This article is republished with kind permission from the Ubyssey, UBC’s student publication, where it was originally published under the title “Divestment?” On February 2, 2016.
UBC is divided on whether or not divestment from fossil fuels is necessary, or even helpful, for the battle against climate change. The university has a $1.2 billion endowment fund that is invested in a range of companies with an estimated $100 million — a little less than 10 per cent of the total — invested in fossil fuels such as oil, natural gas and coal. Adopting a policy of divestment would mean that UBC would have to shed those investments and move them into something else.
In referendums held last year, the student body and the faculty both voted in favour of divestment by a large margin. As a result, the Board of Governors is being increasingly pressured to make a decision.
The effects of social pressure
According to Alex Hemmingway, a political science PhD candidate and environmental activist with UBCC350 [a group of students, staff, and faculty at UBC who are “dedicated to advocating for meaningful government climate action and using political action to address the climate crisis”], divestment at UBC sends an important message. The university is a leading educational and research institution — the stances UBC chooses to take on issues such as divestment carry a lot of weight.
“These companies depend on a social license to operate,” said Hemmingway. “Until [we as an institution] highlight and confront the specific and destructive role of the fossil fuel industry in the climate crisis both in terms of profiting from pollution and polluting our politics, we’re not going to be able to make the progress we need on climate policy.”
Part of the power of divestment is in removing this social license that allows oil companies to operate with little ethical scrutiny. The term “social license” refers to the level of acceptance a community has for a project within it — an example of the effect removing social license of an industry can have is the meat industry. When the inhumane treatment of animals raised for meat became publicly exposed, many people were appalled. This reaction attacked the meat industry’s social license because it forced them through the power of societal pressure to change their practices. Examples of these changes are increasing the demand for alternative sources for meat such as organic and free-range meat, as well as creating a rigorous certification process for humanely-raised meat.
Divestment is an attempt to elicit a similar effect on the energy industry using socioeconomic pressure to change the practices of the industry.
Proponents of divestment argue that the statement sent by UBC adopting a policy of divestment would have a ripple effect on the province and the country. Hemmingway believes that more people speaking out against fossil fuel extraction corporations will give these companies less lobbying power, which allows them to block legislation that hurts their profits but helps the environment.
Whether or not divestment will actually have the intended social effect is unclear. Although it is a movement on many campuses, charities, churches and other groups across Canada, the United States and the United Kingdom, it was created less than five years ago and the long term results have not had the chance to ripen yet.
David Tindall is a sociology professor at UBC whose main research is on environmental issues and the social movements linked to them. He notes that the first actors in social movements, whether individuals or institutions, don’t have a significant effect.
“But once you reach a critical mass, then it can lead to a shift,” said Tindall. He believes that UBC’s divestment would add another weight to tip the scales, which could eventually pressure the government to create stricter environmental policies.
Others take a more neutral view, such as Sauder professor Ilan Vertinsky, director of the Forest Economics and Policy Analysis Research Unit. He thinks that UBC’s voice is small in the bigger picture and it probably will not carry much power in the struggle against climate change — although he doesn’t necessarily see this as a reason to not divest.
“There are lots of voices. I think it’s another voice and I don’t think this voice will cost us too much,” said Vertinsky, arguing that it is important to take a stand that reflects the university’s values of sustainability. He doesn’t believe divestment will have a negative financial impact on the value of UBC’s endowment fund if the investments are managed properly over the long term.
“In the long run for the university, investment in oil is not a good investment economically because there is a societal, international commitment that … some time in the future, we will phase out oil,” said Vertinsky.
“In the long run, for the university, investment in oil is not a good investment economically because there is a societal, international commitment that … some time in the future, we will phase out oil.” ~ Ilan Vertinsky, professor in the Sauder School of Business
Divestment itself would not actually have an environmental impact at UBC — the university has been making a very public shift away from non-renewable energy sources on campus for several years. But as a symbolic gesture, divesting could potentially have a large environmental impact by changing the status quo of society’s acceptance of polluting energy companies.
Is divestment a distraction from the real problem?
The gesture, however, would not be without its drawbacks. Nat Carson, president of the Mining Engineering Club and fourth-year mining engineering student, said that divestment will not help UBC’s goals towards climate change — much of the research on sustainable energy in her department is actually funded by some of the companies UBC would divest from.
“Something that is really overlooked by a lot of people who are pro-divestment is that a lot of these energy producers do heavily invest in clean technology and they are some of the people who are doing the most innovation,” said Carson. “If we do divest from these companies, does that mean we’re stopping investing in research in the technology?”
She worries that divesting from those companies will cause them to stop funding research at UBC and slow down the development of market-viable sustainable solutions. The way to create sustainable solutions, according to Carson, is to work with energy companies rather than against them.
“I think that [divestment] is a distraction from the real problem, which is finding solutions through the better use of carbon resources, finding technologies that change the demand for carbon resources or finding ways to sequester or reuse carbon resources,” Carson explained.
