March 3, 2015
How to Reverse a Slow-Motion Apocalypse
Posted on Nov 22, 2013
By Todd Gitlin, TomDispatch
Fossilized corporations do their thing while frozen governments produce (or opt out of) hapless and toothless international agreements. By default, initiative must arise elsewhere—in places where reason and passion have some purchase as well as a tradition, places where new power may be created and deployed. This counterpower is, in fact, developing.
Given the might and recalcitrance of the usual culpable and complicit institutions, it falls to people’s initiatives and to other kinds of institutions to take up the slack. This means universities, churches, and other investment pools, now increasingly under pressure from mushrooming campaigns to divest funds from FFCs; and popular movements against coal, oil, fracking, and other dangerous projects—in particular, at the moment, movements in the U.S., Canada, and elsewhere to stop tar sands pipelines.
Those in the growing divestment movement suffer no illusions that universities themselves wield the magnitude of power you find in investment banks or, of course, the FFCs themselves. They are simply seeking leverage where they can. The sums of capital held by universities, in particular, are small on the scale of things. Harvard, the educational institution with the largest endowment (some $32.7 billion at last count), reports that only 3% of its direct holdings are in the top 200 energy outfits. (The amount of its money held indirectly and opaquely, through private capital pools, and so also possibly invested in FFCs, is unclear.) Though millions of dollars are at stake, that’s a drop in the bucket for Harvard, whose holdings amount, in turn, to nowhere near a drop in the total market capitalization of those energy giants.
Square, Site wide
We won’t know how much influence that legitimacy can bring about until the attempts are made. What we do know, from historical precedent, is that such efforts, even when they start on a small scale, tend to inspire more of the same. As Robert Kinloch Massie argues in his fine book on South African sanctions, Loosing the Bonds, divestment campaigns such as those over apartheid and Big Tobacco (phased out by Harvard in 1990) worked by creating a cascade effect.
With climate change, the stigmatization of the FFCs is already spreading from universities and churches to city and state pension funds. Eventually, if it works, the cascade changes the atmosphere around private and public investment decisions. Then those decisions themselves begin to change and such changes become part of a new market calculation for investors and politicians alike.
That’s why it matters so much that some 400 divestment campaigns are currently underway at American colleges and universities. Cascades of influence can move institutions, often in surprising ways. Every time a divestment demand is put forward, the conversation changes in elite board rooms where investment decisions are made. Children of FFC executives go home for Christmas and their nagging questions make their parents’ business-as-usual lives less comfortable. (This dynamic, though seldom credited, undoubtedly played some role in ending the Vietnam War.)
At Harvard, my alma mater, a fierce campaign by courageous and strategic-minded students has spun off a parallel campaign by alumni. They are being asked to withhold contributions to the university and to donate to an escrow fund until Harvard divests from its direct holdings in FFCs and undertakes to divest from its indirect holdings as well.
Is this sort of demand just a gesture of moral purity? Not necessarily. Indeed, there may well be an economic payoff for morally motivated divestment and reinvestment. My fellow alumnus Bevis Longstreth, a former commissioner of the Securities and Exchange Commission, makes a strong case that the policies of the FFCs are shortsighted and risky. (During the year 2012 alone, the top 200 sank $674 billion into acquiring and developing new energy reserves and working out ways to exploit them.) Significant parts of the capital they are now investing will likely be “wasted,” since in a climate-change world, large portions of those reserves will have to stay in the ground.
Looked at in the long term, the FFCs may not turn out to be such smart investments after all. Indeed, in the boilerplate language of financial prospectuses, past results are no guarantee of future results; and there are already investment models showing that non-FFC funds deliver better proceeds.
These efforts and arguments have yet to convince Harvard President Drew Gilpin Faust that climate change is one of those “extraordinarily rare circumstances” when divestment is justified. Instead, she proposes “engagement” with the boards of the energy companies, as if sweet reason by itself stood a chance of outtalking sweet crude oil. She touts Harvard’s teaching and research on climate issues, while neglecting the way those corporations fund disinformation meant to blunt the effect of that teaching and research. Having declared that the issue is not “political,” she defends Harvard’s investments in the chief funders of propaganda against climate science. Some rejection of politics! Meanwhile, for saying no to divestment, President Faust wins the applause of an Alabama coal company front group.
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