Divestment is the act of selling stock in companies as a way of shunning them, usually for a social or political cause. Students nationwide are imploring universities to use divestment as a tool to fight the fossil-fuel industry by organizing protests, writing letters, and making their voices heard across campus. Some schools, most notably Stanford University, have taken action, but most universities have said “no,” and for good reason. The University of Iowa should side with the majority. Not only would divestment be financially detrimental, putting aid that students depend on at risk, but it is an ineffective way to effect real change.
While it is admirable for universities to practice what they preach, or in this case teach, divesting from fossil-fuel companies would seriously affect the university’s ability to provide financial aid for its students. In 2013, more than 60 percent of UI students relied on financial aid from the university. The year before, Iowa’s public universities absorbed 20 percent of the state’s fiscal cuts, which is among the most draconian in the nation. The UI depends on its endowment to meet students’ financial needs and continue to diversify the socioeconomic backgrounds of students. On average, fossil-fuel investments provide around 2 to 10 percent of a university’s endowment earnings. Removing those funds without a reliable replacement puts many students’ education in jeopardy.
Furthermore, as students struggle to pay their way through school, previous divestment movements have shown that the companies do not actually suffer financially. While some environmental activists think that owning stocks in fossil fuels is a form of moral turpitude, everyone else does not have such objections and will buy whatever we sell. By selling stocks, we would relinquish influence to people who do not share the same concerns. Only shareholders can vote on certain matters or elect a board, both of which can shape companies’ environmental practices. It is necessary for the UI to maintain a voice in the fossil-fuel realm in order to advance the goal of protecting the environment.
The fossil-fuel industry itself is not the enemy, dependence on fossil fuel is. With increasing demand for cheap energy, the global consumption of fossil fuels has skyrocketed, and it is expected to rise another 37 percent by 2040. The energy needs of the world, especially the poorest countries, cannot be met without them. Coal, oil, and natural gas are essential not only for power, transportation, and heat, but also for the production of a wide variety of chemicals and products used by everyone, every day. To be sure, the cost of consuming these resources is not only economic but also comes in the form of air pollution, habitat destruction, and increased health risks. As more people finally accept climate change as a reality, they blame the fossil-fuel industry and call for immediate action to reduce emissions, lower consumption, and increase efficiency. But with an industry this complex and embedded in daily life, it is unrealistic to expect rapid, transformational change.
The divestment strategy has arisen from a frustration over legislative stalemate. Policy progress in combating climate change has been stalled at both national and local levels. Idealists who need to find some outlet for their moral outrage are pushing divestment. We should remain focused, however, on policy. If every student who raised her or his voice about divestment directed it instead to her or his elected officials — to even electing those officials — we would achieve greater results.
Maya Nevels