“[Divestment] is a distraction from the real problem, which is finding solutions through the better use of carbon resources, finding technologies that change the demand for carbon resources or finding ways to sequester or reuse carbon resources.” ~ Nat Carson, president of Mining Engineering Club and fourth-year mining engineering student
She says many sustainable energy solutions already exist, but what is missing is an economically viable way to implement them. Research is the way to discover cheaper solutions and UBC needs a relationship with fossil fuel companies to continue to pursue such research.
Carson says it would make more of an impact if UBC were able to actually become a self-sustaining university rather than saying we don’t approve of carbon. She believes it would create a more significant ripple effect across campuses to be a leading example in technology and action, rather than morals.
Vertinsky believes that fossil fuel companies would continue to invest in clean research at places like UBC, divested or not. “It’s of great interest of the companies to clean up their act,” said Vertinsky. “They would not cut funds because it looks bad for public relations.”
Regardless of whether Vertinsky is right, others such as Hemmingway think the positive societal impact that might come from divestment outweighs any potential financial risk.
“We’re talking about an unprecedented global crisis that needs immediate action in climate change. I really think we need to take that action anyway, even if it were to cost you some money as an institution,” said Hemmingway.
Although research shows that the university’s endowment fund wouldn’t be adversely affected by divestment, many engineers at UBC could face a financial risk from divestment. Funding from energy companies provides a lot of co-op, research and engineering competition opportunities for UBC students. Companies and UBC also form a strong alumni network, which leads to an avid hiring of UBC graduates. Divestment could have an impact on graduates hoping to enter the energy industry.
Carson notes the conflict between these interests and UBC’s overall emphasis on sustainability as an institution.
“Divesting could mean that energy companies don’t necessarily turn to UBC students when they’re looking for the latest innovators … but we’ve come from UBC where we do have this huge emphasis for sustainability,” said Carson. “Graduates from UBC have this unique perspective and entering the energy industry would allow them to change that conversation in carbon technology right from the source.”
“Divesting could mean that energy companies don’t necessarily turn to UBC students when they’re looking for the latest innovators … but we’ve come from UBC where we do have this huge emphasis for sustainability,” said Carson. “Graduates from UBC have this unique perspective and entering the energy industry would allow them to change that conversation in carbon technology right from the source.” ~ Nat Carson
Vertinsky argues it would be a bad PR move for those companies to entirely cut ties with UBC if UBC were to take a stand on divestment. The university, after all, has a powerful voice and its graduates are highly sought after. Companies do not want to face the backlash from isolating the UBC community.
UBC students saw a recent example of this backlash. On January 22, Peter Kiss, the CEO of Morgan Construction — a construction company specializing in the oil fields — published a LinkedIn blog post stating that he wouldn’t hire UBC graduates if the university chose to divest. After a few days of uproar in the media, he posted on Twitter that he retracted those statements and would still hire from UBC.
However, it is important to ask whether academic freedom is hampered by corporate interests if the university cannot act freely in fear of losing funding.
“You have to be very careful of being in a situation where the views of professors are then constrained to being in line with the interests of corporations or at least constrained to the extent that they can’t criticize corporations,” said Tindall.
Alan Ehrenholz, Engineering Undergraduate Society president and third-year civil and environmental engineering student, argues that academic freedom is having access to those opportunities, regardless of who funds them.
“[Engineering students] want to be able to study what they want to study,” said Ehrenholz, arguing that divestment could actually hamper an engineering student’s access to the learning opportunities provided by companies hurt by divesting.
Sustainable words, sustainable actions
This raises a question of whether divestment is actually in line with UBC’s goals. Ehrenholz believes not, because it will limit access to experiential learning for students, but Hemmingway focuses on the fact that it will properly reflect student and faculty opinion, referencing last year’s referendums.
However, Carson says it doesn’t match up to still use gas and oil and yet so vehemently disapprove of it.
“Pulling out and saying, ‘All carbon is bad, let’s not use it,’ and then still living a Westernized life is biting the hand that feeds you,” said Carson. “From my own personal perspective, [divestment] is a symbolic gesture more so driven by emotion than it is business. I think that if UBC really wanted to make a statement, then it should find ways to run the campus on renewables.”
Hemmingway pointed to UBC’s goal of 100 per cent reduction of greenhouse gas emissions by 2050. UBC brands itself as sustainable and even has an associate provost in charge of sustainability. James Tansey, director of UBC’s sustainability initiative, signed the open letter to the university from the faculty calling for divestment.
“What it fundamentally means is bringing our investment practices in line with our rhetoric and our own hopes for excellence in sustainability.” ~ Alex Hemmingway, political science PhD student and member of UBCC350
“What it fundamentally means is bringing our investment practices in line with our rhetoric and our own hopes for excellence in sustainability,” said Hemmingway. “It’s really about bringing our investment actions in line with our values.”
UPDATE: On February 15, UBC’s Board of Governors voted not to divest from fossil fuels. On the same day, UBC announced it was launching a Sustainable Future Fund to give donors more choice when donating to UBC’s endowment.