Almost 40 years ago a movement was born on college campuses led by student activists advocating that their university endowments completely divest from any companies operating in Apartheid South Africa. Students built shantytowns on their campus grounds and occupied university administrators’ offices in order to elevate their cause and entice the national media – you know, that old school 60’s style organizing. Today, in this same spirit, environmental activists and students at over 200 campuses are organizing campaigns to encourage their endowment managers to completely divest from all fossil fuel companies.
With today’s tools for social organization, students have new opportunities to galvanize this movement. Environmentalist Bill McKibben and his organization 350.org, alongside other advocacy groups like the Responsible Endowments Coalition, have been successful in shining a media spotlight on this issue in the past several months. They’ve created comprehensive toolkits that are distributed freely online to empower students who are interested in starting divestment campaigns on their own campuses. University endowments manage billions of dollars, and a successful fossil fuel divestment campaign would deal a serious blow to oil and coal companies. While I’m impressed by the savvy and the energy of this movement (even if it has yet to produce any real results), I still wonder if divestment is the right path to choose.
Sure, pulling money out of publicly-held fossil fuel companies will affect their stock price, but they are not going to be crippled to the point of inoperability. The real change that needs to occur is to shift the collective focus of these companies away from fossil fuel extraction and towards clean energy production in a meaningful and timely manner. I would argue that demonizing them and reducing inflows to their R&D budgets is a failed strategy. These companies and their leadership, as unfortunate as it may be, hold the keys to a clean energy future. They are more prepared than governments, nonprofits or advocacy organizations to actually build the clean energy infrastructure. If we accept this as true (and, of course, I’m inviting debate here) then we must also agree that divestment is not an appropriate strategy.
Instead, what if we took an activist approach that encouraged engagement with fossil fuel companies? Through our own individual retirement funds, and through the investment portfolios of organizations that we’re a part of (universities, government agencies, unions, etc) we collectively own all of the major fossil fuel companies given our status as shareholders. We hardly ever consider the weight and responsibility of this ownership, but it’s incumbent on us as shareholders to define a new way forward for the fossil fuel industry. This strategy of deliberately investing in companies with poor social or environmental records in order to affect change from within is called shareholder activism.
Shareholder activism has a long history of success in contributing to meaningful corporate reform around issues like global health, environmental sustainability, human rights and labor practices. There is an organized global regime of leaders and institutions dedicated to filing shareholder resolutions to improve corporate practices. CERES, for example, directs the Investor Network on Climate Risk (INCR), a network of 100 leading investors collectively managing more than $10 trillion in assets. Ceres helps INCR members “leverage their power as shareholders to secure meaningful commitments on sustainability issues companies are facing.”
The student-led fossil fuel divestment campaign is (perhaps unintentionally) working against the shareholder activist community rather than in unison with it. I applaud the energy and awareness of students who are leading this movement, but I wonder if they would be more successful by integrating their movement with other shareholder activist organizations rather than taking a divestment approach. This issue seems to be come down to a fundamentally simple question: when something is broken, do you fix it?… or trash it and build something new?
What do you think?