The current consensus is that global warming needs to be limited to two degrees centigrade. What this means is that the global temperature cannot rise by more than two degrees if we are to avoid catastrophic climate change. Yet fossil fuel companies have found enough coal, oil and gas to heat the Earth by five degrees centigrade, not once, but three times over. In addition, as PWC reports, 2014 was the sixth year in a row that the global economy missed the decarbonisation target required to keep warming under two degrees.
In the face of such dire circumstances, surely one would imagine some action has taken place. Indeed, last year, the ANU agreed to divest from seven resource companies. These were: Iluka Resources, Independence Group, Newcrest Mining, Sandfire Resources and Sirius Resources. However, the only two fossil fuel companies dumped by the ANU were Santos and Oil Search. You might be forgiven for thinking the ANU had truly done something radical. A plethora of articles appeared in The Australian Financial Review (AFR) blasting ANU’s announcement to divest. Karl Simmich, CEO of Sandfire Resources, threatened to sue the ANU. However, the ANU still holds shares in some of the biggest polluters and worst offenders, companies such as: BHP Billiton, Rio Tinto, Woodside Petroleum, and Wesfarmers. Given the urgency of the climate change situation we face, Fossil Free ANU are calling on the ANU to divest the rest starting with a National Day of Action on Wednesday 22 April.
In light of this, it may be time to review the case for divestment. First, a simple definition: divestment is the opposite of investment. Instead of obtaining shares, one gets rid of them. While the ultimate idea may be to defund fossil fuel companies, the crucial step at this stage is to de-legitimise them. Divestment is often chastised as “symbolic” and thus vacuous. Yet symbols matter hugely in our society. When the ANU announced it was divesting from just seven resource companies last year, the AFR, to name one publication, published some 42 articles, most of them lambasting the ANU and divestment. If divestment is such a pointless gesture, what exactly was the AFR so concerned about? If divestment is such a pointless gesture, why has it ignited debate across American university campuses? Harvard and Yale have divestment movements, both of which have engaged in occupations, MIT recently hosted a public debate on whether it should divest or not, and Stanford went so far as to divest from coal companies, putting the ANU’s meagre efforts to shame.
The Faustian (as in president of Harvard, Drew Faust) counter to university divestment claims that to divest from fossil fuels would make the university a political actor, and not an academic institution. Such an idea rests on a twofold fallacy. In the first instance, Faust assumes the economic and the political are separable, as if political and economic constraints don’t frequently intertwine. In the specific case of divestment it assumes that a university’s endowment is exclusively an economic instrument. In the second case it assumes universities should not be moral actors. They should, like individuals, pursue their own economic gains and only be restricted by a legal framework. In a recent speech at Columbia University, Jeffrey Sachs made the case for a move away from this view, claiming: “the economy and our material resources within it should operate within a broader moral framework, one that extends beyond individual contracts, private property, and prevailing law. There are transcendent moral purposes in society. Voluntary contracts may lead us badly astray, even to the threat of our own survival and the survival of other moral beings.” There are few better examples of being led badly astray than universities investing in fossil fuel companies.
If the ANU wishes to be the leader it thinks it is; if the ANU wishes to become an institution of prestige like the US Ivy League universities, who are now seriously considering divestment; if the ANU wishes to show the leadership it claims to possess in plethora, then it needs to divest the rest of its portfolio from fossil fuel companies.