Divestment’s Gettysburg?

Rachelle Peterson

Pickett’s Charge is often said to be the high-water mark of the Confederacy. Some 12,500 troops threw themselves against Union positions on Cemetery Ridge, and were repulsed with devastating losses. The college divestment movement has just suffered such a defeat—one that probably spells the end of the movement’s hopes for actual success, though like the South, it will no doubt continue fighting beyond any real hope of victory.

The divestment movement is an effort by campus “sustainability” activists to get colleges to sell off their portfolios of fossil fuel-related companies. After a series of victories at a handful of small, impecunious colleges, it advanced deep into the heartland of American colleges and universities, only to whimper away defeated and mortally wounded.

Where did such a defeat take place? Hamilton College, where students, faculty, and staff issued a six-part December declaration in favor of divesting endowment funds from the stocks of oil and fossil fuel-related companies, today announced its “disinclination” to divest at this time. Hamilton College would have been the first major American institution to divest.

Case Study

Hamilton’s story is in many ways a textbook example from the strategy book of student activist campaigns across the country. During the 2012-2013 school year, Hamilton activists pushed the divestment agenda to the forefront of campus discourse.  An online petition on the national “Go Fossil Free” website asked Hamilton “to immediately freeze any new investment in fossil-fuel companies, and to divest within five years from direct ownership and from any commingled funds that include fossil-fuel public equities and corporate bonds.” The given reason, heavy on apocalyptic rhetoric, denounced paying “for our education with investments that will condemn the planet to climate disaster.”

By September, Hamilton College’s Trustees Committee on Investment, well aware of the ruckus, invited key members of the activist group “Hamilton Divests” to meet. The trustees harbored skepticism that divestment was feasible but listened to the students advocate for an hour. Afterwards, the student newspaper The Spectator reported that “a number” of the trustees were “interested in divestment” but “unwilling to commit because of a lack of faith in the economic viability of divestment.” Willing to negotiate, the trustees tasked the students with finding alternative energy investment funds and money managers that would either maintain or improve Hamilton’s financial performance.  Thus the students could satisfy their environmental consciences and the trustees could protect themselves from financial folly.

Most divestment stand-offs end there. Administrators toss a bone to student activists—either out of real sympathy for and agreement with the students’ motives, or from a strategic calculation to conserve political capital for more needful circumstances. But then they deflect the divestment drama by throwing up their hands. They are, after all, the ones accountable for the financial preservation of the institution.  At Bowdoin, Barry Mills met with students pushing a proposal to divest, and when he vetoed their proposal, he let them down gently: “I would never say never.” At Swarthmore, Rebecca Chopp entertained proposals from Swarthmore’s pro-divestment Mountain Justice chapter, but then refrained from weighing in directly, instead citing endowment guidelines requiring Swarthmore to “manage the endowment to yield the best long-term financial results, rather than to pursue social objectives.”

But Hamilton offered near-ideal conditions for a successful divestment campaign. In December, the Student Assembly voted 26 to 3 to support divestment from fossil fuels. Then an alliance of students, faculty members, and college employees issued the declaration that called divestment an integral step towards Hamilton becoming “the best institution possible.”

At the end of February, the dean of faculty Patrick Reynolds sent the faculty a memorandum announcing a resolution "that Hamilton College divest from fossil fuel holdings," to be discussed at the faculty meeting on March 4.  At the meeting, the faculty secretary records, "The resolution was passed on a voice vote; the vote was pretty overwhelming, but not unanimous."   (The Spectator erroneously reported this as a unanimous vote.) Two days later on March 6, 159 faculty members, students, and employees submitted a letter formally asking the trustees to divest.

That proposal, rather than calling for immediate divestment from all fossil-fuel related companies, identified 200 companies with the greatest carbon emissions and asked the college to refrain from investing in any of them in the future. The proposal also specified that each year, the college should divest any holdings it had among twenty of these 200 companies. Of the top twenty emitters, Hamilton invests only in two, Consol Energy ($1,217,280) and Mitsubishi Corporation ($211,210), and thus would divest from only two this year. Next year, Hamilton would divest from any holdings it has among the next twenty worst, and so on until shorn of all fossil fuel holdings.

Conspicuously missing from the proposal was any mention of alternative energy stocks or money managers to substitute for fossil fuel investments—the one task the trustees requested. And yet the trustees listened.

