Fossil Fuel Divestment Hits a Roadblock in San Francisco
Last week, the San Francisco Employees Retirement Board voted unanimously to study divestment from fossil fuels. Environmentalists had hoped the group would vote outright to divest its $530 million in holdings from oil, gas, and coal companies, making it the first public pension fund in the country to do so.
“It’s not enough, but it’s a start,” says Jay Carmona, the divestment campaign manager for 350.org. “This is historic, but we're certainly not finished, and we'll be seeing more of the board in the coming months.”
Divestment refers to the selling of investments in particular companies. It has been pursued as a strategy to effect change because when a large investor, such as a pension fund like San Francisco’s or a university like Harvard, sells stock, the company’s share price falls. The strategy famously helped end apartheid in South Africa after U.S. college activists pressured their schools to divest the schools’ endowments from companies doing business with that country’s government.
If the firms felt a hit to the bottom line, the thinking went, they’d pull out of South Africa, which would in turn be motivated to change policy. Nelson Mandela has endorsed today’s fossil fuel divestment movement, which gained traction after 350.org’s founder, Bill McKibben, outlined the strategy in an essay for Rolling Stone. Other divestment movements, sometimes known as socially-responsible investing, have targeted companies involved with tobacco, guns, gambling, and pornography.
A recent study from the University of Oxford found that divestment movements succeed, by and large, not because they have a direct financial impact but rather because they stigmatize the targeted industry. "Stigma attached to merely one small area of a large company may threaten sales across the board," the report found, citing examples of Motorola dumping its defense business due to bad press and Revlon's decision to divest from its South African operation after customer groups threatened a boycott.
Since 2010, 41 institutions—including six colleges, 18 U.S. cities, and 13 church organizations—have committed to divesting from the fossil fuels.
One institution that won’t, however, is Harvard University. Responding to pressure from students, President Drew Faust wrote in a letter to the Harvard community earlier this month that while she shares with her students the importance of “addressing climate change,” she does not believe “that university divestment from the fossil fuel movement is warranted.” The school is “an academic institution,” not “a political actor,” she wrote.
"It took Harvard five years to figure out it didn't want to be involved with apartheid in South Africa,” said McKibben, in response to Harvard’s decision. “One hopes that the efforts of students, faculty, and alumni mean this will happen more quickly." Tim DeChristopher, a noted environmental activist who served two years in federal prison for peaceful civil disobedience and is now a student at Harvard Divinity School, also quickly responded, telling The Nation: “[Drew Faust] says that Harvard’s endowment shouldn’t take a political position, and yet it invests in an industry that spends countless millions on corrupting our political system.” According to Open Secrets, a government watchdog group, fossil fuel companies contributed an average of $400,000 per day to U.S. politicians in 2012.
As Harvard’s decision made clear, the divestment movement has its work cut out for it— San Francisco’s vote notwithstanding, Employees Retirement Board member Brian Stansbury told the San Francisco Examiner that he doesn’t “see our portfolio without energy.”
A nurse in San Francisco’s Department of Public Health, Martha Hawthorne, had a different outlook. “We don’t have to choose between having a pension or a planet,” she told the Examiner. “We can have both. The best investments are those which will bring us returns today and ensure our future tomorrow.”