Editor’s note: Concerned about their future and climate change, many college students have joined campaigns to pressure universities to divest their endowments from fossil fuel companies. We asked Boston University professor Cutler J. Cleveland, who is active in divestment efforts, to share his perspective.
I have taught courses in the energy and environmental sciences at Boston University for 27 years. For most of that time I have remained “above the fray” when it comes to activism, preferring to let others, including many of my students, engage in the political process.
I can no longer stand on the sidelines. Climate change and other impacts that stem from our reliance on fossil fuels are large, growing and they disproportionately harm the poor in every society. As a scientist, I conclude that the evidence is unassailable. As a citizen, I am compelled to try and use this information to help steer our energy system to a sustainable future. Many universities hold large endowments or funds that have significant positions in fossil fuel companies. This investment will increasingly be viewed as an abdication of the university’s treasured position as representing the intelligence of society.
Three years ago, I wrote a letter as then co-chair of Boston University’s Committee on Sustainability urging the university’s Board of Trustees to seriously investigate divestiture. And with my colleagues, I recently started a blog that discusses issues surrounding energy transitions.
I’m not the only academic to get involved in this issue. At least 200 institutions of higher education, foundations, religious organizations, and cities have committed to divestment. This includes about 32 colleges and universities that have pledged some level of divestment; at least an equal number have publicly rejected divestment.
At Boston University, a faculty petition and the student group DivestBU have prompted the University’s Advisory Committee on Socially Responsible Investing to take up the divestment issue. So pressure by faculty and students has helped make divestiture a front-burner issue.
Why we need to change
This is a multi-faceted problem, but one issue, in particular, motivated me to act. Boston University and many other institutions of higher education have education and research programs that describe the nature of climate change and its impacts on society. The same institutions have invested considerable effort in “greening” their business operations, including efforts to improve the efficiency of energy and water use, recycling, purchasing and procurement, building and renovation, and outreach to students, faculty, and staff.
But climate change has not been confronted in the boardroom, where endowments have been ring-fenced from transparency and scrutiny. This is what I want to change. Universities face charges of being hypocritical. What message do you send when you grant degrees with titles such as “Sustainability,” “Environmental Science,” and “Climate and Society” with one hand, yet with the other hand invest in the activities that drive the very problems those degrees aim to address?
Yet the argument for divestment spans the financial, economic, environmental and ethical domains. One guiding principle is the existence and degree of harm caused by the use of fossil fuels. As stated by Robert Knox, chair of the Board of Trustees of Boston University, circumstances exist to consider divestment only when “the degree of social harm caused by the actions of the firms in the asset class is clearly unacceptable.”
A prodigious body of evidence indicates that the fossil energy system causes pervasive human health, environmental, and social harm across every society, and that these costs will grow in the absence of explicit measures to address them. Climate change will shave about $1.2 trillion from global GDP this year, and that cost is growing by about 2 percent per year. The World Health Organization estimates that an additional 250,000 people will die annually between 2030 and 2050 from conditions caused or worsened by climate change. Air pollution from fossil fuel combustion reduces life expectancy by up to 1.6 years in the US and five years in northern China. These costs will grow if we continue to develop unconventional oil and gas sources such as oil sands, shale gas, and shale oil which have larger ecological footprints than conventional sources.
The dependence on oil leads directly to violent conflict. In the name of national security, the US military has frequently been used to protect access to foreign sources of oil and to protect key suppliers such as Saudi Arabia and Kuwait from internal revolt and external attack. Oil revenue channeled through charities, schools, and private donors in some Middle East nations helped create and sustain both Al-Qaeda and the Taliban.
University endowments face tangible financial risk from their investments in fossil fuels. Material efforts to enforce a carbon budget designed to prevent unacceptable damage from climate change will result in a dramatic loss of value for fossil fuel assets, principally in the form of stranded assets, or energy sources that will left in the ground. Companies with large amounts of stranded carbon resources could see their stock prices fall, lowering the value of investment portfolios that hold the shares.
Universities also face risk to their reputation. The ability of the university to sell itself to prospective students, faculty and contributors rests on its authority as a source of knowledge vital to humanity. If there is a misalignment of its teaching, research, operational, and financial behaviors, that authority and the institution’s viability, is put at risk. Failing to act carries a significant reputation risk, as the university’s very existence is defined as a civilizing force. Universities seen to be complicit in destruction will likely lose position, students, faculty and reasons to be proud of what they do.
Some say divesting from fossil fuels while at the same time using those fuels to run campus operations is hypocritical. But I believe hypocrisy only arises if one’s investment behavior is misaligned with the nature of your research and teaching programs, and with your campus operations.
No one expects to flip a switch and be divorced from fossil fuels. But many universities have expansive research programs that provide elements of the roadmap to a sustainable future. This includes teaching programs that prepare young adults to navigate life in that future, and campus operations that reduce the institution’s carbon footprint and overall environmental impact. In this situation, there is no hypocrisy in divestment, even if the institution continues to rely on fossil fuels for some time.
Another frequent argument made against divestiture is that low-carbon forms of energy are more expensive than fossil fuels, so “forcing” a transition will impose a significant cost on society. As a blanket statement, this is demonstrably false.
Multiple independent studies and the observation of actual investment patterns unequivocally demonstrate that energy efficiency and onshore wind power are as cheap or cheaper than electricity generated from fossil fuels in many regions. The cost of electricity from solar sources is plummeting. The price for solar photovoltaic technologies has dropped from $50-80 per watt in the 1970s to less than $1 per watt today. Lower cost drives adoptions; about 26 percent of all new electric capacity in the first half of 2014 in the US was solar.
A university’s role in society
There are three takeaway points on divestment. First, addressing climate change is central to the mission of every institution to higher education because it imperils vital aspects of human existence and, therefore, crosses every academic discipline and profession.
Universities have an obligation to their students, facility, alumni and society to understand the nature of, and the risks posed by, climate change. To the best of their abilities, they must see that such knowledge is used in society’s best interest. This obligation holds regardless of whether or not divestment is being considered.
Second, divestment is feasible and, if intelligently implemented, should not threaten the financial health of endowments.
Third, universities do not have to go it alone. There is a rapidly expanding set of informational resources, analytical tools, and institutional partnerships that support the planning and implementation of divestment.
This article is adapted from “The Path to Fossil Fuel Divestment for Universities: Climate Responsible Investment,” Cutler J. Cleveland and Richard Reibstein.