The Case for Divestment

Open Letter to the Corporation

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An Open Letter to Members of the Corporation of Brown University

The Case for Divestment

Dear Members of the Brown Corporation,

For more than a year, the Brown Divest Coal campaign has worked hard to ensure that Brown University divests from the largest coal burning and mining companies in the United States. Over 100 students have contributed actively to the campaign, gathering petitions, coordinating events, communicating with the administration, and hosting on-campus conversations with everyone from Dr. Peter Singer to Rev. Bob Massie. As the Corporation approaches a decision on the issue, we remain committed to Brown’s divestment from the coal industry, and confident that our University will make the responsible choice.  We request that Brown exclude from its direct investment, and require its separate account investment managers to exclude from their direct investments, the ten largest U.S. coal burning utilities and five largest U.S. coal mining companies, as outlined by the Advisory Committee on Corporate Responsibility in Investment Policy (ACCRIP) in their April 9, 2013 divestment recommendation.

In this letter we will review why fulfillment of the ACCRIP’s recommendation is a prudent, prescient, and ethically necessary decision. We commend the honest dialogue Brown’s Corporation has facilitated on the issue to date, and we request that members of the Corporation approach this letter, and the arguments it contains, with the same open-mindedness. We hope that Brown’s decision will be restricted to the divestment recommendation at hand, and not conflated with broader conversations underway at other universities concerning full fossil fuel divestment. Our campaign has chosen to focus on the coal industry for a reason: coal is the worst of the worst — the most carbon-intensive, environmentally hazardous, and socially devastating fossil fuel. We join the Undergraduate Council of Students (UCS), the Graduate Student Council, and 3,600 Brown students, alumni, faculty, and staff in echoing ACCRIP’s conclusion that, “the harms associated with these companies’ business practices are so grave that it would be deeply unethical for Brown University to continue to profit from them.”

I. The Ethical Choice

A. Coal burning is a severe public health hazard

  • Particulate pollution from coal-fired power plants caused an estimated 13,200 Americans to die prematurely in 2010. Additional impacts include an estimated 9,700 hospitalizations and 20,000 heart attacks each year.[1]
  • These health impacts were most severe for children, the elderly, and those with respiratory illnesses, as well as for the poor, predominantly minority communities that are disproportionately located downwind of major coal-fired power plants.[2]

B. The environmental and health damages from coal extraction, transport, processing, and combustion are immensely costly

  • Coal’s life cycle effects waste stream cost the U.S. public a third to over one-half of a trillion dollars annually. Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of non-fossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive. [3]
  • In the Appalachian coal-mining region, mountain top removal mining has destroyed 2,000 square miles of hardwood forest—an area the size of Delaware—and buried 2,000 miles of streams. Toxic waste associated with mountain top removal mining poses a huge public health burden in surrounding areas.[4]
  • The economic costs of coal mining in Appalachia outweigh the benefits more than 5-to-1. According to a West Virginia University study, the coal industry creates about $8 billion per year in economic benefits for the Appalachian region. But even using conservative estimates, the cost of premature deaths attributable to coal mining is valued at approximately $42 billion. The same study found that the heaviest coal mining areas of Appalachia had the poorest socio-economic indicators.[5]
  • Despite years of grassroots pressure and shareholder action opposing mountain top removal, none of the ten utilities on the divestment list has instituted a policy banning coal sourced from mountain-top removal sites. For example, a 2012 shareholder resolution that would have committed Dominion to a phase-out of sourcing from mountaintop removal mines was voted down, garnering only 9.5% of the vote. This year, the same resolution failed again, garnering only 6.9% of the vote.[6] Arch Coal, Alpha Natural Resources, and Consol Energy continue to operate mountain-top removal mines.[7]

