March 3, 2014

TRUSTEE VIEWPOINT: Divestment: A Need for Better Arguments

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As a member of Cornell University’s Board of Trustees, the entity ultimately responsible for Cornell’s endowment, I must admit I am disappointed with the arguments that have been offered both for and against “divestment” thus far. I enjoy a good debate; I’d like to take a position on this issue, but the rationales for supporting or opposing divestment are too weak. I challenge the University community to offer better arguments for or against “divestment of Cornell’s endowment from public holdings in companies with large fossil fuel reserves.” The Board meets again in late March, and we could use insight before that time.

Proponents of divestment have frequently argued that if Cornell divests, it will start a trend of other colleges and universities divesting. This could happen, but there is no solid evidence for believing it will. While it is true that no institution of higher education with Cornell’s prestige or endowment size has divested yet, it does not necessarily follow that Cornell’s actions would start a cascade, or suddenly persuade other obstinate Boards of Trustees. The composition of each institution’s endowment differs, as do the dispositions and inclinations of their trustees. Cornell does not command enough clout to persuade other institutions they should follow suit. To assume that Cornell will start a revolution is a misappropriation of the sociology of social movements.

I challenge the University community to offer better arguments for or against “divestment of Cornell’s endowment from public holdings in companies with large fossil fuel reserves.”

A second claim in favor of divestment is that Cornell could meaningfully shape the national policy discourse on investment in fossil fuels. Again, this could happen, but the evidence for such an effect is lacking. Proponents have declared that divestment would signal that deep-thinking university intellectuals see little future in fossil fuels. Nevertheless, colleges and universities are also widely perceived as bastions of liberal thought. That a liberal-thinking enclave should divest is just as much evidence that the ivory tower can live its own existence, removed from the real world.

Finally, divestment enthusiasts allege that divesting is a moral imperative. This is the most frustrating of all of the arguments for divestment. The problem is not that divestment is not morally relevant; it is simply that this claim is never appropriately justified. It should go without saying that something is not an ethical necessity just because someone asserts that it is. Some moral truths are indeed self-evident, but the morality of divestment obviously is not, or there would not be so much debate surrounding it. Having taught environmental ethics at Cornell, I am not even sure to what ethical principles people are appealing when they allege that divestment is morally appropriate. Consequentialist arguments for divestment are extremely weak; so little evidence exists for divestment having any tangible effect on global carbon emissions that a direct reduction in climate change cannot be forwarded as a justifiable moral argument.

There is a potentially strong argument for divestment based on virtue ethics, perfectionism and ethics based on vision. For example, Cornell should divest, not because of the effects it will achieve, but because divestment communicates a vision of the world consistent with our own goals. Nevertheless, I have yet to hear an argument thoughtfully expounded.

In terms of opposing arguments, the University repeatedly asserts divestment will negatively affect the endowment. This could happen I guess, but I doubt it. Even as a Cornell trustee, I have yet to see the financial case for this claim. Such a miniscule percentage of our endowment is invested in the publicly-traded securities of the 200 companies with the largest fossil fuel holdings that even if we took a hit on our returns by moving investments elsewhere, the effect would seem negligible. Furthermore, A.J. Edwards, the chief investment officer for Cornell, and his team in the Investment Office are quite competent. They can find other stocks or asset allocation categories — for example, the ways in which the other 99 percent of the endowment is invested — that will also provide good returns.

Second, President Skorton has said Cornell should not manage its endowment for political purposes. I could accept this if Cornell never made political statements, but our President consistently tries to influence national debates (and rightly so) on issues such as college affordability, the import of the humanities, immigration policy and association with Israeli academic institutions. Therefore, political statements are fine for the University, all else equal.

Finally, President Skorton recently alleged that Cornell should not risk its endowment for a “symbolic statement”. See above to see whether we are actually risking our endowment. I was legitimately surprised to hear David claim that divestment was only a symbolic statement.

Perhaps the strongest argument for divestment lies in its symbolic message — an asseveration that can set Cornell apart, symbolically, as committed to sustainability. It is a way of “branding” Cornell as green, like our recent selection as one of the Princeton Review’s 22 Greenest Colleges and Sierra Magazine’s Ten Coolest Schools. I have no doubt that divesting would draw more of the best and brightest students to our Environmental Science and Sustainability major.

In summary, divestment is a critical issue to consider, but as a trustee, I need to hear better arguments before I can take a position.

Darrick Nighthawk Evensen is a graduate student in the Department of Natural Resources and the graduate student-elected trustee. He may be reached at [email protected]. Trustee Viewpoint appears alternate Tuesdays this semester.