Responding to the attempts to promote divestment on the campus of Harvard University, the editorial board of The Crimson came out with a rebuke of the merits of divestment, asserting that divestment is the wrong tactic to focus on in the fight for a better environment.
The editorial board made several compelling points:
1. Divestment does not actually hurt energy companies: Several pro-divestment advocates have tried to convince the general public that if enough pension funds and endowments sell of their shares of energy companies, those companies will lose value and force a shift towards renewable energy. The Crimson’s editors rejected this notion, saying:
Simply put, it is the supply of and demand for fossil fuels that creates the market valuations of energy companies, not the reverse. Divestment has no ability to alter these basic economic realities.
The editorial board is not alone in this view. The staff of the California Public Employees’ Retirement System CalPERS, the country’s largest state-managed pension fund, recently stated that divestment “is an ineffective strategy for achieving social or political goals.” Former pension manager Christina Wood, who actually was involved in divesting CalPERS of certain portfolios in the past, wrote that “the notion that divestment is effective ignores historical fact.”
2. Divestment is a purely symbolic gesture: Even divestment advocates themselves have said that there are no tangible benefits that can be pointed to with regards to divestment. Harvard’s own Prof. David Keith, who supported divestment efforts in the part, conceded that in an article “divestment—narrowly defined—would accomplish little” The Crimson’s editors stated:
Any case for divestment therefore operates purely on the symbolic level.
3. While divestment may not hurt energy companies, it does hurt endowments: The Crimson’s editors pointed out that while the effect that divestment may have on energy companies would be negligible, it would deprive the school’s endowment of a more stable investment portfolio:
Such measures would be deeply harmful to the endowment’s ability to finance Harvard’s mission.
The concerns of the editorial board are firmly rooted in established research and evidence. Dr. Bradford Cornell of the California Institute of Technology took a look at Harvard’s endowment and concluded that Harvard would incur losses “exceeding $100 million per year.”
Harvard is not alone in opposing divestment. Stanford University’s trustees pushed back on a divestment proposal, saying that “the trustees do not believe that a credible case can be made for divesting from the fossil fuel industry.” At the Massachusetts Institute of Technology, President L. Rafael Reif rejected divesting, stating that “the deliberate public act of divestment would entangle MIT in a movement whose core tactic is large-scale public shaming,” Other universities, such as Denver University have also recently declined to divest, despite being pressured to do so.
For the complete text of the editorial, click here.