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| Photo by London Commodity Markets |
The Guardian recently reported on an Oxford University study that recommended for investors to divest funds away from the fossil fuel sector. While the direct impact of divestment campaigns on share prices and company financing may be small, the study suggests that the reputational pressure could still influence transformative change in the fossil fuel industry.
The
researchers nonetheless acknowledged that even with the maximum possible capital divested by
university endowments and public pension funds, the total was relatively small
compared to the market capitalisation of traded fossil fuel companies and size of state-owned enterprises.
Debates on divestment of university endowments has been on-going within the academic community. For example, Hendey (2012) wrote an article in the Harvard Political Review expressing his view that divestment from fossil fuel companies would deliver a strong signal to the energy industry that
the academia takes a serious view of the climate-energy challenge.
On the other hand, Harvard's President Drew Faust released a statement in Oct 2013 that divestment of its investment in fossil fuel industry may not be warranted. She argued that there are more effective ways for Harvard to address both climate
change and to enhance its commitment to sustainable investment.
While we continue to ponder upon the efficacy of such fossil fuel divestment campaigns, I believe that tracking developments in this area would be interesting to see how academic institutions and the industry would respond to mounting pressure from such campaigns.
I notice that Drew tries to put a line between the academic and economic use of the fund. However, given that the investment is being used by some fossil fuel companies to misrepresent science ("Merchants of Doubt" has many illumating examples) and that if climate change reaches the higher projections there won't be a Harvard left to save, I'm skeptical.
ReplyDeleteOf course, you could replace "climate change" with "lung cancer from smoking" and you'd get a statement straight from 1988, before Harvard decided funding tobacco companies was too politically costly.
Thank you for the comment. The contrast of Harvard's response in the two cases is indeed striking. Hopefully with stronger scientific evidence, institutions may find action to mitigate climate change a more compelling case.
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