What is divestment?
Divestment is the opposite of investment – it means getting rid of stocks, bonds or investment funds that are unethical or morally ambiguous.
When an individual or institution invests money, it might buy stocks, bonds, or other investments that generate income. Colleges and universities, cities, retirement funds, religious organizations, and other institutions put billions of dollars into investments to help generate income.
Divestment as a tactic is rooted in the moral imperative of financially and politically renouncing a destructive system. Through divestment, institutions send the message that they will no longer support the harmful practices of the fossil fuel industry, which are some of the worst of any corporate sector.
What are we asking for, and who are we asking?
We are calling for the administrations of each of the Claremont Colleges to immediately freeze any new investments in fossil fuel companies, and to divest within five years from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds.
Who is running this campaign?
This is a student campaign, run by individuals from Pomona, Pitzer, Scripps, Claremont McKenna, and Harvey Mudd Colleges. We are part of a national movement of divestment campaigns happening in colleges, cities, religious organizations, pension funds, and other institutions around the country.
Can divestment really make a difference?
Yes! Divestment has a history of successful campaigns, including Darfur, Tobacco, and the largest and most impactful: South African Apartheid. By the mid-1980s, 155 campuses, 26 state governments, 22 counties, and 90 cities had divested from companies doing business in South Africa. Nelson Mandela specifically pointed to the anti-apartheid divestment campaign as critical in pressuring the South African government into negotiations that ultimately overturned its notorious system of extreme racial discrimination.
The practices of the fossil fuel industry directly contribute to the horrific climate disasters whose numbers keep growing, and disproportionately affect low income and minority communities through pollution, toxic waste dumping and dangerous working conditions. To tackle these issues, we need to get to the root of the problem – the fossil fuel companies themselves. The industry’s political and economic stranglehold on our government and society have allowed it to avoid or undermine meaningful regulation, and stifled development of greener alternatives that could lead us towards a more sustainable future.
Although its targets are financial, divestment’s main strength is in its ability to build a social movement and spread awareness about the issues. It draws force from its status as an ethical responsibility and moral imperative. However, the financial impact of divestment on the fossil fuel industry is not insignificant. Although the enormity of the industry’s worth is daunting, the top 500 college and university endowments hold about $400 billion, of which an average of five to ten percent is invested in the fossil fuel industry. Add the investments of cities, state pension funds, and religious institutions and that starts to add up to a lot of money.
Will this hurt our endowment?
Studies have shown that divestment often has little to no impact on stock returns. A report by the Aperio Group, an investment management firm that offers a “socially responsible index,” found that the risk of fossil fuel divestment is negligible. It concludes that full divestment from all fossil fuel companies increased risk by about 0.01 percent, and divesting from the “Filthy 15”—the companies determined to be the worst of the fossil fuel companies—increased risk by less than 0.001 percent.
In fact, fossil fuel investments will likely lose a significant portion of their value as climate change—and the fight against it—accelerates. The Copenhagen Accord of 2009 drafted by the United States, China, India, Brazil, and South Africa recognized that the increase in global temperature must be kept below two degrees Celsius to prevent extreme climate disaster. If we are to keep to this agreement, eighty percent of known fossil fuel reserves must remain underground. This will likely cause a forty to sixty percent decline in the viability of fossil fuel investments, as reported by HSBC. Some mutual funds have already begun to divest from coal and oil because they realize that these investments are increasingly filled with risk. In October 2012, Financial Times ran an article about the “carbon bubble,” comparable to the housing bubble of 2007.
Ultimately, fossil fuel investments are a risk for investors and for the planet. It is economically as well as morally sensible to start a gradual phasing out process and a transition away from fossil fuels.
What does the number 350 stand for?
350 parts per million is what many scientists, climate experts, and national governments are now saying is the safe upper limit for carbon dioxide in our atmosphere if we are to keep global temperature rise below 2 degrees Celsius. We are currently at 400ppm.
Accelerating arctic warming and other early climate impacts have led scientists to conclude that unless we are able to rapidly return to below 350 ppm this century, we risk reaching tipping points and irreversible impacts such as the melting of the Greenland ice sheet and major methane releases from increased permafrost melt.
For more on the science of 350, visit 350.org/science
What does “Do The Math” mean?
To grasp the seriousness of the climate crisis, you just need to do a little math. Fossil fuel corporations have 5 times more oil and coal and gas in known reserves than climate scientists think is safe to burn. That means we have to keep 80% of their fossil fuels underground to keep the earth in livable shape.
The three big numbers:
2 degrees — Almost every government in the world has agreed that any warming above a 2°C (3.6°F) rise would be unsafe. We have already raised the temperature 1°C, and that has caused far more damage than most scientists expected. A third of summer sea ice in the Arctic is gone, the oceans are 30 percent more acidic, and since warm air holds more water vapor than cold, the atmosphere over the oceans is a shocking five percent wetter.
565 gigatons — Scientists estimate that humans can pour roughly 565 more gigatons of carbon dioxide into the atmosphere and still have some reasonable hope of staying below two degrees. Computer models calculate that even if we stopped increasing CO2 levels now, the temperature would still rise another 0.8 degrees above the 1 degree we’ve already warmed, which means that we’re already 4/5 of the way to the 2 degree red line.
2,795 gigatons — The Carbon Tracker Initiative, a team of London financial analysts, estimates that proven coal, oil, and gas reserves of fossil-fuel companies equals about 2,795 gigatons of CO2, or five times the amount we can release to maintain 2 degrees of warming.