By Nicolas Loris and Richard Sigman ~
Students at dozens of academic institutions across the country have called for their university endowments to divest equities in the fossil fuel industries. When University of Denver trustees voted this week against fossil fuel divestment, many students walked out of their classes to bring awareness to this cause as the meeting took place.
Fossil fuel divestment is foolish for many reasons.
First, it weakens the diversification of a university’s endowment, harming future generations of students.
Second, it won’t work. Divesting certain industries through political activism has a poor track record of effectiveness. The companies in question are almost always able to continue to finance their operations and raise capital efficiently.
Most important, however, is the potential harm to society should divestment actually succeed.
The utility of cheap, reliable, and transportable energy sources available through fossil fuel recovery dramatically raises society’s standard of living. Electricity and transportation are made more affordable (and therefore accessible) with abundant sources of fossil fuels bidding down the costs of energy consumption.
Divestment from fossil fuels fits the theme of the environmental activist mantra of telling other people what to do. Celebrities tell families to use different light bulbs and buy smaller cars while they fly around on private jets. Politicians travel around the world for global warming conferences, but demonize the use of conventional fuels. And students press universities to make financially unwise decisions as a symbolic gesture.
Many other universities, including American University and Harvard, have rejected fossil fuel divestment, understanding that the purpose of endowments is to fund university operations and research, not to make political statements. More schools should do the same.