Taking stock

    Environmental activist Bill McKibben addresses a crowd on his "Do the Math" tour. Photo courtesy of 350.org, licensed under Creative Commons.

    On Nov. 20, 1985, Northwestern University President Arnold R. Weber issued a statement to the public about South Africa. He decried the country's apartheid-based society to be "unjust and oppressive" and "cruel and pernicious." He proclaimed the need to eliminate apartheid. But the crux of Weber's statement concerned the estimated $100 million Northwestern had invested in companies operating in South Africa, a substantial chunk of the University's $613 million total endowment. 

    Weber's message followed years of controversy about whether Northwestern should sell its stock in these companies, which included names like Ford and Xerox. Divestment—the sale of stock holdings—was favored by a majority of students, who argued it would strike an economic blow against a clear injustice. The opposition to divestment asserted that the Univeresity should not get involved in political matters, as Northwestern ought to remain a vehicle for independent thought and debate. Some of those opposed said apartheid was a problem better combated by government action. 

    At the time, divestment movements on campuses across the country were starting to explode. Before April 1985, only 53 collegiate institutions in the United States had moved to partially divest their holdings; that number increased to 155 just three years later. Students protested for several years, demanding that administrations and trustees divest from South Africa. The situation reached a boiling point, and school administrations across the country were forced to take a stand. For years Northwestern resisted drastic action, taking small steps but never fully committing to substantial divestment. 

    Though a related statement from the Special Trustee Committee on South Africa established stricter policies for investment, created new South African study initiatives and recommended a new committee to review individual stocks, the movement to fully divest Northwestern’s holdings from companies involved in South Africa failed. The committee concluded that divestment would set a poor precedent. 

    “An investment policy that seeks economically to impose an institutional solution on an ideological or social issue would cast the University into the political arena, severely compromising its special claim as a unique forum for free inquiry," the committee wrote. "Total divestment would be inconsistent with the Trustees' duty to invest the Unviersity's assets in a prudent manner producing reasonable income and safety of capital." In other words, divestment was bad business. 

    When the South African system of apartheid collapsed in the 1990s, many believed divestment played a leading role. Nelson Mandela acknowledged the University of California school system’s divestment of roughly $3 billion from South African companies as a significant domino in apartheid’s fall. Debate continues over how big a role divestment played. Some argue that it was a leading factor, while others say it did little to harm the South African government. But most agree that it at least galvanized the public and helped the issue gain prominence.

    Nearly three decades after Northwestern rejected total divestment from South Africa, another major divestment campaign has sprung up on campus. Its target: fossil fuels.


    Last November, a small group of Northwestern students attended an event called “Do the Math” at the Athenaeum Theatre in Chicago. The students were a collection of Northwestern’s leading environmental activists on campus, representing groups such as Students for Ecological and Environmental Development (SEED) and Engineers for a Sustain able World (ESW). The event featured Bill McKibben, a journalist-turned-activist who founded the climate action organization 350.org in 2008. (The name of the organization refers to the safe amount of carbon dioxide—350 parts per million—that scientists say can exist in Earth’s atmosphere. Earth’s carbon dioxide levels currently hover around 392 parts per million.) McKibben was speaking as part of a nationwide tour in which he called for action on climate change. If we didn’t act now, he warned, the planet’s future would be unsalvageable.

    There was no need to convince the environmentally-conscious Northwestern students in attendance that climate change was a pressing issue. What piqued the group’s interest was what McKibben said about fossil fuel divestment, a major initiative he had started to push around the country. 350’s Fossil Free Campaign advocates that institutions like local governments, religious organizations and schools divest their fossil fuel stocks. By divesting, the Fossil Free Campaign argues on its website, organizations that contribute to “the public good” can help drive a campaign against an industry that is “destroying our future.” When McKibben spoke in Chicago last November, divestment campaigns were taking hold on a number of college campuses. The goal: Take school endowment money invested in fossil fuels and reinvest it elsewhere.

    “Going into that event, I wasn’t sure divestment was the absolute best route,” says David Snydacker, a Northwestern Ph.D candidate in the Materials Science and Engineering Department and a campus environmental leader. “But we realized we could make an impact and bring climate change to the forefront.”

    After hearing McKibben speak, the group of Northwestern students agreed that divestment would be a smart strategy to pursue on campus. This decision spawned the creation of the DivestNU campaign as part of the Northwestern Responsible Endowment Coalition.