The Hamilton Difference

Hamilton’s trustees did eventually reject the proposal, of course, but only after months of deliberation and conversation with student activists. The open ears of the trustees can be attributed in part to the force of student pressure. Hamilton students enjoyed the weight of a nationwide movement behind them as activists at 380 colleges and universities clamor for “environmental justice.” Hamilton students described divestment as “an opportunity for the College to be a leader among our peers,” and a way to “generate positive publicity for the College.” “Positive publicity” spotlights Hamilton not only as a place that preserves the environment, but also as an institution that listens to its students.

Students made much of Hamilton’s divestment movement during Apartheid, when their forerunners beleaguered the administration to divest from companies with ties to South Africa. Hamilton’s president responded by suspending the twelve students who camped out in his office and by destroying the shanties students had built and lived in with “compassion“ for impoverished South Africans. Today’s pro-divesters were proud for protesting less vehemently than their forebears, but they also knew they put their administration in tough bind: at a time when academia increasingly cares about environmental sustainability and caters to student demands, no administrator wants to appear an environmental oaf and an authoritarian out of touch with student interests.

Plenty of colleges face similar pressures, though, and the key factor in divestment gaining such attention at Hamilton seems to have been a trustee insider: David Blood, a 1981 Hamilton graduate and a former charter trustee. Blood is also the business partner of Al Gore. The two founded Generation Investment Management in 2004 as an activist investment tool to funnel investment money into businesses that reduce carbon emissions, develop renewable energy, and sell long-term quality non-disposable goods. Generational Investment Management also invests in companies that aim for social and economic, not just environmental, change: pandemics, demographics, migration, poverty, and HIV/AIDS are among the topics the managers research when considering investments. The idea, as Gore and Blood explain in a Wall Street Journal op-ed, is that “sustainability issues are central to business and should be incorporated in the analysis of business and management quality.”

The student assembly, preparing for its December vote to support divestment, cited Blood’s name as a source for key ideas in their divestment proposal. A bullet point from the December 2 minutes states, “Working with David Blood, who runs Generation Investment Management, to talk about an alternative portfolio, but students haven’t received all the information from the College or tools needed to generate a full alternative plan.” The combination of student vigor and Blood’s expertise made Hamilton a ripe target for divestment.

The Numbers

Hamilton College has an endowment over $800 million, counting $710 million in endowment assets, $63 million in planned gifts, and $99 million worth of short-term investments, according to its 2013 financial statements. Of this, about $254 million is directly invested into shares. Energy investments constitute the second largest category of investments at $55 million, after private equity investments of $84 million. Thus the energy investments make up about 7% of the total endowment.

Of Hamilton’s endowment, $179 million is set aside as “restricted” for scholarships, faculty libraries, and other such expenses; another $418 million is “temporarily restricted.” Financial pressure to meet these and other pre-determined funding obligations is especially heavy during the so-called “college bubble.”

In an attempt to quell the initial fears of financially-minded trustees, Hamilton activists in their March proposal offered a definition of “fiduciary responsibility”:

We define fiduciary responsibility in the following way: not incurring unnecessary or unacceptable losses to the endowment, and not investing in portfolios or holdings with lower return rates than acceptable, not breaking any contracts; thus, not putting Hamilton’s future at unnecessary financial risk.

But “unnecessary or unacceptable losses to the endowment” was not defined, nor was “lower rates than acceptable.” And the last phrase, “unnecessary financial risk,” suggests that the students believed some financial risk is necessary. The proposal suggests that divestment itself counts as necessary, and presumably not precluded by such a definition of “fiduciary responsibility.”

Why Divest?

Often the goal of a divestment movement parallels the goal of a boycott: to exert social pressure to force the offending party to align. The effectiveness of either tactic, though, is doubtful. Both boycotts and divestments require a critical mass of activists in order to generate pressure. But the efficacy of divestment is even more doubtful. Boycotting goods decreases the demand for those goods and forces the price to drop, presumably cutting into the sellers’ profits. The drop in demand is real; the boycotting consumer isn’t replaced by another consumer (unless, of course, there’s a counter boycott). But when one college divests from companies that deal in fossil fuels and emit carbon dioxide, any number of investors will eagerly buy up the stocks. The company scorned by one college is eagerly welcomed by another.

These reasons lead a number of environmentalists to consider divestment campaigns economically foolish. In a New York Times “Room for Debate” series last year, environmentalist activists discussed whether divestment movements worked. Three of the five contributors suggested that divestments didn’t. As two Johns Hopkins students wrote, divesters “are merely absolving themselves of direct moral culpability while hiding their heads in the sand.” Instead, they recommended shareholder advocacy from within. One Hamilton student, Max Schnidman, advocated a similar tactic in a Spectator op-ed last May: “Divestment is a feel-good position that will only harm the College in the short term and the environment in the long term, as the market as a whole will continue to invest in fossil fuels.” He concluded that “Climate change solutions need to work with the markets, and not against them, in order to succeed.”

