Divestment

How Colleges Fund Fossil Fuels: Oil and Gas Divestment Explained

All around the world, environmental activist organizations have jumped on the strategy of divestment. From 350.org to Extinction Rebellion to groups of student activists and citizens, thousands of people have realized that halting the institutional funding of fossil fuel giants may be the best way to bring about a reduction in emissions on an individual scale.

But what is divestment? And how does it work?

What is Divestment?

Divestment is the process of selling shares of a publicly traded company. In the case of fossil fuels, it means dumping investment in Shell and other oil companies. When protest doesn’t get a company’s attention, taking profit away from them is a way to demand it. Large organizations, like municipal governments and schools, often invest part of their employee pension plans in oil company stocks. This is done to build an endowment of funding for the school/institution to use for operational expenses. Getting just one college to divest can remove hundreds of millions from the fossil fuel industry very quickly. “In the most recent year with available data, 832 endowed U.S. public and private not-forprofit colleges and universities held assets totaling $516 billion, which averages to $620 million per-institution,” as reported by the Marcellus Coalition.

The History Of A Campus-Based Movement

This strategy traces its roots back to the 1970s, when much of the world divested from South African business interests to protest apartheid, with 350.org starting the utilization of the use of this strategy against fossil fuel companies in 2012. As a campus-based movement, divestment has become an issue at colleges and universities worldwide. According to EcoWatch, “about 150 campuses worldwide have committed to fossil fuel divestment.”

At the University of Chicago alone, over 250 professors support divestment. Unfortunately, the school’s administration, including president Robert Zimmer, have resisted this change- even allowing fossil fuel companies to hold conferences using school resources. Extinction Rebellion Chicago recently held a nonviolent act of civil disobedience at University of Chicago’s “Booth Energy Forward 2019” conference, which (amongst others) was sponsored by Chevron and Exelon.

In a statement, XR Chicago member Victoria said that, “This conference’s goal is to discuss how to maximize returns on fossil fuel investments, and to act as a networking event for graduate students at University of Chicago’s Booth School of Business. We are here to not only confront the members of the conference, but to also reach out to these students to question why they seek jobs within an industry that is destroying the planet they, presumably, also wish to inhabit.”

She continued, “Chicago just became the largest city in the USA to commit to 100% renewable energy by 2050– so why is one of its most prestigious Universities acting as the networking arm for an industry that has been proven to be the single greatest cause of global warming?”

Member Joe agreed by stating that, “we simply can't allow multi-trillion dollar fossil fuel companies to meet, network, and continue profit strategies under the guise of Education, or at all for that matter,” and that “it's time for these institutions to act like the cultural leaders that they claim to be.”

Victoria concluded that, “In 2016 250 professors at the University of Chicago in solidarity with student activists, urged the elite private university to purge its $7.6 billion endowment in coal, oil and gas companies. The university did not act then, we are hoping they will act today.”

Despite the stalemate at the University of Chicago, divestment efforts are becoming so strong on college campuses that they’ve given rise to other activist groups. The Sunrise Movement began as a group of students who had connected over their desire to get their school to divest.

Why Divestment Is A Good Strategy

After just half a decade, divestment campaigns are starting to get results. In 2017, New York State divested $390 billion in oil, gas, and coal interests from its pension plan. Over 40 academic institutions have responded to student and faculty demands and dropped fossil fuels, including Stanford University. The Rockefeller Brothers Fund and the nation of Ireland have divested, too. In a watershed moment, Norway is beginning a massive divestment campaign that will eventually remove $8 billion from the oil and gas sector. Altogether, over $6 trillion had been divested from fossil fuel as of September 2018. 

Most significantly, oil companies are beginning to feel the pinch. In 2017, Royal Dutch Shell quietly reported that divestment was a significant threat to its bottom line. If the size of divestments continues to grow, then the oil giants will finally have to make changes. Investor money is talking. Soon, Shell and its cohorts might have to listen.

You can find out more about Extinction Rebellion International on their website, or follow them on Facebook, Instagram, or Twitter.

You can find out more about Extinction Rebellion Chicago on their website, or follow them on Facebook, Instagram, or Twitter.