale faculty and alumni, including investors, ethicists, and a U.S. Senator to discuss a proposal for Yale University to make the same commitment with a sum that’s about forty times greater than the collective endowments of the previous seven colleges combined.2

The proposed panel — to include Tom Steyer (asset manager and environmentalist), Rhode Island Senator Sheldon Whitehouse, Don Elliott (Law School), Tony Leiserowitz (Yale Project on Climate Change Communications and FES), and Robert Rosenkranz (Chief Executive Officer of Delphi Financial Group) — will compare the university’s  “moral obligation” to divest with principles laid out in 1972’s The Ethical Investor, authored by Yale faculty and which “pioneered responsible institutional investing at Yale and across the nation.”3

An 80-page document that students presented to the Advisory Committee on Investor Responsibility outlines a management plan by which the University would track emission records in energy companies in which it invests, and sell the stock if the company fails to improve or to report. Those urging divestment acknowledge that any stock Yale sells from its portfolio will be purchased by others; the companies won’t feel any economic pain.  But for organizers that’s not the point.

“Yale’s significance goes beyond money,” says Fossil Free Yale Coalition Coordinator Yonatan Laudau.  “The endowment and its manager, David Swensen, are so well respected. We talked to Princeton and Harvard endowment officers, and most of them worked with David Swensen. They come from Yale.  If Yale divests, the ripple effect will be enormous.”

Styled after the campaign against apartheid

McKibben’s call for divestment is styled after the global campaign that helped topple apartheid in the 80’s. Archbishop Desmond Tutu called the U.S-based boycott against companies investing in South Africa an indispensable part of their eventual victory.  For the 155 U.S. colleges who participated4, it represented a high-water mark for student activism.  But is the analogy appropriate?  Do the nation’s energy companies represent the same evil as a system that systematically oppressed one race over another? 

Harvard University doesn’t think so.  Calling divestment “neither warranted nor wise,” President Drew Faust announced in an October 10 letter that the world’s richest university endowment wouldn’t be participating.  Neither would Middlebury College — McKibben’s employer — sign on. Their President Ronald Leibowitz used an August 28 letter to state that the college that pioneered environmental studies as a major and which is on track to becoming a carbon-neutral campus by 2016 would not divest.  His reasons were similar to those voiced by Faust and both questioned the practical effect of the measure.  Both were hesitant to constrain their money managers and consequent funding for future generations.  Both were concerned about opening the door to more appeals and more causes, turning their endowments into political instruments rather than economic ones.

Economics, both sides agree, is at the heart of the matter.  Divestment supporters readily admit that the gesture they advocate is symbolic and will not keep oil and gas in the ground.  Buried in McKibben’s original essay, however, is a strategy that could.

“If you put a price on carbon, through a direct tax or other methods, it would enlist markets in the fight against global warming. Once Exxon has to pay for the damage its carbon is doing to the atmosphere, the price of its products would rise. Consumers would get a strong signal to use less fossil fuel – every time they stopped at the pump, they’d be reminded that you don’t need a semi-military vehicle to go to the grocery store. The economic playing field would now be a level one for nonpolluting energy sources. And you could do it all without bankrupting citizens – a so-called “fee-and-dividend” scheme would put a hefty tax on coal and gas and oil, then simply divide up the proceeds, sending everyone in the country a check each month for their share of the added costs of carbon. By switching to cleaner energy sources, most people would actually come out ahead.”

Advocates of “fee and dividend” include former NASA scientists James Hansen and former Republican Representative Bob Inglis, who sponsored legislation in 2009 that would have made it law.5  It is an example of the sort of innovative policy initiative that comes from our nation’s centers for studying issues like the environment, economics, climate science and how they all work together.  It is also a policy that recognizes the global scope of the climate change problem, but also its genesis, a system that includes producers and consumers.  By that measure, are the energy companies the moral equivalent of the rulers of apartheid South Africa?  Or are they lucky beneficiaries of a system of energy provision in which we all participate and which we now realize threatens the planet?

At one point in McKibben’s essay he plays with the words of Walt Kelley’s “Pogo” the opossum who says, “We have met the enemy and he is Shell.”  Might it have been more accurate to quote the opossum verbatim, “We have met the enemy and he is us”?

1Global Warming’s Terrifying New Math, Bill McKibben, Rolling Stone, July 19, 2012


3A Report On Responsible Energy Investing, July 29, 2013.  Alice Buckley, Abigail Carney, Gabriel Levine, Minh Alexander Nguyen, Patrick O’Rourke Reed, Alexander Vernoit, Max Weinreich, David Gabriel Rissman,Yonatan Landau Liz Bullock, Halley Epstein, Mordechai Treiger,

4“Did an academic boycott help to end apartheid?”, George Fink, Nature, Volume 417, Issue 6890, pp. 690 (2002).