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Divestment: More Controversial Than You’d Think

Jake Quan

Jake Quan

Ludovica Grieco, Staff Writer

NYU Divest and its allies have made progress in recent weeks by securing a meeting with the Board of Trustees’ Investment Committee following a 33-hour sit-in at Bobst Library. While the organization has made some headway furthering their stance that the university should divest its investments from the fossil fuel industry, a voice opposing the movement has emerged amongst the NYU community.

Last year, the University Senate passed a resolution in favor of divestment and former NYU President John Sexton promised Divest organizers a meeting with NYU’s Board of Trustees.

However, before the University Senate resolution was passed, there was already controversy surrounding the issue. The University Senate assigned the issue of divestment to the Senate Financial Affairs Committee, which then formed a subcommittee to produce a report on the financial and environmental impact of divestment, called the Divestment Working Group. The Divestment Working Group ultimately produced a report opposing divestment.

The nine-member committee was created in order to examine whether the university’s divestment would make a difference in the overall predicament of climate change. Their report stated complete divestment would be more of a political action and statement than impactful change for the fossil fuel industry.

In addition, the group suggested that the university should foster sustainability through direct action practices make a positive environmental impact such as teaching and spreading awareness.

“[T]he working group has concluded that supporting divestment is primarily a political action or statement that expresses the university’s opposition to the fossil fuel industry’s role in global warming or climate change – and there is not sufficient justification for such an action or for enactment of a policy of the university,” the report reads. “However, the working group is unanimous in its support for continuing direct action by NYU to reduce carbon emissions, improve sustainability, and reduce dependence on fossil fuels.”

Students like CAS sophomore Michael Anastasiou are also concerned with the possible financial implications divestment may have on the university, such as a potential increase in tuition.

“For an institution that praises itself with investing in its students future, generating as much revenue as possible through investments is imperative for maintaining a much needed positive cash flow,” Anastasiou said.

Divesting from fossil fuels could decrease the university’s endowment, which concerns some students in the NYU community.

“With tuition costs in this institution at historically high levels, a four year degree is not attainable for the average income earner,” Anastasiou said.

SPS junior Eli Nachmany voiced his concerns surrounding divestment in the New York Times last May, suggesting that divestment would not actually hurt fossil fuel companies but would only hurt NYU. In a study released in 2015, California Institute of Technology professor Bradford Cornell estimated that divestment would cost NYU $4.16 million per year.

I find it most interesting that the same individuals advocating for divestment are the same fighting for affordability and economic justice at NYU,” Nachmany said. “Instead of dedicating time and effort toward tangible green programs and the development of sustainable modules, the group wants to make symbolic statements.”

In addition, Nachmany reiterated Anastasiou’s tuition concerns saying that divestment might impede the university’s ability to provide financial aid and scholarship to the students who need it.

“The way forward is not through symbolism, but through substantive change, which divestment would not achieve. There is no direct path between divesting and solving climate change,” Nachmany said.

Email Ludovica Grieco at [email protected]

UPDATE: This article has been updated to include the following statement from CAS junior Olivia Rich on behalf of NYU Divest.

“Many financial experts, including the Bank of England, have warned that fossil fuels companies are a risky investment,” Rich said. “Bradford Cornell’s study is contradicted by other research, including a study done by the Aperio group, and is based on performance of companies in the last 20 years, which is not a good predictor of the future given the likelihood of government action against fossil fuel extraction. Significant consensus exists in the NYU community that divesting from fossil fuels is consistent with NYU’s values and mission. Over 80% of the University Senate supported a pro-divestment resolution, rejecting the Working Group Report. The case for divestment is strong and is widely supported at NYU.”

 

 

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5 Comments

5 Responses to “Divestment: More Controversial Than You’d Think”

  1. Graham Smith on April 29th, 2016 4:45 pm

    1.Why do sustainability efforts and divestment have to be mutually exclusive? And, where’s the proof that sustainability efforts, no matter how aggressive, visionary, and thorough, lead us any closer to the legislation that is required if we are to transition away fossil fuels to renewables at the speed and on the scale that the science requires? Of course sustainability efforts are necessary and vital, but thirty years after our political leaders began talking about climate change, we are further away than we’ve ever been to enacting legislation that puts a price on carbon. Without such legislation, the transition won’t happen. NYU making a ‘political statement’ through divestment is a step that addresses the problem.
    2.The link between divesting and solving climate change is that stigmatization of the fossil fuel industry through reputable institutions pulling their money out of fossil fuel companies takes away some of their political power and social license. The end goal is legislation that puts a price on carbon emissions. That goal is not within the realm of possibility right now because of the influence and lobbying of the industry. To make this more concrete, take the divestment movements against the apartheid government of South Africa and against the tobacco industry. In both cases, there is a link between those movements and legislation eventually being passes. This link is shown in a study by Oxford University: http://goo.gl/y8rrk4.
    3. Divestment is compatible with prudent fiduciary practice. This has been shown in several studies by MSCI (http://goo.gl/6KgU87) and NorthStar Asset Management (http://goo.gl/jJjy6u). If New York University would have divested from the fossil fuel industry three years, they would have saved large sums of money. Investments in the fossil fuel industry have traditionally been a prudent move, but that has changed in the volatility of fossil fuel stocks, and will continue to be risky as the industry’s assets become stranded as carbon emissions are regulated more severely.

  2. nyustudent on April 30th, 2016 1:41 am

    the concerns about the rise of tuition after divestment are not researched or well founded, and therefore aren’t grounds for denouncing investing into the fossil fuel industry. suggesting that divestment is only a “moral” issue and doesn’t bankrupt the fossil fuel industry is essentially correct, however doesn’t represent how CRUCIAL the statement of divestment is.

  3. lisa on April 30th, 2016 1:46 am

    ^^ I agree completely; this article doesn’t accurately represent both sides of the argument and it does NOT represent the needs of the students (or world) accurately– shame on the writer.

  4. Anina on May 1st, 2016 3:00 pm

    There is broad support for fossil fuel divestment at NYU. Divestment has attracted over 1600 petition signatures, 220 signatories to our faculty letter, and a University Senate resolution for fossil fuel divestment passed with over 80% voting in favor. The article speaks of a movement against fossil fuel divestment, but evidences this only with a year-old letter to the Times and the concerns of two students.

  5. Anina on May 1st, 2016 3:27 pm

    Correction: nearly 1800 petition signatures

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Divestment: More Controversial Than You’d Think