The Case for Divestment
By Lauren Johnstone (ECO)
Tuition alone is not enough to run Kenyon College. In order to pay its bills, professors, maintenance workers, AVI contract and everything else, Kenyon must raise extra funds in the form of an endowment. These funds are invested in order to foster growth and turn a profit. Naturally, the college’s portfolio is diverse, as it attempts to maximize its profit and avoid having to reduce financial aid packages or raise tuition in order to meet its financial obligations.
But this investment strategy comes with social cost: we find ourselves in a situation in which Kenyon’s investments endorse and encourage the use of fossil fuels at a time when energy conservation should be an increasingly important priority. The current divestment campaign aims to take these invested funds out of fossil fuel companies. The numerous reasons for this movement are all rooted in the dire urgency of climate change.
Most of us are already familiar with the science: the combustion of fossil fuels emits greenhouse gases, most notably carbon dioxide and methane, into the atmosphere. These gases create a greenhouse effect which traps incoming heat inside the earth’s atmosphere. This heating creates a disastrous feedback loop, whose ultimate effects remain largely unknown. To put the issue in perspective, however, the World Bank, a group dedicated to reducing global poverty, recently announced that it will not be able to operate in a world warmed to 4 degrees Celsius higher than pre-industrial temperatures. We’ve already warmed the world 0.8 degrees Celsius, and our current trajectory puts us on track for a 6 degree rise.
The divestment campaign insists that our institution should not have any fiscal ties to the fossil fuel industry. It is immoral on our part to gain any form of profit while people suffer each year at the hands of an increasingly disastrous climate. Storms like Hurricane Sandy are becoming more frequent, droughts more commonplace, forest fires are lasting longer and covering more land and island nations are beginning to disappear under rising seas. And these kinds of catastrophes are disproportionately affecting poorer communities. With divestment, Kenyon would take a stand against the fossil fuel industry’s destructive business. The return that Kenyon earns on its investments cannot come at the expense of human and planetary health. We can make our money elsewhere.
It’s no surprise that the fossil fuel industry is wildly profitable: the world wants cheap energy. And it would be misguided to fault the energy industry for using the free market to efficiently distribute natural resources to new markets. Their doing so has helped develop communities that would otherwise be living in pre-industrial conditions. However, rampant and unregulated growth in the world’s consumption of fossil fuels is not a sustainable path forward. At a certain point, we run the risk of developing ourselves out of existence.
Perhaps divestment appears a bit far-fetched in tackling the inherent problem with the industry. It is true that Kenyon’s divesting will not make much of a difference in the global market for oil. We are a small institution with a small endowment—according to the most recent available figures, about $184 million. In fact, even if every college and university divested from fossil fuels, these goliath companies would not take a hit. Divestment, however, goes beyond the pockets of these companies. Schools would be sending a strong message that as educators preparing young adults for the future, it is reprehensible to benefit in the short-term from something that threatens that future. We would also be doing what endowments are intended to do, that is, provide generational equity by ensuring the college’s survival for graduating classes to come. Our economy, by choice or by eventual necessity, will be forced to run on something other than fossil fuels. By divesting now, Kenyon will set a precedent for forward-thinking institutions, showing that it is possible to be both profitable without sacrificing principle.
While the divestment campaign is only focused on separating Kenyon’s money from the fossil fuel industry, it does have a few ideas about where that money could be reinvested. In the coming years, renewable energy will power the world. If we shift towards renewables sooner rather than later we will avoid the unnecessary environmental and human degradation that our environmental intransigence is leading us towards. Renewable energy companies need capital to become price-competitive with fossil fuel companies; our investments can provide some of that necessary capital. Coal, oil and gas have seen the field tilted in its favor for too many years. The green energy industry is poised for a boom, provided it receives moral and financial backing.
Divestment is not only in Kenyon’s moral interest, it doesn’t even effectively cut against Kenyon’s financial interest. Approximately 2-3% of our endowment is held in fossil fuel companies. Moreover, according to financial sources within the administration, the funds in question are used only minimally (approximately 7%) in our operating budget. Therefore, to pull this 2-3% of our stocks from fossil fuel companies would not be detrimental to the endowment or to the college.
One popular argument against divestment is that our financial advisors need not be ethics advisors. While this may be true, one does not need to be formally tied to ethics to act ethically. It is absurd to think one is absolved of their duty to act ethically when that is not in their job title. With every action, as world citizens, we are obliged to think of the moral implications. While this complicates the matter of investment, it is our moral duty. Through the divestment campaign, we hope to plant the seeds for these kinds of conversations. As members of a larger Kenyon community, we ought to be able to question the decisions our administration makes on our behalf.
Perhaps the most important part of divestment is the understanding of the impact investments can have. The college movement in the 1980’s to divest from Apartheid South Africa has been credited with helping end Apartheid. When 155 schools pulled their money out of companies that had holds tied the apartheid regime, they hurt the South African economy and directly gained the government’s attention. The fossil fuel divestment movement started last year by 350.org and Bill McKibben aims to have a similar effect on the fossil fuel economy. The hope is that through the retraction of investments, the companies and United States government will listen.
At Kenyon, we have been progressing with our divestment campaign throughout the semester. We have created a group of students passionate about the environment that see divestment as a powerful action our college should take. We have released a petition that has over 550 signatures. We have been talking with administrators, trustees and alumni. Throughout the campaign we have worked to create an open dialogue on divestment. While the ultimate goal of the campaign is to get fossil fuel companies out of Kenyon’s endowment, we hope that in the process we can create a new precedent of transparency between the administration and students. We want to work with the community to create viable solutions that keep our college financially stable while not benefiting from climate change. Such a respected institution as Kenyon should divest for its students, its greater community and the planet.