C. Coal is a leading driver of global climate change

  • Coal is the single largest source of worldwide energy-related carbon dioxide emissions.[8]
  • On average, coal-fired generation emits 34% more carbon dioxide than oil-fired generation, and 98% more carbon dioxide than natural gas-fired generation.[9]
  • Climate change is already warming the ocean and the atmosphere, raising sea levels, changing precipitation patterns, increasing the length and severity of heat waves, increasing the frequency and intensity of some extreme weather events,[10] and threatening significant losses of biodiversity worldwide.[11]
  • These effects constitute severe threats to human health, food and water security, and geopolitical stability around the world. According to the World Bank, millions of people risk being pushed back into poverty as climate change undermines economic development in less-developed countries.[12]
  • Climate change is an urgent problem. According to the IPCC, at current emission rates the planet’s atmosphere will exceed a dangerous threshold concentration of greenhouse gas in approximately 27 years.[13]
  • Emissions reductions are not proceeding fast enough to avert this scenario. On-going changes to the energy fleet are not expected to have a significant effect on future carbon emissions. According to the Energy Information Administration, CO2 emissions from the electricity sector will return to 2010 levels by 2020 if no policies are put in place to control greenhouse gas emissions from existing fossil fuel-fired power plants.[14] The International Energy Agency estimates that if significant emissions reductions are not achieved by 2022, all carbon emissions allowable would be locked-in by energy infrastructure existing at that time.[15]

D. Seven of the companies on the divestment list are contributing members of the American Coalition for Clean Coal Electricity (ACCCE), which has consistently and aggressively obstructed climate legislation, despite the grievous and immediate dangers posed by climate change

  • For example, the ACCCE and other members of the coal industry, including Duke Energy, have mounted a multimillion dollar lobbying and advertising campaign to obstruct recent EPA regulations on carbon emissions from new power plants.[16], [17], [18]
  • Despite multiple years and at least $45 million spent on “clean coal” advertisements extolling the benefits and feasibility of carbon capture and storage, the ACCCE and other industry groups are opportunistically opposing new regulations that would require carbon capture and storage, arguing now that the technology is unproven and a risky bet.[19],[20],[21]
  • From 2003 to 2008, members of the ACCCE spent less than two cents for every dollar in profit on researching carbon capture and storage.[22] In 2008, the ACCCE opposed the American Clean Energy and Security Act, which would have allocated $60 billion for carbon capture and storage research.[23] Once the bill had failed, CEO Steve Miller attempted to claim that the ACCCE had supported the bill.[24]
  • At least six of the companies[25],[26],[27],[28] on the divestment list have financial and/or administrative ties to the American Legislative Exchange Council (ALEC) which has lobbied to repeal state renewable energy mandates,[29] attempted to block EPA greenhouse gas emissions regulations[30], and consistently attempted to deny the scientific consensus on human-induced climate change.[31] ALEC stopped releasing any member names as of 2011.

E. Many socially responsible investment groups, including the World Bank, have stopped funding coal projects

  • In July, the World Bank board announced it would cease funding coal-fired power stations, except in “rare circumstances” in developing world countries with no feasible alternatives to coal.[32] Later that month, the European Investment Bank, the European Union’s main finance arm, announced it would stop investing in most coal-fired plants.[33]
  • Socially responsible investment groups that have divested and/or screened coal specifically from their portfolios include but are not limited to: Trillium Asset Management[34], Boston Common Asset Management[35], Impax Asset Management[36], and financial services provided Storebrand[37]. Goldman Sachs recently advised against investing in thermal coal on financial grounds.[38]
  • San Francisco State University, the largest university to divest so far, has stopped investing in coal and tar sands.[39]
  • The Providence City Council voted to divest in June, acknowledging that the city’s “investments should support a sustainable future where all people can live healthy lives without the negative impacts of a warming environment.”[40]

As ACCRIP has already concluded, the egregious ethical harms enumerated here are more than sufficient to require Brown’s divestment. Continuing to profit from the coal industry would constitute an obvious and ongoing refutation of Brown’s commitment to sustainability and human rights. In the University’s Charter, Brown is tasked with “forming the rising generation to virtue.”[41] Brown cannot fulfill this mission while simultaneously profiting from an industry that unequivocally contravenes our virtues, and poses massive risks for rising generations.

