Divestment 3: Hip Hop & Push Back

I bumped into the endowment manager of a small liberal arts college at a holiday party. I asked about the practical concerns some have expressed about the feasibility of divesting from fossil fuels, when endowments allocate assets to various management funds who invest in co-mingled funds, and the like. His response was straightforward: "no problem, I could get us out of fossil fuels next week, and if the investment committee tells me to do it, I will, doesn't matter to me."

I'm not sure if that perspective would be universal among endowments managers, but it may put that aspect of the conversation to bed.

Although I'm not sure that's good news for the divestment movement.  The more I look at this, the more convinced I become that the best thing for the goals of the campaign would be if most endowments continue to refuse to divest.

As this post by Carol Pierson points out, negative SRI screens have had little impact on curbing things like guns and tobacco over their long history. As I pointed out in this previous post, it's unlikely that if all endowments sold their fossil fuel stocks, the markets or fossil fuel companies would notice.

What fossil fuel companies, the markets, and the general public will likely notice is millions of students raising hell. And if endowments continue to stand their ground, that could happen. The campaign has now spread to 192 campuses.

The divestment movement also got a boost from skeptics with a WSJ opinion piece by Robert Bryce (subscription required). Divestment proponents were quick to point out Bryce's financial ties to the fossil fuel industry and provide rebuttals to his argument.

Fox News also acknowledged the campaign (and tried to dismiss it as childish).

The campaign is also getting wisely leveraging the arts to get people involved -- too often sustainability efforts focus on science, dire warnings, and restricting behavior.  I'm convinced the only way to really engage people in leading the kinds of changes needed to create a sustainable society is through the arts. Here's one example with the official divestment music video:

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ARTSTRIKE: Don't know how we'll make it

Today is ARTSTRIKE -- an effort spearheaded by Rebuild the Dream which describes it this way:

We're using culture as a tool to change people's hearts and minds, in a way that only art can.

Artstrike aims to "expose" the fiscal cliff, as a "fiscal bluff" and using it to highlight the growing, and dangerous levels of inequality in America today.

Systematically increasing levels of inequality undermine the strength of our social fabric, and undermine people's capacity to meet their needs. That's unsustainable, and is bad for all of us, rich or poor.

Art and culture are great ways -- maybe the only ways -- to bring about the kinds of transformational cultural shifts needed to lead a peaceful and relatively smooth shift to sustainability.

Here's a video of one of today's art works that I thought was particularly powerful:


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Divestment 2: Does the Math Add Up?

As I noted in my first divestment post, the “climate math” behind the divestment movement stems from the Carbon Tracker Initiative’s report “Unburnable Carbon” (pdf).

The report contends that our “carbon budget” between now and 2050 – if we want to avoid a rise in average global temperatures of more than 2 degrees C (which would bring tremendous damage and human suffering to our global human society) – is 565 gigatons of carbon dioxide.  The total known reserves of coal, oil, and gas represent a carbon potential (if burned) of 2,795 gigatons, which means that about 80% of the known reserves are “unburnable” if we are to avoid a really nasty climate for us, our children, and grandchildren.

The report points out that fossil fuel companies account for reserves as assets, and analysts and investors determine the value of those companies based on these assets. If 80% of these assets are unburnable (and therefore worthless) these valuations are way off.  Further, because these companies represent such a large portion of economy and the financial markets, this valuation error represents a major systemic risk for the global financial systems.

One of the co-founders of the Carbon Tracker Initiative, recently published an article, “Why the ‘Do the Math’ Tour Doesn’t Add Up” on GreenBiz questioning the value and effectiveness of divestment as a response to this dilemma.

In the article Cary Krosinsky points out that “there is a severe systemic problem,” and that instead of pointing figures we should be rolling up our sleeves and figure out “what we should really be doing.” I always tend to prefer good faith, solutions-based approaches, and couldn’t agree more that this is a systemic problem, and that one divestment campaign is going to solve it.

But I think the intent behind the divestment movement is to highlight that good faith efforts haven’t (yet) been effective enough, fast enough.  And it is one piece in a larger effort – apartheid didn’t end only because of divestment, it was one part of a much longer, sustained effort that included a lot of hardship and sacrifice by countless advocates, undertaking many strategies.

