BCD’s Response to ACSRI’s Refusal of Support

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The Advisory Committee on Socially Responsible Investing (ACSRI) said two days ago that the proposal of Barnard Columbia Divest (BCD) for divestment from fossil fuels “did not meet the criteria for divestment.” According to their response (which can be read in full here), ACSRI will not recommend BCD’s divestment proposal because “the merits of the case are not clearly on one side, nor are [they] sure that Columbia’s divestment would send a signal more powerful than engagement [with fossil fuel companies]. Below is the response of BCD to the ACSRI’s decision:

“We cannot ban the burning of fossil fuels overnight. Triggering the change will likely take changes in government policy, in private investment priorities, and the civic engagement of a globalized society,” wrote the Advisory Committee for Socially Responsible Investing (ACSRI) as they declined to trigger the change by being leaders in a national movement to divest university endowments from the fossil fuel industry.

The flawed and self-contradictory document that the ACSRI published on Wednesday is reflective of the nature of the committee itself and its treatment of the fossil fuel divestment proposal that Barnard Columbia Divest for Climate Justice (BCD) first brought to them in November 2013. Unfortunately, despite the best efforts of individual members, the structure of the ACSRI prevents it from responding with the urgency this situation requires.

I. The clock is ticking

International climate agreements designate 2ºC as the ‘safe’ upper threshold of warming the world would be able to withstand. Fossil fuel companies have and plan to burn five times as much carbon as would get us to the limit, for the purpose of continuing to be the most profitable industry in history. The next major climate summit is happening in Paris in December 2015, but the UN process has yet to be successful in lowering global GHG emissions. A large section of the West Antarctic ice sheet collapsed this week. According to the International Energy Agency, we will spend our ‘carbon budget’ within sixteen years. Time is running out.

II. The legitimacy of the ACSRI

Yet, in the seven months since November, the ACSRI has demonstrated that they believe climate change and climate justice are not urgent issues for the University. After all, they repeatedly asked us not to hold them to their commitment of taking a vote on divestment on Tuesday and making their results public – because they had not actually taken the time to understand the issue. Despite promises of transparency and inclusion since November, they have consistently cancelled meetings with us, kept internal meetings secret, refused to inform us on their research progress, and demonstrated that communication among ACSRI members themselves is sorely lacking. We were abruptly told about their vote two weeks in advance, when we had simply wanted to meet to create a constructive timeline together of how we could expand research on divestment.  More significantly, they have dismissed students as equal partners in this important dialogue. In one example, when we hosted a panel on fossil fuel divestment together, we were told that it would not be appropriate to have a student on the panel because we are not “experts.” Forget that our members work at cleantech hedge funds and intern at responsible endowment nonprofits – it is technocratic “experts” who have brought us to a point of planetary crisis at the expense of regular people who have been giving voice to the destruction they have witnessed for decades. And rarely does expert status come without strings attached. The ACSRI has repeatedly told us that the Earth Institute needs to be involved in the divestment conversation. While we have been and plan to continue engaging with the Earth Institute, it also counts Eni S.p.A. among its “Corporate Circle” sponsors. Of course, Eni S.p.A. is one of the top oil and gas companies on the Carbon Tracker 200, a list of the fossil fuel companies with the most reserves that we were asking Columbia to divest from.

III. A flawed report

In the text the ACSRI published, there are several convenient omissions. First, in considering institutional consensus within Columbia, they did not include the list we submitted of faculty memberswho support fossil fuel divestment – now numbering sixty-two – a week before the report was released. Those signatures were gathered in less than a week’s time. In claiming that the 73.7% of Columbia College students who voted for fossil fuel divestment in the fall is not an indication of enough support, they dismiss at least 1,166 people. How many thousands of students equate to the voice of one “expert?” If those thousands of people in the middle of Low Plaza, demanding why their voices do not count, would the ACSRI be able to ignore them? Clearly, the fact that Columbia “plans to…work toward 100% usage of recycled graduation gowns” as part of its sustainability efforts speaks much louder. The ACSRI’s focus on Columbia’s sustainability efforts in the report is distracting but not actually apt; unlike other schools, Columbia does not have a University-wide sustainability plan. Next, in considering consensus among educational institutions, they included Stanford divesting from coal, but they did not include the fact that Pitzer divested their $125 million endowment from fossil fuels and established a comprehensive sustainable investing plan in April. Their commitment to chartering “a standing subcommittee on fossil fuel” is phrased as a new development, but they told us that in November, our presentation was the kick-off to a “fossil fuel divestment subcommittee.” The results of seven months’ work leave much to be desired.

