The NYU Senate Financial Affairs Committee Divestment Working Group recently released a statement outlining their response to student and faculty pressure for the University to divest from fossil fuels.
The working group decided not to recommend divestment based on two main factors:
-Divesting would be a largely symbolic move, and would do little to reduce carbon emissions besides making a political statement.
-It would not be financially prudent for NYU to divest the $139 million it has invested into fossil fuel companies. Because of the structure of how the University’s investments are managed, it would require $1.3 billion to change hands.
I’ve followed NYU Divest for a few months now, and have been impressed by their professionalism and drive. I’ve consistently been conflicted about my feelings on divestiture, but I am disappointed by the University Senate Financial Affairs Committee Divestment Working Group’s decision not to recommend divestment to the committee. The e-mail statement is reproduced below with a link to the full report on a Wiki page.
It is important to remember that the Divestment Working Group is not a decision-making body; its purpose was only to make recommendations to the full Financial Affairs Committee who has the authority to hold a vote.
In a press release, NYU Divest characterized the Working Group’s statement as misleading. NYU Divest stated that many of the Working Group’s arguments against divestment were met with skepticism from the University Senators, clarified that the measure has not been put to a vote, and expressed hope that the full University senate would make the right decision.
Personally, I agree with many of the points raised by the Working Group as well as many of the points raised by NYU Divest. I think it is a fair assessment that divestment carries a strong symbolic weight but will do little to affect actual change. I read one of the articles cited by the Working Group, entitled “Divestiture is Nothing But A Distraction” penned by David Oxtoby (president of Pomona College). I initially agreed with a number of Oxtoby’s points, but upon further reflection I feel that the article is somewhat patronizing in tone and limited in scope. The conclusion I have personally reached is that divestment by a major university such as NYU would be a sufficiently publicized statement that it would carry more than simple symbolic weight. If The Rockefellers (heirs to the Standard Oil fortune!) can do it, so can we. More than 130 NYU Faculty members signed the open letter to President Sexton calling for divestment; if they truly are among the best and brightest academics in the country perhaps we should listen to them.
Removing $139 million from the fossil fuel industry would not do much to hurt Shell or Mobil or OPEC or the Koch Brothers or insert evil business tycoon here . But if NYU were to turn around and invest that money into sustainable energy and other green industries, that has the potential to actually kickstart something. Unsurprisingly, many industries related to sustainable energy and development are experiencing rapid growth* and are likely to be profitable for investors.
*What would Malthus and Professor Bartlett think about exponential growth in green roof construction?
Another interesting bit of information: I had never really heard or thought about the NYU Senate before. I didn’t know who it was composed of or how broad its powers are. Here’s a summary in case you are also wondering:
-It’s the deliberative body for matters concerning university-wide policies, practices, and structures
-It has no direct authority, however it makes direct recommendations to the President and Chancellor of the University who then relay these recommendations to the Board of Trustees.
- It is composed of the Tenured/Tenure-Track Faculty Senators Council, Full Time Non-Tenure Track/Contract Faculty Senators Council, the Administrative Management Council, and the Student Senators Council.
Email statement from University Senate Financial Affairs Committee Divestment Working Group:
Few challenges of our time claim our attention the way climate change does. It calls on us to think about how we can lead more sustainable lives in our individual lives and how we can align the communities and institutions with which we are connected with those values.
It was in that spirit that the Senate Financial Affairs Committee, in response to a request by the advocacy group NYU Divest, set out to determine whether or not it should recommend that NYU divest itself of investments in fossil-fuel-related companies.
After several months of review by a Working Group of faculty, students, and administrators, we determined that we would not make such a recommendation. The report of the Working Group may be accessed on its Wiki at the following address: https://wikis.nyu.edu/display/DivestmentWorkingGroup/Divestment+Working+Group
Given how large a spot this topic occupies in the national – indeed global – public discourse and how fervently a segment of our University feels about this topic, we want to share with the University what led us to this conclusion.
The Working Group accepted a number of premises: that the impacts of global warming are apparent; that the risk to the environment of continuing growth in carbon emissions is significant; and that, generally speaking, the mitigation of fossil fuels is both in our best interest and consistent with the University’s mission.
In thinking about divestment, the Working Group focused on 1) whether it was an impactful step to take, and 2) whether it was consistent with NYU’s fiduciary duties.
The Working Group came to the conclusion that the decision to divest NYU’s endowment of fossil fuel stocks is primarily a political statement. In acknowledging this, the Working Group was not saying it was grounds for disqualification of the effort – politically driven recommendations have been acted on in the past because of their symbolic weight — but it is grounds for approaching the topic with considerable circumspection.
Though there have been numerous calls for divestment on campus for various reasons over the years at NYU, it is rare for the Senate to endorse such recommendations. Those instances where there has been a Senate recommendation have tended to be characterized both by a clear and compelling moral or humanitarian objective and an absence of alternative actions NYU can take.
By contrast, in the case of climate change, NYU can – and indeed already has – taken direct actions to reduce carbon emissions significantly. Moreover, NYU can have an impact through its teaching and research mission. It was in these areas that the Working Group concluded that NYU can have its greatest impact on global warming.
In contemplating the issue of divestment, the Working Group also had to take account of NYU’s legal duty to invest its funds in a manner that is prudent and in the University’s best interests.
In December 2014, approximately $139 million – or 7% — of the endowment was invested in companies identified as problematic by the advocacy group NYU Divest.
NYU does not directly purchase investments in companies (i.e., directly purchase stocks). Instead, NYU’s endowment is primarily invested with fund managers, who comingle funds from many investors, who tend to have a diverse portfolio of investments at any given time, and who do not take direction from clients on which specific investments to make.
Because of this structure, in order to eliminate the $139 million in fossil fuel investments, NYU would have to liquidate relationships with 39 funds that together account for 38% of the endowment, or $1.3 billion. The Working Group concluded this was not financially prudent. NYU does have some accounts with managers who hold securities in NYU names, and approximately $700,000 of fossil fuel investments are held in such accounts. A minority of Working Group members favored divestment of those fossil fuel investments.
The Working Group recognizes that there are many on this campus for whom a reduction in the use of fossil fuels and a focus on sustainability are a passion. For them, the act of NYU divesting its endowment of fossil fuel stocks would have been a powerful symbol. While the Working Group report does not recommend such an action, we appreciate the fervor and commitment these groups and individuals bring to this topic. And we hope it will encourage NYU to continue to takes steps to enhance sustainability and to reduce the use of fossil fuels.