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Divestment From Fossil Fuel Companies

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Divestment

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One way to battle against the destruction of civilization by greenhouse gases is to encourage people and institutions to divest from fossil-fuel companies, basing this encouragement on a moral argument supported by a financial argument.

The Moral Argument

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The moral argument says, in Bill McKibben's words, "if it's wrong to wreck the climate, it's wrong to profit from that wreckage." It is time to be "going after the fossil fuel companies," because theirs is a "rogue industry." "Mr. McKibben's goal," said New York Times writer Justin Gillis, "is to make owning the stocks of these companies disreputable, in the way that owning tobacco stocks has become disreputable." Another precedent appealed to by McKibben was the movement to divest from apartheid South Africa, which was crucial in bringing that system down. By turning fossil-fuel industries "into pariahs," McKibben argues, their "chokehold on politics" can be weakened. [1]

McKibben's divestment campaign began with colleges and universities, where faculties and students seek to convince their administrations and trustees that they should divest. Although several schools quickly saw that this would be the right thing to do, many did not. At Harvard, 72 percent of the students said that the school should divest, but its president, Drew Faust, said that divestment would be neither warranted nor wise. The task of the administration and trustees is to protect and increase its endowment, which should not be used for social purposes. Her argument was publicly challenged by then-Mayor Mike McGinn of Seattle, which had already divested. He agreed that she needed to make sure that Harvard's endowment would be there for future generations, just as he as mayor had to protect the city's pension system. But, he added, "We also share a greater and overlapping responsibility - one to our planet and to future generations," so they needed to figure out how to do both. He also argued that Harvard has a special responsibility: Having "the largest academic endowment in the world, one that rivals the size of the economies of many countries, Harvard is uniquely positioned to lead on this issue."

Responding to Faust's statement that divestment would mean "using the endowment as an instrument of political and social change," he reminded her that Harvard had done this before, when in 1990 it divested from the tobacco industry. This decision was motivated, then-President Derek Bok had explained, because Harvard did not want to be "associated as a shareholder with companies engaged in significant sales of products that create a substantial and unjustified risk of harm to other human beings."[2]

Although the divestment program has now expanded to all public-interest institutions, especially seminaries and churches -- including the World Council of Churches, which represents a half billion people [3] - it was wise for divestment movement to begin with colleges and universities, because just as the anti-Vietnam-war movement was primarily fueled by students, who did not want to die or have their friends die in a immoral war, young people do not want their futures destroyed by climate disruption. One student said: "By the time we're ready to have kids, buy a home -- it's already a radically different world if we don't put the brakes on as quickly as possible." Other students, disappointed that their school's board of trustees had rejected their call to divest, said: "When it comes down to it, the members of the board are not the ones who are inheriting the climate problem. We are."[4]

However, the appeal to students is not merely to their self-interest. McKibben tells them, "this is not only the crisis of your lives -- it is also the crisis of our species' existence."[5]

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The Financial Argument

The financial argument for divestment is that fossil-fuel stocks are becoming increasingly risky, so if individuals and institutions do not delete them from their portfolios, they are liable to lose a lot of money. This argument was stimulated by Carbon Tracker, which pointed out that, because we now know that most of the carbon in the ground must stay there, to prevent runaway global warming, those having portfolios with many fossil fuel stocks are destined to end up with a lot of stranded assets, meaning that they will be worthless. [6]

Al Gore, who is now the chairman of an investment firm, has referred to the estimated $7 trillion in carbon assets on the books of multinational energy companies, saying: "The valuation of those companies and their assets is now based on the assumption that all of those carbon assets are going to be sold and burned. And they are not. Although people might believe that Gore's opinion is biased because he is opposed to fossil fuels, this warning has already been made in a study ("Oil and Carbon Revisited: Value At Risk From 'Unburnable' Reserves") prepared by HSBC Global Research. [7]

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David Ray Griffin is emeritus professor of philosophy of religion at Claremont School of Theology and Claremont Graduate University. He has written 30 books. His most recent book is Unprecedented: Can Civilization Survive the CO2 Crisis? (Clarity (more...)
 

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