    "When the students approached me with the idea of this, it seemed like a clear-cut home run," says Rob Whittier, Northwestern’s Director of the Office of Sustainability. “It’s hypocritical of us to talk about climate change and energy in our curriculum—and it’s part of our strategic plan—and then not act in a similar fashion.”


    Northwestern's endowment fund totals $8.7 billion, according to Chief Investment Officer Will McLean. The fund is a massive pool of money that provides a constant source of income to the University, its programs and its investments. It allows the University to function while also supporting future improvements, like construction of new facilities and programs. The fund is integral to the stability, health and interests of the University. There is a strong correlation between a school’s prestige and its endowment size; Harvard’s endowment totaled over $30 billion in 2012, making it the largest in the country.

    Though Northwestern’s administration has some input, the Investment Committee, made up of 31 University trustees, makes big endowment decisions. The Investment Office, led by McLean, plays an equally large role in the decision-making process by advising the Investment Committee on big decisions and working to update Northwestern’s investment portfolio. McLean’s job entails growing the pool of money and thus supporting the school’s financial lifeblood.

    The goal of any campus divestment campaign is to alter the makeup of the endowment. Advocates say by ridding the endowment of particular controversial investments, Northwestern can make a financial impact, send a message and align the fund with the University’s educational goals. A divestment campaign’s ultimate mission is to use endowment alterations to help achieve some larger end, like the destruction of apartheid or drastic reductions in fossil fuel usage. The problem is in many cases, these investments are very profitable for the school.

    Because of the endowment’s importance to the school’s financial health and stability, divestment doesn’t happen overnight. It took years for Northwestern to agree to a limited policy on South Africa. Fossil fuels present challenges that previous divestment campaigns didn’t have.

    Even though McKibben predicts 2028 will be the year our climate becomes catastrophic, climate change is difficult to conceptualize. All of the effects of global warming—massive floods, rising seas, droughts, extreme temperatures, storms and more—still remain locked in the future. No one is getting shot. There isn’t racial discrimination. Evidence that climate change is a human rights issue exists, but it still feels theoretical. It hasn’t really hit us yet.

    “It is a challenge to get support keyed in to climate change as much as some of the other issues,” admits Paige Humecki (McCormick ’13), former co-president of Engineers for a Sustainable World. “It is a social justice issue, though, and it is a major one.”

    The ubiquity of fossil fuel companies is another challenge. Energy proliferates throughout all aspects of society. While it might be simple to find companies related to apartheid-era South Africa, it’s more difficult to decide from which companies to divest in the case of fossil fuels. Every company uses fossil fuels in some way. Should Northwestern divest from just standard oil and gas companies? Should it limit divestment to coal? To what extent should the campaign focus on utilities? These were questions environmental leaders had to answer before they could truly pursue divestment.

    The last major challenge—beyond getting people to understand or care about the pervasiveness of fossil fuels—was determining how to grapple with the fact that Northwestern’s fossil fuel stocks generate a lot of money for the University.

    “Frankly, I understand oil and gas [stocks] do perform well historically,” says Mark Silberg, a SEED co-chair and leader of the divestment effort. “I want to respect the process of making wise investment decisions.”


    When DivestNU decided to pursue divestment, it entered the process with a good understanding of the endowment and how it works. The group also understood that fossil fuels make up a significant portion of the fund. With this knowledge, DivestNU made two decisions that shaped the rest of the campaign. The group decided to not wage an aggressive, confrontational battle against the administration or Investment Office, and that the primary initial divestment push would be limited to coal and additional investment in clean energy.

    What makes the decision to avoid conflict unique is that environmental activism maintains a long tradition of confrontation. Bill McKibben was arrested in 2011 at the White House while protesting the potential construction of the Keystone XL pipeline, a continental crude oil pipeline that environmentalists and other opposition groups say will have disastrous effects on the climate. Many of McKibben’s undergraduate follower have taken part in similar protests, such as a group of Rhode Island School of Design students who organized a sit-in at the school president’s office to demand divestment. Similarly, more traditional forms of protest were also prominent at Northwestern during the push to divest from South Africa.

    But Silberg says that DivestNU believed from the start that confrontational tactics would not work well at Northwestern. He would rather work with the administration and Investment Office rather than against them. “We aren’t picketing and having sit-ins in Norris and we’re not chaining ourselves to the Rebecca Crown Center,” he says. “We understand that adversarial diplomacy may not be productive.”