IV. Our investments in fossil fuels

If we call these and other factual omissions accidents, there is no way to do the same for their minimization of the amount of money that Columbia has invested in the fossil fuel industry. The document addresses directly-owned stocks, which represent approximately ten percent or $800 million of our $8 billion endowment. Much of the other ninety percent is invested in commingled or mutual funds, which are likely invested in fossil fuel companies. Social responsibility fund managers have told us that the average endowment has an investment of 4-5% in the fossil fuel industry – Barnard said that their endowment has 3.6% invested in fossil fuels at a public town hall. Four percent of Columbia’s $8 billion is $320 million. The ACSRI did not accurately report info about the direct holdings: they claim that there are no companies from the Carbon Tracker 200 on the list, because stocks of Soco International were sold last year. While we applaud divestiture from a company that is planning to drill for oil in the Congo’s Virunga National Park, the list of direct holdings that the ACSRI gave us also contains Inner Mongolia Yitai, one of the top coal companies on the Carbon Tracker 200 list. Let us be clear: just because the only transparent part of Columbia’s endowment is free of significant investments in fossil fuels does not mean the same for the rest of the $8 billion. In fact, that would be a pretty smart administrative strategy to keep socially controversial investments out of the directly-managed portfolio. We will be publishing an annotated version of the ACSRI’s report soon for further discussion.

V. They still don’t understand divestment

More broadly, there are three major indicators that the ACSRI has not understood the purpose of divestment as a tactic to revoke the social license of the fossil fuel industry: a) their argument that divestment would be hypocritical due to our society’s current reliance on fossil fuels, b) their leanings towards shareholder activism,  and c) their desire for a “best in class” rating of fossil fuel companies.

Yes, we currently rely on fossil fuels, but it is not so much a matter of consumer demand as lack of choice. The fossil fuel industry gets $59 in subsidies for each $1 it spends lobbying Congress–a 5800% return on investment. While we should all do what we can to be environmentally conscious, renewable energy has had to navigate an uneven playing field. We have the technology and solutions to address climate change, but the political clout of Big Carbon has perpetuated inertia.

Shareholder activism, including writing resolutions to advocate for a change in practice, is used well when a company’s business plan needs reform; for example, it has been used effectively to demand better labor practices from fast-food companies. However, there is no problem that can be fixed within the fossil fuel industry’s business plan; the problem is the business plan. Years of shareholder activism by various organizations have been ineffective in turning fossil fuel companies to exploring renewables. For example, Big Oil has already divested–from alternative energy. For any fossil fuel company, their investments into alternative energy have never broken the single-digit percentages, and ExxonMobil spent $188 million on alternative energy between 2002 and 2013. Their profits were $45 billion in 2012 alone.

Finally, that is the same reason why we should not wait to classify fossil fuel companies into a list of best and worst. Those categorizations would likely be by factors like number of recorded human rights abuses, but if the ACSRI’s purpose is truly to “advise the University Trustees on ethical and social issues” that endeavor becomes self-evidently ridiculous. There is little room to judge ‘better’ and ‘worse’ when every single fossil fuel extraction company is counting on an absence of anti-extraction legislation that would protect the planet and its inhabitants.

VI. The future of the fossil fuel divestment campaign

We are disappointed but not discouraged by the ACSRI’s decision. For the reasons we have put forth, we have realized that the committee has hitherto not been a legitimate partner in exploring the question of divestment, but rather a PR-friendly institutional barrier between students and the financial decision-making power that lies with the Board of Trustees and the Trustees Subcommittee on Shareholder Responsibility (TSSR).

As such, we are calling for a meeting with the Trustees in the fall.

Alongside having discussions with the members of the Board, we promise to commit ourselves most to turning to Columbia community members, especially our fellow students. In the coming weeks, months, and years, we will together hold our university accountable to our principles and a healthy, safe future for all.

We will do our best to make sure fossil fuel divestment occurs as expediently as possible, so that it can serve as an effective catalyst in the movement for climate justice. After all, time is running out. We only have one world. Divest now.

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  1. I can't even  

    These kids are so pretentious.

  2. does anyone know  

    have they told us yet about latin honors?

  3. Blunts in Butler

    Fuck the earth, let's just be i-bankers.

