Members of Climate Justice at Boston College (CJBC) and Boston College Investment Club debated the fossil fuel divestment movement, which advocates that institutions remove their current investments from fossil fuel stocks due to climate change.
The debate aimed to discuss the Investment Club’s decision to invest part of their $600,000 portfolio in companies connected to the fossil fuel industry such as C&J Energy Services Inc., Chicago Bridge and Iron Company (CBI), and Flotek.
Matthew Barad, MCAS '20, and graduate student James Mazareas argued in favor of the divestment initiative as members of CJBC. Mark Pfister, Harrison Kenner, and Aldo Eysaman, all CSOM '18, argued against the movement as representatives of the Investment Club.
Barad started the debate by showing a series of graphics that illustrated the market summary for each of the companies they want to pull their current investments from.
“We are focused on the financial cost of divesting, and specifically in the loss you would incur by not divesting," he said.
One of the statistics cited CBI, which in a five-year performance experienced a 65% drop in their market value, from $54 to $18.
“The world is moving away from oil and gas extraction,” said Barad, pointing out that 50% of CBI’s losses occurred last year and amounted to $1.5 million. “If you want to sell and recover the losses, this is the best time.”
Mazareas cited Pope Francis’s encyclical on ecology, Laudato Si, which says that climate change is primarily the result of human activity and that we are responsible for changing our everyday actions to be more sustainable.
He argued that as a Jesuit, Catholic University, BC is falling behind other Catholic institutions such as Georgetown University and Marquette University, which are following Pope Francis's call for ethical and moral investments.
On the opposing side, Pfister argued that divestment a symbolic action that will not change the demand for fossil fuels from international households, corporations, and other entities.
“Symbolic actions warm hearts and they change minds, but endowment is very much a financial operation,” said Pfister. “The energy industry has different performance from the broader equity markets; diversification in the only free lunch in finance. It's the best way to ensure higher returns.”
The Investment Club claimed that divestment would hurt university endowment. They cited a study conducted by Hendrik Bessembinder at Arizona State University, which found that over a two-decade period, colleges that divested lost 12% of their endowment value. Divesting would bring tangible financial ramifications, which means that scholarships, funds, and university operations can come under peril.
“Would you be willing to not participate or receive sufficient scholarship funds for a moral issue like this? We think the answer to this question is no,” Kenner said. “The mission of BC is to train the next generation of problem solvers, not [to] take symbolic action in the year 2018, when we don’t know the outcome of our symbolic action.”
Furthermore, the Investment Club argued that as the entire global energy industry transitions from fossil fuel to the energy renewable approach, the industry and technology for green energy is not ready to handle the capacity of our global energy demand.
“We don’t yet have the battery capacity for green energy to be viable in and of itself,” Eysaman said. “We have to wait and we still have to rely upon conventional fossil fuel based resources to manage the base load that we use in our everyday lives.”
Barad rebutted his opponents by restating their argument.
“We are focused on the financial cost of divestment, and specifically really the losses you would incur by not divesting,” he clarified.
He stated that the argument that divesting from industry renewal would result in a loss of money is false. According to a Times of London report, universities that divested from fossil fuels found an average of 8.7% increase on their incurrence of their endowment investments from before and after they invested.
In addition, Barad refuted the Investment Club’s argument on global energy usage by claiming that there has been an increasing investment in green energy.
“To match that global energy usage is mostly resulting in renewable energy investment, not old ways because we know that those investments don’t work anymore,” Barad said.
The Investment Club, however, reaffirmed that the oil market is not dying; in fact, it is very much alive. The industry is open to having green energy come in, but it is also one that has continued to invest in oil and gas.
Kenner stated that they are not trying to fight against green energy. However, he thinks that it makes more sense to try and find companies to invest in research for creating technologies that will enable it to be used.
“We're open if you find individual companies that you don’t think have a reliable future; we’re open to having presentations on the cash flows and the merits of those individual investments,” Kenner said. “We don’t think that applying a binary rule is necessarily the right approach.”
At the end of the debate, the Investment Club seemed unconvinced by CJBC’s argument to divest from fossil fuels. The arguments made in the debate ultimately reflected that the environmental debate surrounding investment in the fossil fuel industry remains relevant both globally and in the BC community.
“The question is whether the Investment Club wants to lead the university and the world in standing up for our right to a clean and green future," said Barad. “At the end of the day, it's going to be more damaging to the endowment to remain invested in fossil fuels.”
Update: Feb. 22 at 10:15 p.m.
A previous version of the article incorrectly suggested that CBI is a fossil fuel company. This was updated to reflect that fact that CBI is an engineering, procurement, and construction company that produces technology used in the oil and gas sectors, and is in that way connected to the fossil fuel industry. Additionally, the sentence that read "Pfister argued that energy renewal alternatives are merely symbolic" was updated to include additional context. The quote that followed was extended to include his full argument.