Is Divest Coal enough?
If you haven’t heard of the Brown Divest Coal campaign, you are likely in the minority of Brown students. Carbon divestment campaigns have arisen on many campuses over the past few months, and Brown’s version is a distinguished example.
Yet, in the face of such grave problems such as climate change, we need to be certain that our efforts to solve such problems are as effective as they can possibly be. I am concerned that carbon divestment does accomplish its stated goal of reducing carbon emissions by reducing the profitably of carbon industry related companies.
Christian Parenti points out in a recent Huffington Post article that even significantly reductions in investment would not necessarily reduce carbon emissions. He points out that over 70 percent of oil reserves are held by national companies, while many carbon companies such as Koch Industries do not issue public stock. The vast majority of the carbon industry would be unaffected by even the most far-reaching divestment campaign.
Still, selling stock in publicly traded carbon companies ostensibly reduces access to capital, which therefore decreases profitability. However, large companies like Exxon Mobil Corp. do not use sales of public stock to generate capital; they use revenue from current assets. It is more likely that such companies will repurchase outstanding shares, possibly at lower prices as the result of divestment. Even if the carbon company itself does not purchase the stock sold under divestment, someone else will. The market will maintain its equilibrium, and prices will be only marginally altered as the fundamental values of the stock will be unaffected.
Divestment can be a successful strategy with two conditions: one, the divestment is large enough to have noticeable effects, and two, companies are able and willing to act to prevent the negative effects of divestment. For example, divestment in South Africa due to apartheid was successful because it was widespread and large companies like General Electric were willing to curtail their business in that area. American Electric Power is not going to change its entire business model due to the threat of a minimal decrease in share price.
Finally, one could argue that carbon divestment is important symbolically. Brown could make a statement about climate change by divesting in coal. But I worry that such a gesture would either too cost-inefficient or would convince too many of us that we had done our part and that we should lessen our efforts.
The motivations of those who support university carbon divestment are honorable. We have had a very effective movement on our campus, and divesting from coal at Brown might be a signal to others that we are serous about the problem of climate change. However, let us make sure that we do not mistake a victory here as anything more than the beginning of a step forward in solving the problem of climate change. We should not stop at half-measures when dealing with the safety of our environment, our planet, and our civilization. To the members of Divest Coal, I say, please do not let this be your last battlefield. We’ve got a lot farther to go.