  4. financial aid

    Putting aside the economic inefficiency that such divestment plans would enact:

    Students shouldn't have the right to determine where the school invests its endowment. It seems logical to me that donors and those who donors trust to manage the school's endowment should make that determination. The school's endowment is not the property of its students. We are lucky to have been allowed the many benefits of Columbia's endowment and no matter how much or how little money Columbia invests in Exxon or Chevron, fossil fuels will be required to meet the world's energy needs in at least the medium term.

    Students, especially at Columbia, are so obsessed with concerning themselves with the "conspiracy of Big Oil", when they should really be grateful that energy companies have enabled them to cheaply heat and cool their homes/workplaces/dorms.

    • BCD Supporter  

      If I remember correctly, that argument was also used to try to delegitimize the abolitionist movement (i.e. "the cotton in your clothing was produced by slave labor"). Indeed, fossil fuels are very embedded in the global economy, but the reason why no alternatives have been implemented is, in large part, due to the political clout of the fossil fuel industry itself.

      Also, it should be noted that U.S. energy is cheap because of billions of dollars in subsidies, and the fact that their prices don't incorporate the externalities of fossil fuel consumption, especially, but not limited to, climate change.

      Thus, I don't think they should be grateful; on the contrary, it's admirable that they're fighting against complacency and recognizing that our quality of life ("cheap and reliable energy") has detrimental effects on the world.

      • A scientist

        So instead of doing nothing except sending a message, why don't the involved parties actually research some alternative energy or help with the solution in front of our faces: nuclear power. Fission can displace coal and oil as a steady high density energy source until we can get solar panels everywhere. Don't just do a lipservice to your cause: advance it.

        • BCD Supporter  

          We need policy to actually boost research and implement solutions, though, which has not been possible in part due to the influence of Big Carbon. Consider the many congressmen who have pledged not to pass climate change legislation (and then take a look at their campaign donations from fossil fuel companies), and how Big Carbon – through astroturf groups and conservative think tanks – has fomented confusion about climate change through anti-science disinformation campaigns.

  5. jf

    clearly you don't understand that a depletion allowance is not a "subsidy" and solar companies and solar infrastructure are subject to actual subsidies and still they cannot compare on a cost basis to natural gas in most parts of the US

  6. jf

    For Laymen:

    The truth is that the oil and gas industry receives the same kinds of tax treatments that every other manufacturing or extractive industry receives in the federal tax code. There is nothing uncommon or out of the mainstream of tax treatments about any of the provisions that have been repeatedly proposed for repeal.

    So how did all of this misinformation get started? It all began in 2009. Within days of being sworn in as the nation’s 44th President, Barack Obama ordered his staff to scour the tax code for any provision that was relevant to the oil and gas industry, and promptly began proposing them for repeal. The oil and gas industry has always been an easy target for political demagoguery, and that dynamic has played out repeatedly and consistently in this Administration.

  7. BCD Supporter  

    For you to say that a depletion allowance – which is essentially a tax write-off – is not a subsidy is laughable. Fossil fuel companies have been able to reduce their costs significantly by being able to deduct some of their income and manufacturing, exploration and drilling costs.

    Renewable energy is unable to compete on a large scale due to the uneven playing field from the subsidies given to fossil fuels. There is also the fact that the externalities of their operations are not incorporated into prices. And yet, in spite of this uneven playing field, the cost of solar PV modules has decreased 80% since 2008, and contrary to what you say, wind power is actually competitive in some parts of the U.S. (e.g. Iowa).

    Meanwhile, renewable energy production as a whole has already surpassed that of nuclear, despite the fact that the nuclear sector (and their billion-dollar subsidies) has existed for half a century. So yes, we need renewable energy subsidies if we hope to lower our dependence on fossil fuels.

  8. Tim

    You show your ignorance by claiming that its an uneven playing field, when A) Virtually every company has the ability to "write-off" depreciation or depletion on the cost basis of capital assets.

    B) Solar firms/manufactures receive this treatment AND they receive grant subsidies from the government directly (solyndra being an obvious example of this creating certain conflicts of interest). The fact that solar is still uncompetitive in many markets proves my earlier point. Why do Petrol companies divest of renewables--renewables LOSE money/destroy capital. Companies would rather invest in projects with better returns. Capital growth means more employment and while renewables may be "sustainable" many of their business models are not.

    C) While I admire your noble goal, and do believe that renewable energy is probably the way of the future, your divestment campaign lacks logic entirely. When the school sells its large block of Exxon stock, someone will correspondingly take advantage of the situation and profit at the cost of the schools endowment and transaction costs.

