In Support of Fossil Fuel Divestiture Georgetown International Environmental Law Review

Christine Hottinger BannerIn Support of Fossil Fuel Divestiture

By Christine Hottinger, Guest Contributor

On June 4, 2015, the Georgetown University Board of Directors announced its decisions to “not make or continue any direct investments of endowment funds in companies whose principal business is the mining of coal for use in energy production.”

Scientists have been warning society and governments about the threats of global climate change for as long as I have been alive: the International Panel on Climate Change was formed the year I was born. But to this point, society and governments have been unable or unwilling to take meaningful action to curb the human contributions to climate change—that is, greenhouse gas emissions from burning fossil fuels to power electricity, industry, transportation, and agriculture.

Georgetown University has been making strides to change this state of affairs. In addition to its concerted efforts to curb emissions across campuses,[1] Georgetown has recently began offering an energy prize, and hosts an Institute for Climate Change as well as the Institute for Public Representation’s Environmental Section here at the law campus. Last week, the Board of Directors voted in favor of partial divestiture of the endowment from fossil fuels—that is, to give up direct holdings of coal.[2] Although this decision steps in the right direction, ultimately it is a half measure because coal is not the only fossil fuel that corrupts our atmosphere and threatens the planet’s future.[3]

The argument for divestment goes like this: it is immoral for an entity to implicitly sanction fossil fuel companies and to make money from global destruction. At their core, fossil fuel companies benefit the most from climate change and our continued reliance on fossil fuels. Fossil fuel companies are currently subsidized by the federal government, and have tremendous political clout—contributing to the climate denial movement, and fighting local and larger efforts to curb emissions. Divestment from South Africa is widely considered to have helped end apartheid with added pressure on governments to pull support from the apartheid regime. Divestment allows institutions, especially educational institutions, to put their money where their mouth is: i.e., against climate change. Common counter-arguments are that: divestment will cost institutions too much in the short term, holding fossil fuel shares enables entities to raise concerns with proxy votes, and that the fossil fuel companies will not be financially hurt by institutional divestment.

“Divestment allows institutions, especially educational institutions, to put their money where their mouth is: i.e., against climate change.”

Noam Chomsky recently rejoined these counter-arguments,[4] saying that they are irrelevant: costs are not as significant as the larger stakes and institutions ought to use their symbolic speech in this matter because of the high stakes of global climate change.

Many seem to be of two minds on what action is meaningful or prudent with respect to fossil fuel companies. On the one hand, people express reservation that divestment commitments do not go far enough to reverse or halt climate change. They regret both that current divestiture schemes are limited in scope and that they have little direct impact on fossil fuels companies’ bottom line. On the other hand, they worry that a commitment by Georgetown to divest would send too strong a message. That message is that fossil fuels are morally repugnant, and some fear it would be belied by the institution and individual members of the community continuing to partake of the current energy system; that we would be hypocrites. Before, I have asked individuals to consider that the climate crisis requires incremental change. On further reflection, however, I think they have the better argument.

Committing to divest can generate cognitive dissonance. Staking this moral ground on fossil fuels begs the question: What else do we have to do? Many remind us that individuals drive to work, use electricity, and fly on airplanes, among other carbon-heavy activities, and are therefore hypocrites. As legal scholars, we rely upon facts and precedent to effect principles. Too often, the status quo is invisibly knit into both precedent and facts. Divestment will illuminate the cognitive dissonance of the status quo as we strive, piece by piece, to make our actions more consistent.

“Standing on this moral limb with full divestiture will not make Georgetown into a punching bag for green inconsistency.”

Standing on this moral limb with full divestiture will not make Georgetown into a punching bag for green inconsistency, because would-be critics would be susceptible to their own arguments. Instead, discourse will have to flow towards what more can be done to prevent climate crisis.

The “bottom-line” argument also rings true: divestment does not hit fossil fuel companies where they live. However, these companies operate not in a vacuum, but a market. Currently, that market is distorted by subsidies and overvaluation of corporate assets: current known reserves cannot all be extracted and burned without heating the atmosphere far beyond the compacted threshold two degrees centigrade.[5] Divestment signals these distortions and may impact public relations, which can exert market force. Some of fossil fuel companies’ (often tepid) investments in renewable energy may be due to their desire to improve public image. The divestment movement has already spurred dialog on energy and transportation systems—and commitments by institutions and municipalities are growing. Harvard’s president expressed a similar concern—that its proxy vote and, therefore, its voice would be lost due to divestment. One might wonder, however, whether shareholders receive different treatment depending on their institutional backing, or if the unique voice of a Jesuit institution may not be more influential in other arenas.

Divestment is not a cure and I recognize that it is barely a salve for this crisis. But it is something that Georgetown can do to further dialog for the reasons above and for those detailed in the student proposal.[6] As the proposal recognizes, the Investment Office may feel the need to commit to divestment in tranches, but any commitment plan is the first step to promote the goods of divestment. And divestment is merely one way to raise our institutional voice against climate change. Georgetown’s commitment to divest direct holdings from coal begins this work, but represents only around 2% of the endowment, and only one major fossil fuel.

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[1] Georgetown University, Sustainability at Georgetown University at http://sustainability.georgetown.edu/initiatives/carbonfootprint.

[2] The full decision is available at https://georgetown.app.box.com/s/kiobphdxs6p17045w2ow284cc9x3kxqf. Although the meeting was kept fairly confidential, it seems from this resolution that the full Board never had the opportunity to

[3] See also Valerie Richardson, Climate Activists Give Cold Shoulder to Georgetown’s Move to Divest Only from Coal, Washinton Times, http://www.washingtontimes.com/news/2015/jun/5/climate-activists-give-cold-shoulder-georgetowns-m/ (quoting student organizers’ disappointment as well as a spokesman for a petroleum organization heralding decisions like this a victory for oil).

[4] https://www.youtube.com/watch?v=AQJQU2GzV0w

[5] Generation Foundation, Stranded Carbon Assets: Why and How Carbon Risks Should be Incorporated in Investment Analysis (2013) 6, available at http://genfound.org/media/pdf-generation-foundation-stranded-carbon-assets-v1.pdf; see Paul Fisher of the Bank of England, Confronting the Challenges of Tomorrow’s World, Speech before the Economist’s Insurance Summit 2015 (Mar. 3, 2015), available at http://www.bankofengland.co.uk/publications/Documents/speeches/2015/speech804.pdf (discussing the bank’s plan to investigate the likelihood that fossil fuel reserves will become stranded assets).

[6] GU Fossil Free, Divesting Georgetown’s Endowment from Fossil Fuels (2014), available at https://georgetownfossilfree.files.wordpress.com/2013/09/guff-proposal-aug-2014.pdf.

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