Coal is the worst of the worst—climatologically, environmentally, socially—and divesting would build on Brown’s proud history of ethical decision-making. In 1984, Brown took the historic and widely lauded step to divest from the “worst of the worst” among the companies operating in apartheid South Africa. Brown Divest Coal requests that the Corporation rise to the occasion once more, and not shrink from a legacy of ethical foresight and bold action. The coal industry has clearly distinguished itself as uniquely and especially harmful among the fossil fuel industries, standing in direct opposition to the principles of the Brown community. We are asking the Brown Corporation to exercise its discernment as it did with South African apartheid—a discernment that cut through political ambiguities and recognized the ethical imperative at hand. Archbishop Desmond Tutu, a champion of the anti-apartheid movement, has called climate change “an even greater threat than apartheid,” with impacts disproportionately felt among the poor.[42] As we concluded in 1984, Brown University cannot continue to profit from the industry contributing the most to such a grave injustice.

Some university administrators, including Harvard’s President Drew Faust, have attempted to absolve themselves of ethical responsibility by appealing to the threat full fossil fuel divestment could pose to endowment returns. But in Brown’s case, the Corporation’s ad hoc committee on coal divestment has already concluded that the effect of coal divestment on the University endowment would be negligible. Brown can fulfill its moral obligation to divest from the most harmful fossil fuel at no cost to the University. It would no doubt be worth allocating resources toward preserving Brown’s basic integrity and cementing its environmental leadership, but in this case Brown has the opportunity to do both essentially for free.

President Faust has tried to take a neutral position in the divestment debate, claiming that the Harvard endowment should not be instrumentalized as a political tool. Not only is this argument deeply irresponsible, it is also mistaken in its premises. President Faust has subscribed uncritically to the same politicization of climate change that companies like those on ACCRIP’s divestment list have peddled on Capitol Hill, attempting, often successfully, to entrench party battle lines and paralyze serious action on climate change. Thousands of Americans are dying each year from coal pollution, and millions in the developing world face unprecedented suffering in the coming decades if emissions are not reduced drastically. Divestment is fundamentally a moral issue. Delaying a moral decision because it has become politicized neglects entirely the basic human rights issues at stake.

President Faust ignores the ethical imperative completely, setting a very dangerous precedent for her university. Brown University knows better: endowments can never be entirely immune to the dictates of ethics. It was for this reason that the ACCRIP was established, and it was for this reason that the University divested from the tobacco industry, HEI Hotels and Resorts, and companies operating in Sudan/Darfur. Absolving Brown completely from the environmental and social consequences of its investments would both profess and engender a cynical anti-idealism, a non-neutral stance that risks disillusioning students, faculty, and alumni, while eroding the integrity and credibility of the institution. Of course there will never be an ethically blameless corner of the market, and Brown Divest Coal acknowledges as much. But in this case, as in others, the ACCRIP has identified a harm so obvious, egregious, and widespread that it exceeds the standard for divestment and requires that the University remove its holdings or risk seriously compromising its values and its mission.

Aware of the fundamental weaknesses of President Faust’s argument, Divest Harvard has vowed to press ahead and ramp up their campaign. Brown Divest Coal has made a far smaller divestment request, and we will continue our campaign until the University divests from the country’s largest coal companies.

II. The Smart Choice

The grave harms committed by the coal industry are themselves more than sufficient to warrant divestment on ethical grounds, as has been the case for all of Brown’s divestment decisions within the past decade. But divestment is also a smart decision, one that will help position Brown as an environmental leader and an ethical bellwether.

A. What messages does divestment send?

1)     After a reasoned debate, Brown is charting an informed middle course, between the misguided censure of Harvard and the full divestment of Hampshire.

2)     The coal industry has contributed immensely to climate change, compromised the health and well-being of thousands of Americans, and precipitated environmental and social devastation in Appalachia. In many instances, large coal companies have obstructed or delayed attempts to redress these harms. Brown University recognizes the seriousness of these harms, and cannot in good conscience continue to profit from them.

3)     Brown University takes seriously not only the gravity but the dire urgency of climate change. Coal industry practices have not reflected any serious attempt to reduce emissions on the timeline required to avert what the international scientific community considers to be truly dangerous climate change. Brown is taking a bold stance on climate change that breaks from the dangerously inadequate industry status quo.

4)     Brown University takes seriously its commitments to human rights and sustainability.

5)     Brown University takes seriously the climate impacts research being produced by its own faculty.

6)     Brown University takes seriously the opinions of its stakeholders, thousands of whom have called for coal divestment.

