On Nov. 6, an opinion piece in this paper expressed opposition to the aims of the Stanford fossil fuel divestment movement. Matthew Cohen ‘18 argued that “Stanford divesting from fossil fuels is impractical, hypocritical and distracts us from more effective measures we could employ to combat climate change.” We thank Cohen for his engagement, and for furthering the dialogue on this issue. However, as members of both Fossil Free Stanford and the undergraduate body, we feel it necessary to respond to the common but flawed arguments he presents.
Stanford, as Cohen notes, has divested before — from apartheid South Africa, tobacco companies, Sudan and the coal industry. When Cohen references apartheid, though, he misunderstands the nature of that divestment movement. Stanford Out of South Africa sought and partially received divestment not merely from South African companies, but also from all companies doing business in the country, which in the 1980s comprised between a third and a half of the S&P 500.
When Stanford was struggling with South Africa divestment, opinion pieces in this very paper employed many of the same unsupported economic arguments that are used today to oppose fossil fuel divestment. These arguments have been refuted by each successive divestment movement on campus. Fossil fuel companies undeniably comprise some significant portion of Stanford’s endowment, just as corporations operating in South Africa did decades ago. Cohen claims that divesting these assets will “likely destabilize the endowment and restrict its ability to diversify its investments.” However, financial analysis has shown that portfolios divested from the fossil fuel industry have actually outperformed non-divested portfolios. And a recent Oxford study reveals that non-divested portfolios’ failure to account for the rising latent cost of carbon exposes them to the risks of stranded assets. Continued investment in fossil fuels may actually result in greater instability than divestment.
The next point — that retaining shareholder powers lets Stanford push for reform of fossil fuel companies from within — is a mainstay of anti-divestment arguments. However, a 2013 Ceres study reveals that this particular industry and its major investors are especially resistant to shareholder input of any kind. Because serious environmental reform runs counter to fossil fuel companies’ fundamental business model, no amount of shareholder pressure has persuaded these companies to engage in anything more than superficial greening. Continuing to cling to the impression of shareholder influence amounts to appeasement — there is no way forward there.
However, all these arguments assume that divestment intends to make an economic impact. Fossil Free Stanford and the international divestment movement do not expect to financially strain the behemoths of the fossil fuel industry; rather, divestment is a social, ethical and political action — a statement to the world and to our own community that Stanford stridently opposes fossil fuel corporations’ behavior. By recklessly expanding and extracting their reserves in the face of urgent scientific consensus against these actions, they are perpetrating exactly the sort of “substantial social injury” that constitutes Stanford’s standard of investment responsibility.
Cohen’s final argument suggests that divestment distracts from more productive efforts to reduce Stanford’s own carbon footprint. We couldn’t agree more that Stanford must continue to become more sustainable; however, we see these goals as complementary. One of Fossil Free Stanford’s main purposes, as Cohen acknowledges, is to raise awareness and foster community engagement about environmental issues. Over the last two years, the Fossil Free campaign has demonstrably strengthened sustainability efforts on campus by engaging the entire community and creating a more active and informed student body.
Cohen further insists that in order to reduce Stanford’s carbon footprint, we must cooperate with the fossil fuel industry. But the facts are clear: In order to drastically cut emissions and prevent catastrophic climate change, we must move beyond fossil fuels — and the industry is determined not to let that happen. Divesting our endowment from fossil fuels helps divest our community from their influence, allowing Stanford to freely pursue a zero-carbon future.
At its heart, though, divestment is an issue of conscience. The fossil fuel industry poses a grave threat to our planet and all its people, leaving us with an ethical duty to divest our endowment — the financial foundation of our education and of Stanford’s mission in the world — from these corporations that are making our world unlivable.
Josh Lappen ‘17 and Charlie Jiang ‘16
Josh Lappen and Charlie Jiang are student organizers of Fossil Free Stanford and Students for a Sustainable Stanford; Josh is also the co-leader of the Climate and Energy Subgroup of SSS. They can be contacted at jlappen ‘at’ stanford.edu and cjiang1 ‘at’ stanford.edu.