The moral case for Cornell divesting from fossil fuels has long been clear. Simply put, the University should not hold equity in resource extraction firms that have sent the planet hurtling toward climate ruin.
An overwhelming body of science tells us the fallout of human-caused climate change will come in the form of severe developing-world food insecurity, more frequent extreme weather events and worse economic growth. Projections indicate death, disease, dislocation and malnutrition will sharply rise, especially for the global poor. The cost in human misery will be enormous. And such suffering will be at the hands of fossil fuel companies — 90 of which account for two-thirds of all industrial-era carbon dioxide and methane emissions, according to a 2017 study.
All this plainly meets the Board’s own standard for divestment, established in 2016, which stipulates the University will only divest if the offending company’s actions are “morally reprehensible.” The point of divestment, then, is to stigmatize fossil fuel companies, to make the enterprise seem grimy and unattractive to the broader public.
But even for how open-and-shut the moral case is, the political and financial cases have continued to nag. Is it the University’s place to make a political statement with its investment portfolio? Should Cornell put its endowment returns, and thereby its fiscal health, at risk by divesting? Indeed, as recently as 2013, The Sun reckoned the answer to both questions was no, opposing divestment.
Yet the picture has changed. Though the Board voted down divesting from fossil fuels in 2016, its divestment standard provides an unambiguous answer on whether Cornell may wield its investments for political ends. Yes, the Board said, Cornell very well can make political statements with its endowment, given “harm so grave” that not divesting “would be inconsistent with the goals and principles of the University.” No doubt climate change, wrought largely by fossil fuels, counts. As we argued following the Board’s vote, “By all standards, the fossil fuel industry meets the Board’s requirements for divestment.”
The Cornell community, moreover, has made its political preferences known. A 2015 open letter to the late President Elizabeth Garrett garnered over 500 faculty and student signatures. All five shared governance bodies — the Employee Assembly, Student Assembly, University Assembly, Faculty Senate and Graduate and Professional Student Assembly — have passed measures urging full divestment by 2035. But the Board’s 2016 vote, in a profoundly undemocratic display, unilaterally swept them all aside.
The Board’s basic objection to divestment is financial. Yet the data seem not to support such concerns in the short run. As Joe Rowland ’73, a former candidate for alumni-elected Trustee, noted last month in our pages, investment funds which exclude oil, gas and coal firms have in recent years notched higher returns than the market baseline.
That poor performance will likely worsen over time. Just about all energy firms own assets, such as offshore oil rigs and drillships, that will lose value as oceans rise and extreme weather events grow more frequent. That’s a risk to companies’ bottom lines. To insure their assets against such risks, it’ll cost oil and gas companies over 4 percent of their total market value, calculates the investment firm Schroders — dragging down the performance of fossil fuel stocks.
Companies that forego climate insurance risk having their assets suffer catastrophic physical damage. So whether through insurance costs or direct climate-related damage to assets, energy firms will eventually pay the cost of climate change. When their rude awakening comes due, the financial case for holding their stocks will further deteriorate.
For these reasons, the Board’s argument that ditching fossil fuel investments would jeopardize Cornell’s fiscal well-being carries little weight. It is more an expression of a hollow status-quo bias — coupled with a disregard for self-inspection or democratic input — than a serious case against divestment.
The above editorial reflects the opinions of The Cornell Daily Sun. Editorials are penned collaboratively between the Editor-in-Chief, Associate Editor and Opinion Editor, in consultation with additional Sun editors and staffers. The Sun’s editorials are independent of its news coverage and op-eds.