B. Who are the audiences for these messages?

1)     Divestment would send a powerful message to the coal industry. Its practices harm American families, and risk precipitating large-scale suffering in the developing world. As the planet continues to warm, the coal industry will face further stigmatization unless it affects a rapid overhaul of its business model.

2)     Divestment would communicate to the Brown community that the Corporation values the opinions of the University’s primary stakeholders—students, faculty, staff, and alumni. The Brown Divest Coal campaign has garnered more campus support—3,600 signatures—than any divestment campaign in at least a decade. Failure to divest would have the opposite effect, engendering student cynicism and eroding any sense of student agency.

3)     Divestment would send a message to other universities and institutional investors. Divesting from coal specifically allows universities to take an ethical stance on climate change without prohibitive financial risk. As the largest school yet to divest, Brown would act as a catalyst for other schools, and could spark a national conversation on coal and the urgency of climate change.

C. Is a “merely” symbolic act advisable?

1)     Symbolic acts have financial consequences. A recent Oxford University study has shown that the largely symbolic fossil fuel divestment movement has grown faster than any previous divestment campaign—including those targeting South African apartheid and tobacco—and could have a serious financial impact on the valuation of fossil fuel assets.[43] While the direct financial impact of such campaigns on share prices or the ability to raise funds is small, the reputational damage caused by divestment can have major financial consequences for fossil fuel companies. In the case of the coal industry, the study concluded that even the direct impacts of divestment could be significant: “Coal companies represent a small fraction of the market capitalization of fossil fuel companies. Coal stocks are also less liquid. Divestment announcements are thus more likely to impact coal stock prices since alternative investors cannot be as easily matched as in the oil & gas sector.”

The study finds furthermore that the indirect stigmatization triggered by the divestment movement poses “the most far-reaching threat to fossil fuel companies.” Stigmatization through divestment has caused companies to be shunned by governments and barred from acquiring public contracts or licenses. Stigma attached to merely one small area of a large company may threaten sales across the board.

“One of the most important ways in which stigmatization could impact fossil fuel companies is through new legislation. In almost every divestment campaign we reviewed from adult services to Darfur, from tobacco to South Africa, divestment campaigns were successful in lobbying for restrictive legislation affecting stigmatized firms.”[44]

To dismiss divestment as “merely” symbolic is to misunderstand divestment and vastly underestimate the power of symbolic acts.

2)     In past divestment decisions, Brown University has acknowledged and applauded the value of symbolic acts. To quote from the tobacco divestment recommendation: “while the exclusion recommended here may have significant symbolic value, at this time it will have no discernible effect on earnings on the endowment.”[45] The same is true now of divestment from coal.

3)     Accepting the erroneous assumption that individual universities are simply too small to make a difference buys into exactly the same logic that has precipitated the climate crisis in the first place, and underlies most tragedies of the commons. As Dr. Martin Bunzl has said, “the Tragedy of the Commons invites the idea that unilateral action is an act of folly. But…we should be wary not to be seduced by its logic. For to do so may hobble our idea of what is possible and thereby end up creating a self-fulfilling prophesy.”[46]

D. Is divestment the best response to climate change?

In large part this is a moot question. Divestment is one of many actions Brown can and should take in response to climate change. Divestment from coal is ethically obligatory, and a powerful means by which to marshal Brown’s public stature to stigmatize the coal industry and take a bold stance on climate change. Divestment from coal is in no way mutually exclusive with many of the other options available to the University. Rather, divestment could complement other responses and serve a powerful role in a multi-pronged response to climate change.

Divestment is, however, mutually exclusive with certain forms of shareholder action, such as drafting shareholder resolutions and engaging in dialogue with company management. As ACCRIP has already stated, divestment is a far better response to the harms of the coal industry than shareholder action.

According to the International Energy Agency (IEA), for the planet to remain below the dangerous 2° C threshold of warming, 80% of existing coal reserves must contribute zero carbon to the atmosphere.[47] In the past, shareholder action has been used as a tool to affect small changes in specific industry practices. In many instances, even these efforts have been unsuccessful. It is highly unlikely that shareholders in the companies listed would willingly vote in favor of a resolution that shifts their business model so fundamentally that the companies’ practices align with the scientific conclusions of bodies like the IEA and the IPCC.