The truth of these objections has forced proponents of divestment to cast about for another justification. Increasingly, they’ve settled on the principle of public shaming. Bill McKibben, the radical environmentalist, has put this argument more bluntly than most: “Turning Colleges’ Partners into Pariahs.” The “partners” in this case are the corporations with whom colleges have partnered in crime as they “wreck the climate.” The way to take down these carbon-emitting corporations is not to ruin their bottom lines, McKibben argues, but to “revoke the social license of these firms.” By shaming corporations that emit too much carbon, McKibben hopes to decimate their credibility and silence their lobbyists, whom he blames for preventing environmental regulations from passing through Congress. Divestment is then the tool of the social architect looking to reshape the norms of social assumptions.

A variation on McKibben’s rhetoric is to present divestment as a way to sow the seeds of carbon skepticism. Perhaps divestment is not itself effective, but its results will be. It’s the college domino effect: one institution divests, lending the credence of popularity to other institutions considering divestment. Soon even divestment-wary colleges feel pressure to consider divesting, and companies face substantial social pressure and even financial costs. Hamilton students were particularly eager to get out at the forefront of this predicted avalanche. Their six-part manifesto announces that “Divestment from fossil fuels offers Hamilton College an opportunity to emerge as a leader among its peers” and that they hope to provoke “a widespread divestment movement amongst colleges, cities, religious groups, etc.”  


The underlying motivation for any of these reasons, of course, is some sense of moral duty. McKibben uses the language of ethics freely. The tagline for his national divestment movement recounts that “If it’s wrong to wreck the climate, then it’s wrong to profit from the wreckage.” Environmentalism rides on some sense of personal purity. One oughtn’t use disposable dishes, trash recyclables, drive or fly too much, do anything else that emits too much carbon. Nor should one let one’s money support companies that do.

Hamilton’s initial “Go Fossil Free” petition used the word “unconscionable” to describe “investments that will condemn the planet to climate disaster,” but its more recent proposal tried to shy away from the language of “oughts.” The manifesto signed by students, faculty, and staff assures readers that

Divestment is not about trying to ‘wash our hands’ of fossil fuel use or about morally condemning those who use or market fossil fuels. We understand that Hamilton College is entangled in the fossil fuel economy and that divestment will not, by itself, put an end to that involvement. 

But that’s a smokescreen that obscures the heart of divestment. Perhaps it’s the obligatory anti-ethics line meant to assuage the proponents of relativism that choke campus discourse in the name of tolerance. But why else attempt a tactic that inflicts serious financial wounds, does nothing to decrease carbon emissions, and leaves emitters’ social credibility largely intact? 

Global Warming

Global warming, supported by a supposed “consensus” of scientist testimony rather than a body of scientific data, lends divestment a tone of moral superiority. One oughtn’t lollygag while the world is going to pieces. It also adds an air of urgency. One never knows when it’s too late and we’ve reached the point of no return.  

Hamilton’s students cited the threat of the global warming as a key reason for their campaign. They devoted an entire section of their December proposal to the environmental context and cite a 0.8 degrees Celsius temperature increase described in Science. They worried about the ways climate change would “negatively and significantly alter primary production, resource abundance, weather patterns, sea levels, migration patterns, ecosystems, food chains, biodiversity and other factors.” But at the end of the section titled “environmental necessity,” they noted that “the campaign for fossil fuel divestment will not solve the climate problem.” Instead, “it is a key starting point.” In other words, divestment is a lot of useless but highly-visible hand-wringing assuaging the conscience but accomplishing virtually nothing.  


Divestment struck its most forceful, ambitious blow and slunk away injured and unlikely to seriously threaten higher education again. Henry Bedford, chair of the investments committee who signed the letter announcing Hamilton’s “disinclination” to divest, expressed skepticism that divestment would work and optimism that shareholder advocacy from within energy companies might prove more effective. He also noted the prima facie hypocrisy of divesting from all fossil fuel energy companies on principle but driving cars and flying in planes in practice. But the “fundamental question,” he said, “has to do with our responsibility to steward funds entrusted to us in support of the College’s mission, which is education….We believe it would be a violation of trust to shape our  investment strategies to achieve ends other than academic.”

Bravo to Mr. Bedford. For once, political ends take second seat.

And if divestment can’t win at Hamilton, where can it win? Sustainability: Appomattox waiting to happen. 

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