    The money that the school makes and puts to positive use by holding such companies (as opposed to money bleeding alternative energy companies), probably negates any carbon externalities that very few people can fully understand or accurately price. Setting trends in fossil fuel reduction is good and all but it is less good when it comes at such a high cost. The biggest challenge of the 21st century will probably be convincing poor countries not to use cheap fossil fuels.

    This whole campaign shows
    i. a false sense of entitlement on the student body
    ii. a lack of understanding of the market system
    iii. scapegoating of a single industry (in a single country) for the externalities that many other participants in our society create

    • BCD Supporter

      A. You fail to take into consideration the other indirect subsidies that are given to the industry, as this is not simply a matter of tax deductions. Aside from tax policy, subsidies have been given in the form of regulations, R&D, government services and disbursements. However, the largest subsidy that is given to these industries is arguably their ability to dump carbon dioxide into the atmosphere for free due to the lack of a carbon tax. If you want to argue semantics, then go ahead, but it is quite a stretch for you to say that these industries have gotten no government support, especially considering the vast literature on the subject.

      B(i). Solyndra is an overused example that needs to be put to rest. While the government definitely did not do its due diligence, the primary reason that it failed was because of plummeting PV modules prices (which is a good thing in the long run) and the inability to compete with cheaper Chinese modules. Solyndra received a $535 million DOE loan guarantee, which is insignificant compared to those given to other firms (e.g. billion-dollar loan guarantees for the nuclear sector, which is infamous for its uncertainty). You cannot use Solyndra, "one" firm that went bankrupt in a country where dozens go bankrupt every day, to make a judgment about renewables as a whole.

      B(ii). No need for the economics 101 lesson. We all know that companies would rather invest in projects with better returns. Theoretically, should a company invest in arms manufacturing if it means it would achieve better returns? What about tobacco? The point here is that ethical considerations are also taken into account. This issue is not purely about economics. Also, it is kind of a stretch for you to say that capital growth automatically leads to more employment, especially when you consider the current debates about income inequality and trickle-down economics, which I will not get into.

      C(i). Clearly you do not understand the logic of divestment. Divestment is NOT about economics; this is a political and moral movement. Everyone knows that divesting will mean that someone will buy the stock cheaply; by definition, selling a stock means that someone else will buy it. This is about sending a message, as was done with companies engaged in business with South Africa during Apartheid, and also with Big Tobacco, which enacted disinformation campaigns similar to that of fossil fuel companies now.

      C(ii). For you to say that the money that Columbia makes from holding these companies negates the billions lost in economic productivity from climate change demonstrates that you do not understand the gravity of the issue. The cost of tackling climate change will be much higher in the future the more we put off implementing mitigation and adaptation policies in the present. The IEA asserted that we have until 2017 to cease ALL new carbon infrastructure construction, lest we get locked into inevitable warming that will undermine international agreements to limit global warming to 2°C. The fossil fuel industry is not acting under the realities of these conditions due to the flawed economic rationalities that you keep citing; divestment sends a message that this is not okay. Also, the biggest challenge of the 21st century is not convincing developing countries not to use cheap fossil fuels, it is for every country — developed and developing — to work together to address this issue, because both have relied on tricks to weaken their emissions reduction commitments.

      D(i). Would you say that the students of the 1960s and 1980s were entitled as well? I would love to hear your thoughts. Would you also say that the World Bank President and the UNFCCC Executive — who have stated their support for divestment — also feel entitled?

      D(ii). We have extensive support from faculty, economics majors, and people who work in consulting and finance. So either none of them understand the market system, or they believe that the long-term sustainability of humanity is more important than economic considerations.

      D(iii). Well, aside from the fact that the industry is responsible for most of the GHG emissions, it is also responsible for the lack of legislation that would address the other responsible participants in our society that you cite.

      • Jim

        A>Show me some of the "Vast literature" there is a piece of literature proving my point above yet I don't see any piece of literature on your part.

        B> Do you ignore the words "Solyndra being an obvious example"? The aggressive tone you take squares with the pretty obvious reality that the movement is misguided. I am not trying to give you a lesson in economics, I'm expecting some pragmatism. There is no debate that getting rid of the entire petroleum industry overnight would result in a lot of unpleasant side effects on the economy given the sheer number of jobs that the industry has created.