Harvard University’s shareholder action has proven unsuccessful in precipitating anything close to the industry shift required to avert dangerous climate change on a scientifically realistic timeline. Harvard has voted for proposals requesting that companies like ExxonMobil and ConocoPhillips set any quantitative targets for reducing their greenhouse gas emissions, and even these proposals have failed every year since 2008. In 2011, the Harvard Corporation voted against a resolution that targeted Exxon Mobil and proposed to “establish a Committee of independent and Company experts in climate and technology to make recommendations…on how ExxonMobil…can become the recognized industry leader in developing and making available the necessary technology and products to become an environmentally sustainable energy company at every level of its operation.” Harvard argued that the resolution was “unreasonable in asking the company to address such a major shift in its business focus,” speaking directly to the limits of shareholder action when trying to address an industry’s fundamental business model.[48]

Resolutions proposing relatively modest reforms to the companies on ACCRIP’s divestment list have also been unsuccessful. For example, in 2013, resolutions filed against Alpha Natural Resources and Consol Energy requested simply that the companies acknowledge and describe how their coal reserves stood to be impacted by impending carbon regulations. Both resolutions failed, garnering 18% and 19.7% of the vote, respectively.[49],[50] In the past two years, Ameren has brushed aside a resolution requesting the creation of a report on plans to reduce the company’s coal-related financial risks, and another resolution requesting a report detailing attempts to increase energy efficiency and renewable energy projects. The resolutions received 10.5% and 11% of the vote, respectively.[51],[52] These cases are not isolated incidents. Even for relatively small and incremental improvements in coal company policy, shareholder action has proven inadequate.

Relying solely on shareholder action is a weak response to the harms of the coal industry for three reasons. First, engaging in shareholder action means Brown would continue to profit from the fifteen largest domestic coal companies, and continue to be implicated in their flagrant ethical infractions. Second, the relatively low-profile act of engaging in shareholder activism would not marshal the public symbolic power of stigmatization outlined in the Oxford study. Third, and most importantly, engaging exclusively in shareholder action resigns our University to pursuing a strategy that has failed for years to affect any fundamental shifts in coal industry practices, let alone on the timeline required to avert dangerous climate change.  Pursuing shareholder action as an alternative to divestment would allow the University to hide behind an inadequate status quo, lending an unwarranted and irresponsible benefit of the doubt to companies that have consistently lagged far behind the emissions-reduction timeline required to avoid breaching the 2° C threshold. Divesting from coal sends a far stronger message, helps to propel a national conversation on coal and climate, serves to balance Brown’s ethical books, and helps position Brown as environmental leader.

We believe in this campaign because we believe in our University—in its integrity, its boldness, and its penchant for independent thought. In divesting from coal, Brown has the opportunity to demonstrate these qualities once again, and take its place as an academic leader on climate change. Brown has the opportunity to take the moral high-ground compared to schools like Harvard and divest from the worst of the fossil fuels with negligible costs to endowment returns. This is not a risky decision: the ethical arguments for coal divestment are irrefutable, Brown would have a strong hand in shaping the messaging of any divestment decision, and institutions as diverse as the World Bank and San Francisco State University have already paved the way with similar decisions.

There is no doubt that divestment would be a bold decision. Bold in that it would break from the status quo. Bold in that it would send a strong and public message. Bold in that it would echo Brown’s 1984 decision to divest from the worst companies operating in apartheid South Africa. We ask you now to be bold. Be Brown. Divest.

[1] “The Toll from Coal: An Updated Assesment of Death and Disease from America’s Dirtiest Energy Source”. 2010. Abt. Associates for Clean Air Task Force.

[2] Ibid.

[3] Epstein et al. “Full cost accounting for the life cycle of coal.” 2011. Annals of the New York Academy of Sciences.


[4] “Mountaintop Mining Consequences”. 2010. Science.

[5] Hendryx, Micheal and Melissa Ahern. “Mortality in Appalachian Coal Mining Regions: The Value of Statistical Life Lost.” 2009. Public Health Reports. West Virginia Gazette.

