Faculty at Cornell University voted for it. Nearly 100 faculty members at Harvard have written the university president seeking it. But don’t look for the faculty at University of Wisconsin-Madison to come out any time soon in favor of divestment from fossil fuels.
Members of the UW-Madison Faculty Senate seem pretty evenly split on the issue, said Bruce Barrett, a professor in the School of Medicine and Public Health. So after they tabled a proposal on divestment last spring, they appointed an ad hoc committee to study fossil fuels and climate change.
Since then, Dane County and the city of Madison resolved not to invest in fossil fuels, and Associated Students of Madison, the student government body of UW-Madison, came out in support of divestment by the university.
Divestment by the university would basically mean that the UW Foundation, the official fundraising and gift-receiving organization for UW-Madison, would no longer invest its assets in fossil fuel companies.
And a majority of members of that faculty ad hoc committee sided against divestment in a report accepted by the Faculty Senate in February.
Authors of the faculty report make no recommendation on divestment – presenting separate arguments in favor and against the action – but they do recommend four steps the university can take to fight climate change:
- Prioritize formal and informal education initiatives on climate change;
- Promote interdisciplinary research on climate change;
- Commit the campus to significant emission reduction targets;
- Promote non-fossil fuel investment opportunities.
It’s not that faculty members doubt the science behind climate change and the human role in it, amply documented in the report, says Barrett, a member of the committee. But the costs of divestment outweigh its benefits, say a majority of the ad hoc committee who oppose divestment.
Other members of the ad hoc faculty committee and their fields of study are Craig Benson, civil and environmental engineering; Vicki Bier, industrial and systems engineering; chairman Donald Downs, political science; Galen A. McKinley, atmospheric and environmental studies; Margaret Mooney, Space Science and Engineering Center; Gregory Nemet, public affairs and environmental studies.
Members agreed not to publicly disclose one another’s positions, Barrett said.
Fossil fuel divestment foes say in the faculty report that it is a divisive political movement that jeopardizes cooperation on more effective steps to reduce carbon use and is in conflict with the primary mission of the university.
What’s more, according to the UW Foundation, many major donors to the university have already expressed their strong disapproval of divestment and major donors would withhold their support, divestment critics write.
They also discredit the analogy with the 1980s campaign of divestment from South Africa in protest of apartheid.
“Divestment in that case had a clear moral rationale,” they write. “Apartheid is inherently evil…Fossil fuel companies are not inherently evil. But the divestment movement is often couched in terms that portray such companies as immoral.”
Why stigmatize the many millions of Americans work for such companies, many of whom are becoming allies in the environmental movement, they ask.
Proponents of divestment call global warming and climate change “an unprecedented and overwhelming threat to humanity.”
Divestment proponents write that its goal is to influence fossil fuel companies to follow more responsible policies, as well as to inspire better governmental regulations and change individual and organizational behavior.
As it is now, the companies that own the majority of known fossil fuel deposits are spending billions to find new deposits that will be environmentally costly to access, divestment proponents say. At the same time they are spending “pitifully small sums” on development of low- and zero-carbon emission energy systems.
“There are many among us at the UW who feel that it is wrong to seek profit by investing in such monumentally irresponsible endeavors,” write divestment proponents. Fossil fuel investments are imprudent, too, they say, because they believe that eventually governments will enact laws to keep fossil fuels in the ground, drastically reducing the value of those “assets.”
The university should refrain from entanglement in politics, they write. “But in the end, the overwhelming threat to humanity, made clear by extensive and conclusive scientific evidence, calls us to demand radical and rapid change in our energy system,” divestment proponents conclude.
Barrett acknowledges that divestment is a divisive issue, and he speculates that one reason there has not been the level of public discourse on climate change that the phenomenon warrants is that people are in denial.
“We’re scared to death,” he says.
But for all the arguments against it – including what is likely to be limited impact on energy companies – divestment is the way to go, he says.
”I think the splash we would make would raise the level of knowledge and discussion that is so desperately needed,” Barrett says.
Mike Knetter, president and CEO of the UW Foundation, responding to an email question on divestment, wrote that that the foundation’s stewardship and fiduciary obligations prevent it from “investing in ways that may not provide the best return on the entrusted to us by donors.”
But the foundation is exploring the possibility of offering donors an investment package free of fossil fuels, he said.
“We have a task force established to explore the potential options for an investment vehicle that would exclude portions of the investable universe for those who might find such an option attractive. We hope to reach a decision on this sometime in 2014,” Knetter writes.
Knetter responded to a question asking how much of the foundation assets were invested in fossil fuels by saying “’invested in fossil fuels’ is really not reported to us by the managers who invest some of our funds and it is not something that would be universally easily defined.”
The UW Foundation reported revenues of $299.71 million in 2012, in its filing with the Internal Revenue Service as a nonprofit organization. Total assets at the close of that year were reported as $2.2 billion.
Cornell University’s top financial administrators are reported as saying that selling off its investment in the 200 companies with the largest carbon reserves – an estimated 0.0048 percent of the companies’ combined value of $3.95 trillion in public energy stock – would have little impact on those companies. Approximately 9 percent of Cornell University’s long term investments are in energy, with about a third in public stocks and the rest in private investments, officials there said.
The Cornell Foundation posted $61 million in total assets in its 2011-2012 filing with the IRS.
At Harvard, the endowment is estimated at nearly $33 billion, according to news reports.
Some observers are pointing to pressure to divest at Harvard as evidence that the divestment movement is building momentum.