        C> Really? I had no idea you guys were a moral and social movement ;) . Maybe my agenda is anti-fear mongering. I hope you have all done your research and actually understand that climate science isn't perfect, if you are not familiar with the medieval warming period maybe you should be. Also, I am not in denial, my criticism is in your approach not in your belief in Global warming. There is a tradeoff between good and bad that you pretend doesn't exist (it does).

        D> You are painting this issue incorrectly as a one sided debate (silencing the opposition, which, I should note, is not healthy for an academic environment). I'm sure the people who run the Columbia endowment and the administration as a whole are equally competent to the members of the administration that support you. I'm also sure a lot of the movements in the 60s and the 80s were misguided (like the whole "save morningside" campaign).

        To your World Bank reference:
        You want to know hypocrisy: A member of the world bank group invests in fossil fuel companies!

        did I not mention carbon "externalities"? oh wait, I did. Open up your mind to other peoples' opinions, there may be some validity to some of them.

        • BCD Supporter

          A. Here's a frequently cited study about fossil fuel subsidies that has become big in the financial world, where I work. This is just one of many, and I would expect that if you are truly interested in this topic, you will take advantage of the resources at your disposal through the internet.

          B. I never took an aggressive tone at all; I was simply stating that your logic for bringing up Solyndra does not advance your argument. Also, you are not the most fitting person to complain about "aggressiveness," considering how much your "argument" has consisted of calling BCD flawed, misguided and ignorant. Your ad hominem remarks decrease your standing in this debate.

          Also, we are not debating that ridding the world of the petroleum industry overnight would result in undesirable side effects. That is true. Divestment does not seek to end these industries overnight; it wishes to begin what will be a long-term transition to a low-carbon economy, which will take decades. Employment in the fossil fuel industry has been on a serious decline the last few decades, with jobs in the renewable energy sector now far outstripping employment in the former. Divestment is but one tactic in the broader fight for climate justice, which considers the wellbeing of workers in the fossil fuel industry (many of whom are subject to poor working conditions).

          Considering the urgency of climate change, divestment is actually pragmatic when you look at it from different perspectives. From a financial standpoint, there is no reason to be invested in something that will be irrelevant in a few decades, or whose carbon assets are at risk of stranding from climate change legislation (a risk that is not accounted for in stock valuations), or whose act of advancing climate change is threatening the supply chains and operations of other companies.

          C. The United Nations Framework Convention on Climate Change (UNFCCC) observes the Precautionary Principle, i.e. scientific uncertainty cannot be used as an excuse for inaction. So unless you are saying that the 196 parties to the convention are also "misguided," your criticism on this approach to climate change has no place here. The question of "uncertainty" also has no place in a world where the effects of climate change are being felt now. Just last week, the Balkans faced an unprecedented flood that affected 4 million people and killed 40. You cannot attribute individual extreme weather events to climate change, but this is a sign of what is to come for Europe, which is expected to have severe flooding at double the current rate by 2050 due to climate change. It is easy for you to say that we are "fear mongering" as you sit comfortably in your air-conditioned room debating this while people are suffering around the world.

          D. I am not painting this as a one-sided debate or "silencing" the opposition. The reason it appears to be so is because the opposition (including yourself) has not been able to bring up a single valid point.

          E. You do realize that this article is from January 2012, correct? The fossil fuel divestment movement began in November 2012. The developments I have mentioned here all happened within the last one and a half years, which is a testament to how rapidly this movement has been growing. For someone who has been stating that BCD needs to do its research, you seem to be lacking in research expertise yourself.

          F(inally). I "am" open to other people's opinions. I have been using this time to address (and shut down) each and every single one of your points, while all you have been doing is making ad hominem remarks about me and BCD. I would say this "debate" is over.

  9. BwogKing  

    I don't support divestment. I don't support environmentalism because it's closely linked to eugenics (as is the progressive movement in general. John Maynard Keynes was the Director of the British Eugenics Society, for example). The people who support enviromentalism tend to be upper-middle class. They want to save the Earth for their children. But they don't care about the people ACTUALLY ON THE PLANET RIGHT NOW who don't have jobs because the Keystone Pipeline is blocked, or people who can't eat or get a job because the price of gas and oil are too high because OBAMA WON'T LET US USE THE RESOURCES WE FOUND IN THE UNITED STATES. So basically environmentalists are actually just about wiping out people with "poor genes" for the sake of their own "good genes".

  10. Scotty Pippin

    This entire 'debate' reinforces the words of Michael Bloomberg, discussing liberal institutions such as Columbia as "bastions of intolerance" and closed mindedness.

    Thank you BCD!

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