Divestment: Chicken or Egg?
You have heard of divestment, but have you heard of a revolving energy fund?
In April 2022, I attended a meeting of student sustainability leaders from six different leading American universities. As part of our introductions, we were each asked to share one successful action our university has taken towards achieving carbon neutrality. The idea behind this ask was to collectively compile a portfolio of actions that we can learn from each other and apply to our respective universities.
(My fellow students and I at the University of Michigan have found that leveraging existing precedents at other universities is extremely useful in driving change at the extraordinarily risk-averse and slow-moving entity that is our university. Think of existing precedents at other universities as the low-hanging fruit because we already know that they work and how they work. These precedents should be the earliest and easiest actions that every university adopts.)
However, one after another, each student’s successful action was along the lines of, “Our student body has successfully signed a resolution that our university should divest from fossil fuels.” At the same time, of the universities represented, not one had actually committed to divesting from fossil fuels. None of the students present at that meeting could actually claim divestment as a successful action for their university.
Disclaimer: I have no issue with students advocating for divestment. I wholeheartedly agree that my university should have zero financial interests in polluting industries and divestment should occur.
What concerns me is that each of my peers at this meeting not only chose to share that their university has not successfully divested from fossil fuels, but also neglected to share a successful action that their university has undertaken. I shared my university’s recently-implemented revolving energy fund. However, I did not learn of any additional actions to apply to my university. The low-hanging fruit were not being leveraged.
In my experiences at protests, in meetings, and in the media, divestment shows up over and over again. Divestment is absolutely a significant factor in my university’s carbon neutrality transition, but it is just one action in the portfolio of actions that will get us there. So why, in my experience, does divestment receive more attention than other actions?
I can think of three reasons:
- It is easy to understand the moral problem. I can quickly grasp that, as a generalization, fossil fuels are bad, therefore it is bad that my university’s endowment is currently invested in fossil fuels.
- It is easy to understand the solution. My university ought to divest from fossil fuels!
- It is easy to advocate for. I can picture myself in a crowd riled-up and condemning my university for investing in fossil fuels. Contrast that with campaigning for implementing building standards to improve energy efficiency (“Hey hey! Ho ho! Single-pane windows have to go!”).
These factors make divestment an easy cause to get involved with (i.e. the barrier to entry is low). And again, divestment is a worthy cause. However, I believe that so much effort towards divestment without equivalent effort towards all of the other actions in the carbon neutrality portfolio is a terribly ineffective strategy. Should my fellow students and I successfully push the University of Michigan to divest, doing so would not make our university carbon neutral. We have to keep in mind that divestment is not a singular goal, but rather one piece of a larger objective. Furthermore, each carbon neutrality action reinforces each other. If we invest (no pun intended) in any action in the carbon neutrality portfolio, then we simultaneously advance campus carbon neutrality, install carbon neutrality-conscious administrators, and improve the overall culture around carbon neutrality. Therefore, to focus on an action with significant institutional resistance, such as divestment, may hinder the progress of all carbon neutrality actions.
For example, I have heard many voices champion divestment at the University of Michigan. So far, we committed to “transition[ing] [our] endowment to net-zero greenhouse gas emissions by 2050”. Not only is this goal embarrassingly insufficient from a climate change standpoint, but many, if not all, fossil fuel assets will not be economically viable by 2050 anyway.
However, we also recently implemented a revolving energy fund, which provides funding for energy efficiency upgrades. The fund not only enables building managers to be climate-conscious, but also requires staff members for operating the fund. In this way, the fund both directly impacts campus carbon neutrality and causes campus culture to be more amenable to further carbon neutrality actions, such as divestment.
The University of Michigan continues to implement actions towards carbon neutrality, including entering into power purchase agreements, issuing green bonds, creating a carbon neutrality executive role, building a climate action dashboard, and committing to geoexchange heating and cooling in all campus buildings. With each action, we enhance campus culture around carbon neutrality, install climate-conscious people in positions of decision-making power, and move closer to carbon neutrality in the process.
Many other low-hanging fruits remain, including upgrading building standards, implementing sustainability education requirements, improving procurement processes, and so many more. I believe it is the role of student sustainability leaders to collectively champion all of these actions in a coordinated effort towards carbon neutrality. I hope that more students will learn to see divestment strategically within the larger picture of carbon neutrality and advocate for divestment in a balanced approach alongside advocacy for all actions in the carbon neutrality portfolio. To advocate so fervently for divestment alone risks not only delaying the low-hanging fruits, but also simply wasting our breath.
If I reimagine the April meeting, I picture one student sharing about power purchase agreements, another student sharing about revolving energy funds, and a third sharing about sustainability education requirements. We would each come away from the meeting with more ideas and precedents for carbon neutrality actions than we had entering the meeting. All of these examples come from the University of Michigan, so imagine if each student at the meeting had shared their own university’s ideas! We collectively possess a wealth of information, so let us leverage the diversity of ideas and actions to drive the carbon neutrality transition we want to see—including, but not limited to, divestment.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.
About the author
Aaron Boockvar-Klein is an analyst for the cleantech company Voltus. Before beginning work in the energy transition space, he graduated from the University of Michigan, where he studied chemistry.