By Darwin BondGraham
Tuesday, 18 June 2013
Fresh from victories in Seattle and San Francisco, grassroots activists advocating city and college divestment from fossil fuel companies are already thinking big about how to reinvest the billions of dollars they want to free up. While very little money has actually been divested to date, the campaign is building connections between climate activists and renewable energy advocates. Where one group is attacking a problem, the other is offering a solution. However the goal of delegitimizing dirty energy companies and funding renewable energy futures is fraught with problems, including the notion of fiduciary responsibility, investment risk and narrow conceptions of social and environmental responsibility.
Divestment Alone Not the Goal
To date, divestment activists have succeeded in convincing six colleges to begin the process of removing university funds from oil company stocks like BP and Shell. A handful of churches and foundations have also begun this process. The city of Seattle’s commitment to divest – the first of any big US city – includes a pledge by the mayor to immediately scour the city’s $1.5 billion short-term investment pool for fossil fuel securities, and to eliminate them. San Francisco’s recent vote was a nonbinding resolution urging the San Francisco Employees’ Retirement System to divest, and it’s unclear whether the pension’s board will follow through. Even so, many other cities and colleges are expected to vote on the issue by the fall.
Will it slow down the fossil fuel industry? Hardly.
Divestment from fossil fuel stocks is expected to have little effect on the values of company share prices or their abilities to raise capital and fund operations. Most large energy companies raise capital in the bond market, and most bond buyers are private investors. Many of the larger oil, gas and coal companies use internally generated profits to pay for new wells, pipelines and other infrastructure. Large global banks like JP Morgan and Wells Fargo provide lines of credit to oil companies like Chevron and Shell. Financing the fossil fuel industry is mostly a private affair guided purely by investors’ appetites for high yields.
“We’re not going to bankrupt them,” said Ophir Bruck about companies his student group is targeting for divestment. Bruck, a 3rd-year UC Berkeley student, pointed to the University of California’s enormous endowment and pension system, noting that each holds billions of dollars in coal, oil and gas company stocks and bonds. “Divestment is largely about hitting the reputations of these companies, their image as an industry, and in that sense removing their social license to operate. We want folks to associate their brand with the destruction of the earth’s climate system.” Students at various universities are therefore using divestment demands as a platform to engage boards of trustees and administrators in conversations about environmental destruction and social inequities, linking these to the profit motives of big oil.