Editorial | Ethical but not yet practical
Published: Tuesday, October 8, 2013
Updated: Tuesday, October 8, 2013 01:10
Proponents of divestment from fossil fuels, notably Tufts Divest, have made a compelling argument for their stance. From the teach-ins to rallies to numerous op-ed submissions during the past few semesters, social activists have made an argument on behalf of our university’s environmental, social and ethical responsibilities vis-á-vis the investment of its endowment. However, what these arguments are lacking is a realistic and viable alternative to investment in specific corporations.
The investment of Tufts’ endowment is handled by third-party fund managers in a double-blind system, making it difficult to ensure that money is not diverted to corporations that may benefit from the fossil fuel market.
Even if we set aside this challenge in actually identifying, divesting from and preventing future investment in these corporations, there is still the question of where Tufts should otherwise invest this 5 percent of its endowment, approximately 75 million dollars. The rationale behind investing is to get significant returns on investments and provide necessary income to the university. Tufts Divest has thus far not provided an understanding of the fact that immediate removal of investments in these companies is not plausible or provided an alternative investment strategy that would see similar returns. Though the ethical argument of divestment is a strong one, suggesting that we divest such a significant amount of money without a contingency plan is unrealistic.
Additionally, there is not significant proof that divestment has a notable influence on activities of the affected corporations. A 2013 study by Harvard University’s Institute of Politics suggests that past divestment campaigns have served to shape public discourse about certain issues but have been financially ineffective in the sense that divestment did not actually affect the “financial markets’ valuations of targeted companies.”
Disregarding the existing issues with even identifying the offending corporations, divestment statistically has not even led to a change in the financial status quo of the targeted corporations. While no one is disagreeing that divestment from corporations that may be contributing to the deterioration of our environment is the morally laudable thing to do, it is unrealistic and unfair to expect that our university do so immediately if there is no strong replacement investment plan.
The referendum vote tomorrow for all undergraduate students asks, “Should Tufts University divest its endowment from fossil fuel companies provided that doing so does not adversely affect the financial status of the university?” Unfortunately, though efforts to get the question on the ballot are commendable and represent the ability of students to effect change, the question itself does not leave room for much success on the part of those supporting divestment. Even with a majority vote in favor of the referendum, the stipulation will prevent significant change when the results reach the university’s Board of Trustees.
There needs to be a viable alternative before the choice to divest can be considered seriously. The university is responsible for the investment of its funds, which includes conducting research to find such an alternative. There is no doubt that there are clean energy solutions in which the university can invest. The answer is not as simple as many hope; immediately divesting from fossil fuel companies is an impractical suggestion. However, both sides of the debate can be more flexible in working to reach a valid compromise.