    Secondly, the group decided that coal divestment and additional investment in renewable energies would be the primary focuses of the initial campaign, while complete fossil fuel divestment would be a long-term goal. Total divestment was not a short-term goal simply because it would be a much tougher sell. The coal industry, Silberg believes, is on the way out in the United States. A combination of new stringent Environmental Protection Agency regulations and new forms of energy like natural gas have combined to take down coal. Silberg argues that coal is a poor investment due to regulatory, political and economic pressures, and that divesting from coal is simply a smart business move, even without taking into account coal’s damage to the environment. And while other institutions have set total fossil fuel divestment as a goal, DivestNU decided to focus on coal divestment and further investment in renewable energy, which are considerably more attainable. McLean says Northwestern’s endowment fund has over a billion dollars in energy-related assets.

    These two choices—avoiding confrontation and pursuing limited divestment—have led to a far different campaign from what might be expected, especially considering the gravity of the issue. Rather than strictly repeating the moral argument that divestment is the University’s obligation to both the planet and its own educational mission, Silberg and the rest of DivestNU have pursued divestment with the bottom line in mind. Divestment should make sense not only for the environment but also for the endowment. That’s why DivestNU has pushed coal divestment—yet the financial concerns still remain for many.


    Even though divestment has received tremendous credit for helping to bring down apartheid—as well as for assisting in efforts against other issues such as tobacco and the Sudanese genocide—debate persists about how big an impact the efforts actually had. Disagreement about divestment also endures among those who believe climate change is a pressing issue.

    A recent University of Oxford study helps explain divestment’s potential impact. While the study concludes that the financial effect on fossil fuel companies is relatively minor, it also notes that other results, like political isolation and stigmatization of companies engaging in certain harmful practices, are more likely. The report also concludes that divestment would hurt coal valuations more than those of oil and gas. But most significantly, the study concludes that the “stigmatization process” will have a much greater impact than the actual financial aspects of divestment, and that stigmatization “poses the most far-reaching threat to fossil fuel companies and the vast energy value chain.”

    Northwestern officials are understandably concerned about divestment’s consequences on the endowment’s growth and stability, but Silberg counters that coal divestment is a smart strategy for the endowment’s financial health. “The skepticism I’ve received has essentially been economic,” Silberg says. “Will this hurt our portfolio? Will this hurt our endowment? The answer is definitely no.”

    One issue is that very few institutions have been willing to divest. Harvard has been most prominent in rejecting divestment; in early October, its president released a statement that closely resembles President Weber’s statement on South Africa. The statement cites a number of the same reasons against divestment as Weber’s 1985 statement on South Africa, from political independence to the need to engage rather than castigate companies on the issue.

    Whittier says the divestment campaign is already making an impact. “I think this is the start of a good and valuable step for Northwestern as a whole to start thinking a lot more critically about where we’re investing and what industries we’re backing,” he says.

    Northwestern has not made any official decisions on divestment. But last year saw some progress, most prominently at the end of January when ASG passed a resolution calling on the University to divest from coal immediately, invest in more clean energy and decrease future fossil fuel investments. A week later, ASG backed a petition to divest, which more than 2,000 people signed. Representatives from DivestNU have held a number of meetings with the Investment Office as well as some members of the Board of Trustees.

    Even if students support divestment, the movement’s success hinges on the wishes of the Board of Trustees. Though aware of the divestment campaign, the Board of Trustees hasn’t been presented with a plan. Silberg hopes to present an official proposal to the Investment Office and the Board of Trustees within the academic year.

    To help guide the Investment Office, DivestNU is constructing a decision tree, a document which will aim to help the Investment Office determine a smart path of divestment. The decision tree will allow the Investment Office, if it chooses to use it, to ask questions about a company and decide whether divestment is a good overall strategy for each individual case. But the decision tree is just the next step in a long road to possible divestment.

    As the divestment process inches along, DivestNU continues its unorthodox form of activism—not making a lot of noise, but quietly working with the Investment Office to push divestment as a sound strategy for the University.

    “We’ve been successful enough at Northwestern because we’re not out picketing at Norris, because we’re not making out the Investment office or the University to be evil—because that’s not our position,” Silberg says. “As a matter of fact, I don’t think most companies at all are evil. I don’t think the BPs or Exxons are evil. But it’s our money, and it’s our choice where we invest it.”


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