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Divestment (and the threat of divestment) has a long history as a strategy for shareholders to effect change in a company’s behavior. Previous campaigns include divesting from: Apartheid in South Africa, violence in Sudan, tobacco products and advertising, sweatshop labor, and the use of landmines. Most recently, divestment has been adopted by students concerned about climate change.

The thought process for divestment goes like this:

  • Certain companies are in the business of causing damage or injustice.
  • Schools, governments, and churches have investments that might include these companies.
  • If these institutions divest, the companies will experience:
    • public scrutiny
    • lower stock prices
  • To stop fiscal losses, companies will stop destructive practices.

What are some concrete examples?


The poster child of divestment is the work done against South African Apartheid. The exact role and effectiveness of divestment in the end of Apartheid is debated. It may not have impacted stock price, but it certainly raised awareness of the issue. The demands to companies were simple and achievable; they could continue business elsewhere, but not in Apartheid South Africa (usually a small fraction of their business). Due ultimately to a number of reasons, companies stopped operating in South Africa and Apartheid was ended. But what about other campaigns?


In the 1990s, activists turned their sights toward divesting from tobacco companies. It makes sense to target tobacco producers because the product doesn’t really have any upsides; it kills many people and increases the health costs of others. The campaign’s result? 32 schools have divested from tobacco companies. And while total users and per capita cigarette use has declined in the US, it doesn’t seem like divestment had a direct impact on the decline.

credit: also.kottke.org

credit: also.kottke.org

Divestment probably did raise awareness and indirectly contribute to some regulations, but 14% of Americans still use tobacco products. Worldwide, the rate is about the same. And in 2010, the top 6 tobacco companies made $35,000,000,000 in profit. Tobacco companies are still lucrative even though their products cause only damage.

Divestment may have even inadvertently made the problem worse by removing the problem (tobacco use) from those arenas (universities and medical schools) most likely to recognize and do more about it. Like with most injustices- out of sight, out of mind.

Fossil fuels

Which brings us to fossil fuels. 26 schools and numerous other institutions have already divested. Proponents of divestment suggest that publicly-owned companies with large fossil fuel reserves are over-valued because they cannot sell and burn all their fossil fuel reserves without dramatic consequences for life on Earth. They argue, “If it is wrong to wreck the climate, then it is wrong to profit from that wreckage.” Climate change will impact everyone, especially the poorest around the world. The moral imperative is concern for the well-being of both humanity and the rest of life on Earth. But is divestment the best strategy to limit fossil fuel use?

First off, around 100% of the human population use fossil fuels. There are people still living hunter-gatherer lifestyles and off-grid organic farmers, but the outliers are very few. Around 80% of our total energy comes from fossil fuels. Coal, oil, and gas are cheap and useful; the US, Europe, and others have used them to gain dramatically richer lifestyles. They are not our only option for wealth, but unlike tobacco products that have only drawbacks fossil fuels have benefits too.

The obvious problem with fossil fuels is that they release carbon dioxide and other pollutants when burned. If carbon capture and storage (CCS) becomes cheap enough, the main reason for divestment disappears. I’m still skeptical that cheap CCS is a good idea, but this moral ambiguity doesn’t exist for Apartheid or selling tobacco. They are and will continue to be bad ideas. (Fossil fuels have other drawbacks, but they became a target for divestment only after concern for climate change heightened.)

Divestment may achieve heightened awareness of the climate change, but seems unlikely to directly affect companies that offer benefits. Opportunists will gladly take over any shares that are put on the market by schools and governments. And unlike the Apartheid divestment, companies cannot assent to the demands of activists. Any CEO that even considers keeping most of their company’s reserves underground would be fired faster than hydrogen in a balloon.

Other strategies for campus activists

Where does that leave us? As more activists question the strategy of divestment, it’s important to ask what strategies can replace it. Politically active students and protesters are a healthy component to society, but can we use that energy for more effective change?

One option might be working towards implementing a Green Revolving Fund. Energy efficiency is a good place for schools to start because the money saved can be reinvested in more energy-related projects. Less fossil fuel energy is consumed and the most effective projects are implemented first. Projects can in-part be solicited from and completed by students. This widens participation in social justice issues and creates possibilities for project exchange between schools and other institutions.

Another option would be to advocate for institutions to adopt a self-imposed carbon fee. This might be a harder sell for student groups, but I think they like a good fight. Experimenting with a carbon fee is very important. Activists often suggest that divesting “leads by example,” but what the world really needs is to bring externalities into the economic system. Universities and students (or even small cities) could figure out the best way to implement a carbon tax, so that we’ll be ready when the time comes to adopt the policy at larger levels of government. There would be decisions over where in the process to charge the fee, how fast the fee increases, what to do with the revenue, etc. Involving more disciplines would give more students real world experience and the opportunity to work for social good.

There are certainly other ways to address climate change on campuses, but I find these two ideas more promising than making demands that can’t be met because they still raise awareness about climate and energy issues. Maybe divestment is about more than raising awareness, but I think we can get more people excited and protesting and productive by shifting strategies.

If you want to read other persuasive pieces on divestment: