Monday, June 3, 2013

Fossil-fuel divestment movement escalates

College students and supporters hold up signs at a rally to support fossil fuel divestment outside of City Hall in San Francisco. ASSOCIATED PRESS
SWARTHMORE, Pa. — Student activists at more than 200 colleges are trying a new tactic in hopes of slowing the pace of climate change: They are asking their schools to stop investing in fossil-fuel companies.

The Fossil Free campaign argues that if it’s wrong to pour pollution into the air and contribute to climate change, it’s also wrong to profit from it. The strategy, modeled after anti-apartheid campaigns of the 1980s, aims to limit the flow of capital to fossil fuel companies by making their stocks morally and financially unattractive. In theory, that could lead to a slowdown in how much fossil fuel is burned and indirectly speed investments in renewable energy.

The students say it’s hard for colleges and universities to ignore the arguments when scientists are teaching classes about climate change, and when the core mission of such institutions is to prepare young people for the future.

“The world that we’re going to be raising our kids in is going to be very different from the one we were born into,” said Sophie Harrison, an 18-year-old freshman at Stanford University.

It is far from certain that the campaign will help change the behavior of fossil-fuel companies or public attitudes about climate change. And unlike apartheid, the target of previous divestment campaigns, there is no ready alternative to fossil fuels. The global economy is powered by coal, oil, and natural gas. Affordable, low-carbon alternatives to these fuels aren’t widely available.

The campaign targets companies that own most of the world’s coal, oil, and natural gas reserves. While many schools argue divestment would harm their endowments, an analysis conducted for the Associated Press casts doubt on that. The research firm S&P Capital IQ found that by one measure, endowments would have been better off had they divested 10 years ago.

The firm calculated the total returns of the broad U.S. market as tracked by the S&P 500 index, with and without the companies singled out by Fossil Free. An endowment of $1 billion that excluded fossil-fuel companies would have grown to $2.26 billion over the past 10 years, but an endowment that included investments in fossil-fuel companies would have grown to $2.14 billion. That extra $119 million could pay for 850 four-year scholarships, assuming tuition of $35,000 per year.

The stakes are even bigger for some schools. Fossil Free is targeting Stanford’s $17 billion endowment, and last year 72 percent of Harvard University undergraduates who cast a ballot voted to divest its $30 billion endowment. Harvard officials responded by saying they have “a strong presumption against divestment.”
Financial giants such as HSBC, Citibank, and the credit rating agency Standard & Poor’s have raised concerns about the financial stability of fossil-fuel companies — if the world decides to drastically reduce carbon emissions.

But that’s a big “if,” and Wall Street analysts who cover oil company stocks are unconcerned. Fadel Gheit, an analyst at Oppenheimer & Co., says there is “no way” a campaign like this could change a company’s energy mix, let alone the entire world’s.

Endowments don’t have enough financial clout to affect the flow or cost of capital for fossil-fuel companies, he said, and fossil fuels are too integral to the world economy.

Syndicated from Toledoblade

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