Although elections for positions on Boston University’s 2015 Student Government Executive Board closed this past Monday, one ballot question will likely remain in the university discourse for quite some time: “Should Boston University divest (stop investing in) the fossil fuel industry?”
This referendum on the role fossil fuels should play in our university endowment is non-binding, but it is clear that there is a significant portion of the student body who is in favor of divestment, with over 75 percent of the more than 2,500 voters responding “yes” to the ballot question. Given this strong opinion in favor of divestment, it is more than time to thoroughly consider the arguments both for and against divestment from fossil fuels. In considering these pros and cons, we must keep in mind the ultimate goal of divesting from fossil fuels — stemming the danger of global climate change.
On the one hand, it is clear that use of fossil fuels is strongly correlated with climate change, which poses a threat to the structure of our current economy and society. While this relationship between fossil fuels and climate change is well established, there is comparatively little consensus on how exactly climate change will manifest itself, with various scientists proposing scenarios ranging from not ideal to pretty bad to downright apocalyptic. Despite the clear harm that we can already see occurring — winter in Boston this year was, shall we say, out of the ordinary — and which we can likely expect to accelerate, we need to now consider whether divestment is actually a worthwhile strategy to combat climate change.
Divestment primarily serves as a political symbol, a boycott and a sign of protest which says that we do not approve of companies that produce and sell fossil fuels. Symbols are well and great, but does this particular symbol have any practical effect on moving us away from fossil fuels? In other words, if BU sells any shares in ExxonMobil it might own, is it going to move ExxonMobil any closer to rejecting fossil fuels? Probably not.
Granted, large scale selling of ExxonMobil stock could reduce the company’s share price, theoretically putting pressure on management to adopt policies that would appease divestment activists in order to restore share prices. But this argument does not hold water either, as any movement by ExxonMobil away from their mainstay of fossil fuel production could just as reasonably be interpreted by shareholders as a sign of danger, which would further decrease prices. In this way, divestment could actually create perverse incentives that would encourage energy companies to double down on fossil fuels, rendering divestment not only ineffective but counterproductive.
While the purpose of divestment from fossil fuels is to encourage the shift away from fossil fuels and toward renewable energy — an extremely laudable and vital goal — it is clear it may not be the best way to affect this change. Because shareholders serve as the owners of a corporation, large institutional shareholders like BU can hold great sway with companies, especially if many other universities also advocated for similar climate conscious policies. Perhaps change from within is a more effective method for changing the behavior of energy companies than dumping shares onto the open market. This logic would suggest that universities invest rather than divest.
Energy companies have not been a great investment lately with the steep decline in oil prices over the past nine months, but they have been in the past. In considering the pros and cons of divestment, then, we should ask why BU is in the investing business in the first place. Investing in energy companies (or any companies, for that matter) produces returns for BU’s endowment, which means more money to invest in and improve our university. Is it really worth it to sacrifice a potential source of investment returns and university improvement by adopting a divestment policy with laudable goals but with dubious effectiveness? For these reasons, we must seriously doubt the effectiveness of divestment as a political tool.
While my thoughts so far have focused on the practicality of divestment, the final argument against divestment is an ethical one. As arenas for the free exchange of ideas, universities should be extremely reluctant about adopting a definite stance on specific social issues. Electing to divest would constitute the adoption of a specific opinion that would have the effect of limiting the free speech of those within the university community who oppose the official stance. If BU were to decide to divest, it should have a compelling reason to do so.
Indeed, BU’s Board of Trustees has stated that it will divest from any industry or enterprise that causes a “degree of social harm” that is “clearly unacceptable.” The only times they have found these criteria met is its divestment from the South African apartheid regime and the Sudanese government over actions in Darfur. Unlike these patently unjust acts, fossil fuels serve a rational and beneficial purpose, fulfilling over 80 percent of the total energy needs of the United States and facilitating every aspect of our modern lives.
Although we can recognize the need to move from fossil fuels to renewable energy sources in order to stem the advance of climate change, divestment is ultimately an ineffective policy that may very well be counterproductive to this goal. This ineffectiveness, coupled with its potentially detrimental financial effects, argue strongly against divestment. Furthermore, divestment violates the ideals of free speech fundamental to a university. Should Boston University divest from the fossil fuel industry? You decide.