April 24, 2015

Investing in Divesting

For the past two years, the UChicago Climate Action Network (UCAN) has been running a campaign urging the University to divest its endowment from fossil fuel assets. Stop Funding Climate Change (SFCC) has already gained the support of 70 percent of the undergraduate student body, as well as numerous faculty and community members. Last Friday, the SFCC led a walk-back to increase campus awareness and ask the administration to engage in a productive dialogue with students about the issue.

As SFCC’s profile rises on campus, we want to address some widely held misconceptions that pervade current student discourse about divestment efforts and their role in addressing climate change. First, the divestment movement does not intend to put financial pressure on fossil-fuel corporations. Rather, divestment is seen as a tool to socially stigmatize the corporations that are actively and irresponsibly perpetuating our dependence on fossil fuels.

The power of social stigmatization should not be underestimated. A turning tide of public opinion helps support relevant legislation and encourages politicians to incorporate an issue into their platforms. The social stigmatization of homophobia and sexual orientation–based prejudice, for example, has proved to be an incredibly potent strategy for securing pro gay rights legislation. The divestment movement can similarly harness this type of social censure in order to encourage legislation that will restrict the fossil-fuel industry and support sustainable energy sources. In fact, other divestment campaigns have done just that—and were successful. A 2013 University of Oxford study found that divestment was victorious in lobbying for restrictive legislation that affected stigmatized firms—galvanizing further action for issues from Darfur to tobacco to apartheid.

The critics who point out that divestment has no direct financial impact on fossil-fuel companies are correct. Divestment is a wholly indirect action—however, it is an important piece of a wider effort that has the potential to create real political change.

Critics of divestment also argue that those who accept an axiom of profit maximization would never entertain divestment. These arguments are based on outdated assumptions. Investment advisory firms Bloomberg L.P., Aperio Group, and MSCI have all found that fossil-free portfolios outperformed their standard counterparts. An MSCI investment index, for example, yielded on average 1.78 percent more profit than the standard index fund. Even when profit maximization is the priority, divestment remains the best practice and could even improve our University endowment’s performance, creating opportunities for increased financial aid and other resources on campus.

Even with these potential benefits, the SFCC ultimately recognizes that divestment is not a panacea for climate change. But neither is it irresponsible or ineffectual; it is simply one step (of many) that we should take when addressing climate change. And it is a step that we, as students, with a voice and a stake in an influential institution, are in the unique position to push for. As a leader of the intellectual world, the University of Chicago has the opportunity to join the 27 universities, 74 religious institutions, 33 foundations, 42 cities, and 20 other institutions around the world who have already chosen to withdraw their financial and moral support from fossil-fuel corporations. As we grow increasingly aware of the threats of climate change, ignorance toward the facts is no longer acceptable: There is no reason—moral, institutional, or financial—that the University of Chicago should not seriously consider divesting.

Sonya Bennett-Brandt is a second-year in the College majoring in English.

Kristin Lin is a third-year in the College majoring in political science.