A campaign on college campuses across the country aimed at stopping climate change received a big boost yesterday with the announcement that Stanford University will stop investing in coal companies.
The resolution, passed by Stanford’s Board of Trustees, states the school will no longer directly invest in approximately 100 publicly traded companies whose primary business is coal extraction, in addition to divesting itself of any current holdings in such companies.
"The university's review has concluded that coal is one of the most carbon-intensive methods of energy generation and that other sources can be readily substituted for it,” Stanford President John Hennessy said in a statement explaining the move.
Stanford’s “Statement of Investment Responsibility,” originally adopted in 1971, says that while trustees’ primary obligation is to maximize profits, the board should consider whether “corporate policies or practices create substantial social injury.”
"Stanford has a responsibility as a global citizen to promote sustainability for our planet," Hennessy said. “Moving away from coal in the investment context is a small, but constructive, step while work continues, at Stanford and elsewhere, to develop broadly viable sustainable energy solutions for the future."
The school does not disclose specific investment information about portfolio holdings or individual values, but Lisa Lapin, associate vice president of communications at Stanford, told the New York Times that the school’s current investment in coal companies represents a small portion of its total $18.7 billion endowment. Thus, Lapin says, “a small percentage is still a substantial amount of money.”
Reacting to the news Wednesday, representatives from the coal industry said the divestment will have no impact on the industry at all.
The move was initiated by Fossil Free Stanford, a student-led organization that petitioned the university last year as part of a national campaign encouraging divestment from all fossil fuel companies.
“It's going to prove to be an enormous victory in terms of symbolism,” Michael Peñuelas, one of the leaders of Fossil Free Stanford, says. “And it's going to tell a lot of other university administrations and other private-sector institutions that this is a feasible move to divest from coal.”
Stanford’s decision clearly bolsters a national campaign that has seen 11 other schools remove investments in fossil fuel companies. The schools include: San Francisco State, which divested from coal and tar sands companies last June, Hampshire College, Pitzer College and a handful of smaller schools.
“The impact of Stanford’s decision is going to put an exclamation point at the end of everything (the national campaign) has done,” says David Meyer, professor of sociology at UC Irvine. “There tends to be a cascade effect when big players like Stanford get into the action.”
Despite campus protests, other schools, most notably Harvard and Middlebury, have refused to join the divestment campaign, questioning the effectiveness of the divestment strategy. More than 100 Harvard faculty members have signed a letter urging Harvard president Drew Faust to divest, and last week, one student was arrested on campus for attempting to blockade Faust’s office.
A report by Harvard University’s Institute of Politics titled, “Does Divestment Work?,” draws parallels between fossil fuel divestment and similar campaigns to halt investment in South African companies during apartheid in the 1980s. The study suggests the effectiveness of divestment is not all about finances:
“The evidence from South Africa suggests that divestment, while ineffective in a financial sense, can have an impact by shaping public discourse. … If universities across the country divested from fossil fuels, this would again be the case.”
While Stanford's move is widely seen as an environmental victory, Meyer says, “It’s also worth pointing out that Stanford didn’t take the whole fossil fuel abstention position, only focusing on coal,” and not divesting from oil or natural gas companies, as Fossil Free Stanford’s petition called for.
Financially speaking, Meyer says “coal increasingly looks like it’s a bad investment.” This makes it much easier for Stanford’s Board of Trustees to remove funds from an already shaky investment — while earning environmental kudos in the process.
Another factor: Bay Area billionaire Tom Steyer, a noted environmental advocate, sits on Stanford’s board. The Washington Post suggests that Steyer’s presence increased internal pressure on the school to approve the divestment.
While the development is “exciting and encouraging for students,” Meyer fully expects them to “claim this victory and keep demanding more.”