LETTER TO THE EDITOR | Divestment Folly

To the Editor: 

Climate Justice Cornell, a campus organization agitating for Cornell University to divest its endowment from energy companies, recently hosted socially responsible investing specialist Katelyn Kriesel to discuss the economics argument for fossil fuel divestment. As a skeptic of politically-motivated divestment campaigns, I was curious to hear the financial case for why endowments should liquidate any holdings they have in energy companies. Historically, the primary obstacle to endowments adopting an anti-fossil fuel stance is the pesky phrase “fiduciary duty.” In a nutshell, fiduciary duty obliges trustees to act in the best interest of the trust beneficiaries, which in this case means maximizing the risk adjusted return of Cornell’s endowment.  Adopting the stance advocated by CJC would entail a blanket mandate to eschew the energy sector, which could trigger legal action since one could argue, with some justification, that a categorical sector ban may not align with beneficiaries’ interests. Realizing this, divestment advocates take a different tack by building a so-called “financial case” for the university to divest.  As Ms. Kriesel outlined, the energy sector has underperformed the S&P 500 index in the past several years. (For the sake of argument, we will ignore the half a dozen errors in her methodology which used three prominent energy companies as a proxy for sector performance, the S&P 500 as a benchmark and disregarded dividends and risk.) On the basis of this information, she argues, universities should divest because energy companies have performed poorly in the past.

LETTER TO THE EDITOR | Re: ‘Tracking the Fossil Fuel Divestment Dollars’

To the Editor:

A Feb. 16th letter to the editor in this section claimed that “[d]ivestment would harm Cornell, reduce its influence and, most significantly, do absolutely nothing to fight climate change.” However, the analysis was incomplete and misleading. Divestment is a moral imperative for the University and a meaningful sanction for the fossil fuel industry. It’s hard to believe that Cornell’s endowment would suffer by removing assets which effectively did not grow over 10 years. Selling fossil fuel stocks, coupled with the shrinking investor market, makes them less valuable.

KROLL | Divestment Explained

Fossil fuel divestment is finally a hot topic. With no small thanks to the protesters who blocked roads and occupied Ho Plaza earlier this month, the movement has been ushered from the margins of campus political life into relevance. Though people may not necessarily know what ‘divestment’ means, they’ve at least heard about it, read about it or had it shouted at them. However, the job is far from done. The goal of the fossil fuel divestment movement is, obviously, to divest.