Editor's note: This contribution by the late journalist I.F. Stone first appeared in our January 1975 magazine.
Bill McKibben likes activism with a healthy dose of ambition -- something that should be abundantly clear after his planet-scale art projects and sit-ins outside the White House. Now the 350.org founder has started "Do the Math", a campaign in the same audacious vein that aims to get colleges and universities divested from major fossil fuel companies. After a widely publicized lecture tour, the campaign has spread like wildfire to campuses nation-wide.
"Do the Math" is a longshot. Divestment campaigns, which spring up fairly often on college campuses, have a very high failure rate. Colleges hate purging their portfolios. A typical financial administrator has a battery of defenses against the "d-word":
"To divest, we would have to rebuild our investment portfolio."
Our administrator is talking about something specific here: the co-mingled fund. These funds mix stocks, bonds, and other assets into one lucrative financial package.
While lucrative, they also stop divestment in its tracks. Dropping shares held outside of a fund is easy, but when shares are tied up within a fund, then you face an all-or-nothing decision: Divest from the entire fund -- not just stock in the rotten apple, but everything else too -- or suck it up and stay invested. Colleges can't cherry-pick, and since they are so heavily invested in these financial smorgasbords, parting with them would entail restructuring their whole portfolio -- and that, unsurprisingly, is a non-starter.
"We need to think about the future generations of [college name]."
This statement touches on two different ideas: institutional legacy and intergenerational equity.
Colleges abide by their legacies. They care only so much if a cause looks good today -- more important is if it will look good tomorrow. Even if a cause is solid, the strategy of divestment gets called into question: Would it look embarrassing if divestment from the fossil fuel industry flops?
"Intergenerational equity" basically means that it's only fair for tomorrow's students to enjoy the same resources as today's. When a college divests, it technically loses money it would have made in the future, from the returns that compound over time. Therefore, our administrator might say, social responsibility today comes at too high a cost for students tomorrow.
"We can promote change by staying invested."
Colleges vote on shareholder resolutions at annual meetings, and in theory, they could change an irresponsible company's behavior through these votes. They can also take direct action, by writing letters directly to the company. (Emphasis on "in theory." Shareholder resolutions are pretty toothless in practice, and let's not even start with letter-writing.)
"We have a fiduciary responsibility."
Translation: "Making money for an institution always comes first, and acting like a socially responsible investor always second -- if at all."
And that's the bottom line. Today, only 18 percent of all post-secondary institutions in the United States apply any criteria of social responsibility to their investments -- down from 21 percent in 2009. And for those 18 percent, the strides they take towards social responsibility are miniscule.
That's why we need a movement even bolder than Do the Math -- one that will aim not to divest, but to change institutional values. Colleges must give social responsibility equal footing with fiduciary responsibility. Groups like the Responsible Endowment Coalition promote such a balance, helping schools strategically transition away from co-mingled funds in Fortune 500 companies, and towards high-yielding investments in communities and green energy.
Colleges must come around to the view that the real intergenerational equity won't be the cost of a lost return -- it will be the cost of the damaged planet future students will inherit if they don't act soon.
Erik Lorenzsonn is an editorial intern at The Progressive.