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Climate Justice at BC and Investment Club Debate Divestment from Fossil Fuels

Members of Climate Justice at Boston College (CJBC) debated members of the BC Investment Club (BCIC) Monday over divestment from fossil fuels.

Matthew Barad, a member of CJBC and MCAS ’19, opened by explaining that, as the world is moving away from oil and gas drilling, staying invested in these industries would lead to short-term losses. He noted that earlier this year, both the International Monetary Fund and World Bank announced that they were divesting from fossil fuels and would not fund any new fossil fuel drilling projects past 2020.

Barad also made the argument that the practice of divestment itself is growing, citing the fact that more than 700 institutions have divested more than $5 trillion from the fossil fuel industry over the last decade.

James Mazareas, another member of CJBC and GMCAS ’18, argued that BC is beholden to divest from fossil fuels within the next couple of years, citing BC’s ethical investment guidelines, which were initially put in place in response to student pressure to divest from South Africa in order to protest apartheid. He also referenced the Monan Amendment, enacted by the University at the time, which says that BC is prepared to employ means to redress wrongful conduct with its stockholdings, and use divestment to avoid complicity in wrongdoing when no other means of influence are possible.

“40 years ago BC made the decision that ethical and moral considerations have to be taken into consideration with its investments,” Mazareas said.

“Eventually Boston College is going to divest,” Barad said. “Now the question is for the Investment Club, whether they want to sell at an opportune time for them or be forced to sell by the institution when it divests as a whole.”

BCIC then presented its case, with Mark Pfister, CSOM ’18, stating that the act of divestment would only be symbolic and have no effect on the global demand for fossil fuels. He also argued that the act of selling shares does nothing to solve the problems with companies themselves and that choosing to divest would only provide greater buying opportunity for others.

Harrison Kenner, CSOM ’18, cited research by Arizona State University professor Hendrik Bessembinder, who found that over a period of two decades, colleges that divested could lose up to 12 percent of their endowment value.

He also pointed out that Boston College’s endowment, at $2.4 billion, makes up less than 1 percent of the entire endowment community, which stands at $60 trillion.

“Symbolic action makes no sense, because we’re not a signaling institution,” Kenner said.

According to Kenner, divestment would be impractical, as it would mean selling illiquid, hard-to-value securities at a time when the energy industry is dealing with low prices.

“The Boston College endowment helps support scholarships, work study programs, subsidized  activities, and the like,” Kenner said. “Would you be willing to not … receive sufficient scholarship funds, for a moral issue like this? We think the answer to this question is no.”

In its rebuttal, CJBC argued that the claim that divestment is harmful to university endowments is false, citing a Times of London report which found that universities that divested from fossil fuels had an average increase of 8.7 percent on their returns to their endowment investments.

Mazareas also pointed out that while university endowments may not have made up the largest investment funds in South Africa in the 1970s and 80s, the college students who pushed for divestment had created a movement that forced governments and larger companies to change their behavior.

“BC is violating its own bylaws,” he said. “It’s violating the Monan Amendment. And if the school is not going to follow that, the Investment Club could actually take a really important lead on that. BC is falling behind other Catholic universities, other Catholic organizations … who are sort of following the Pope’s call here.”

BCIC responded by again highlighting the financial ramifications of divestment.

“What it comes down to is, ‘Do you need energy investments to have a robust and established endowment?’ and the answer is unequivocally yes, because they have a different risk profile and different volatility relative to other investments,” Kenner said.

“We totally agree that the transition to green energy is not something to fight against,” said Aldo Eysaman, CSOM ’18. “But we think that it makes more sense to find companies to invest in to do this research on creating technologies that will enable it to be used, rather than trying to fight companies that are, their very nature is investing in [oil and gas], so to try to fight them to change that is unlikely to happen.”

Featured Image by Abby Hunt / Copy Editor

February 22, 2018