[7] “Extreme Investments: U.S. Banks and the Coal Industry Coal Finance Report Card 2013” Rainforest Action Network.

[8] U.S. Energy Information Administration. “Frequently Asked Questions.” 2013.

[9] Environmental Protection Agency. “Air Emissions”.

[10] Intergovernmental Panel on Climate Change. “Climate Change 2013: The Physical Science Basis. Summary for Policymakers”

[11] “Climate Change and Biodiversity Loss” 2012. Harvard School of Public Health.

[12] “World’s poorest will feel brunt of climate change, warn World Bank” June 2013. The Guardian.

[13] “U.N. Climate Panel Endorses Ceiling on Global Emissions” September 2013. The New York Times.

[14] “Benchmarking Air Emissions of the Largest Electric Power Producers in the United States”. 2012. National Resource Defense Council.

[15] “World Energy Outlook 2012.” 2012. International Energy Administration.

[16] “Coal industry no fan of President Obama plan” June 2013. Politico.

[17] “Coal Industry, Hill allies target fine print of Obama climate plan”. September 2013. Center for Public Integrity.

[18] “Coal Industry Fuels Opposition to Emissions Regulations”. June 2013. Open Secrets: Center for Responsive Politics.

[19] “Clean Coal Groups Says Clean Coal Not Proven Technology.” September 2013.  Bloomberg News.

[20] “EPA Proposes crackdown on emissions from new gas, coal-fired power plants.” September 2013. Center for Public Integrity.

[21] “Duke Energy knocks new EPA Plant regulations” September 2013. Charlotte Business Journal.

[22] “The Clean Coal Smoke Screen.” December 2008. Center for American Progress.

[23] “ACCCE Statement Regarding the Waxman-Markey Discussion Draft.” March 2009. Reuters.

[24] “Did Coal Lobby CEO Lie Under Oath.” October 2009. Mother Jones.

[25] “Energy, Environment, and Agriculture Task Force.” American Legislative Exchange Council.

[26] “Annual Meeting Memorandum.” June 2011. American Legislative Exchange Council.

[27] “Annual Meeting Memorandum.” October 2010. American Legislative Exchange Council

[28] “Free-market group draws criticism for potential role in bills.” August 2011. St. Louis Post-Dispatch.

[29] “Climate skeptic group works to reverse renewable energy mandates.” November 2012. The Washington Post.

[30] “Conservative Group Drafts, Promotes Anti-EPA Bills in State Legislatures.” April 2011. New York Times.

[31] “Energy, Environment, and Economics: A State Guide for Legislators, 5th Edition.” June 2007. American Legislative Exchange Council.

[32] “World Bank to stop funding coal-fired power stations in developing countries” July 2013. ABC News.

[33] “EU Finance arm curbs loans to coal-fired power plants.” July 2013. Reuters.

[35] “Boston Common’s Approach to the Energy Sector.” January 2013. Boston Common Asset Management.

[36] IMPAX Asset Management.

[37] “Storebrand Ditches Fossil Fuel Assets in Pursuit of Long Term Stable Returns.” July 2013. Business Green.

[38] “The window for thermal coal investment is closing.” July 2013. Goldman Sachs.

[39] “SFSU Votes to Divest Investment in Coal and Tar Sands.” June 2011. Business Week.

[40] “Resolution of the City Council.” June 2013. The City of Providence.

[41] “The Charter of Brown University” 1945. Brown University.

[42] “Desmond Tutu: Climate change is worse than apartheid.” November 2011. Spero News.

[43] “Campaign Against Fossil Fuels Growing: Investors being persuaded to take money out of fossil fuel sector, according to University of Oxford Study.” October 2013. The Guardian.

[44] “Stranded assets and the fossil fuel divestment campaign: what does divestment mean for the valuation of fossil fuel assets?” 2013. University of Oxford.

[46] Bunzl, Martin. “Climate and the Commons – a reappraisal.” 2009. Climate Change.

[48] “Corporation Committee on Shareholder Responsibility”. 2011. Harvard University.

[49] “Alpha Natural Resources Climate Risk 2013.” 2013. Ceres.

[50] “Consol Coal Reserves and Climate Change Scenarios 2013.” 2013. Ceres.