Krosinsky also questions why oil services companies aren’t being targeted for divestment, but the Fossil Free campaign is pretty clear on this, stating: “There are many more companies that contribute indirectly to climate change–the multinationals that build drilling equipment, lay oil pipelines, transport coal, and utilities that buy and trade electricity. But right now, we need to be laser-focused on keeping all that coal, gas and oil in the ground, and these 200 companies are the ones that own the vast majority of those reserves.”

I think the more relevant question around if the divestment math adds up, relates to the impact divestment will actually have on the financials and activities of fossil fuel companies. Everyone I’ve talked to in the financial sector seems to agree that the impact on stock prices won’t likely be that significant.

The VP for Investments at Bowdoin supported this view, summarizing in this recent article what was my initial reaction to the divestment movement: “Markets are efficient and it is unclear if one group of investors decides to boycott a specific sector that there is any meaningful result… Other investors will step in and buy cheaper securities.”

There’s an estimated $400 billion in college endowments in the US. At Middlebury, 3.6% of the endowment is invested in fossil fuels. I have no idea if this is indicative of other endowments, but let’s assume for a minute it is, and be generous in assuming 5% of total endowment dollars are invested in fossil fuels – about $20 billion dollars. Exxon Mobil alone has a market cap of $404 billion. On average, more than 13 million shares are traded every day – that’s over $1 billion worth of shares per day at current stock price, for just one of the 200 companies targeted.

It seems like if all the endowments in the country sold all fossil fuel stocks, there’s a good chance that the markets and companies would barely notice, much less leave 80% of their reserves in the ground as a result.

But again, it seems to me that the divestment movement is realistic about this, and recognizes that its power is in highlighting the fact that climate change is a moral issue.

Harvard students summed up this idea well in this recent Crimson article: “Divestment may not pose an immediate threat to the annual turnover of the biggest companies, yet it does help to undermine the social and political capital of a powerful industry. More than anything, divestment is a moral statement.”

Do you think this will help the general public recognize that climate change driven by extracting and burning fossil fuels is an urgent, moral human rights issue?

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Divestment 1: Intro to the Fossil Fuel Divestment Movement

Over the past year or so, various efforts from coalitions of NGOs and student groups have emerged calling on college and university endowments (and other institutional investors) to divest from fossil fuel companies.

I’m planning on writing a series of short posts on these efforts and the many interesting questions, challenges, and conversations they raise.

This first post is just an overview (the NYT also just ran this article summarizing this emerging movement):

There are two major related, but distinct efforts:

·      Coal Divestment: launched in 2011, supported by a coalition of 11 groups.¹

o   Calls on college endowments to divest from coal with a focus on 15 specific companies.

o   Active campaigns on approximately 20-25 campuses. 

o   See the Coal Divestment Toolkit (pdf) for details.

·      Fossil Fuel Divestment: launched in 2012, supported by a coalition of 7 groups.²

o   Calls for college endowments (and others) to “immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years.”

o   Focus on the top 200 coal and oil and gas companies, as measured by their reserves

o   Based on the premise that to avoid an increase of global average temperatures of more than 2°C, humanity cannot release more than 565 gigatons of carbon dioxide before 2050, which is about 20% of the carbon potential in known fossil fuel reserves (2,795 gigatons) — rendering 80% of known reserves “unburnable”

o   Currently, these reserves are treated as assets for the entities that control them.  If 80% are unburnable, the valuations of fossil fuel companies are currently misrepresented. This poses potential risks to individual investors, as well as systemic risk to the financial markets as a whole.

o   These numbers are stem from this report (pdf) from the Carbon Tracker Initiative (and are also the basis of Bill McKibben’s Rolling Stone article last summer and 350.org’s just-completed “Do the Math” tour)

o   For more details see 350.org’s Fossil Free website: http://gofossilfree.org

Key considerations:

·      There is an estimated $400 billion under management at college and university endowments.

·      The net impact of divestment on stock prices and companies’ capitalization is unclear; only a portion of investments are in public markets, and only a portion of those are in fossil fuel companies.

·      These efforts recognize that highly profitable fossil fuel companies are not likely to stop extracting fossil fuels as a result of this effort, but contend that drawing attention to this issue will highlight the moral implications as well as financial, social and environmental risks of fossil fuel investment. 

·      There is evidence that proposed alternatives (such as socially responsible investment funds, fossil fuel free funds, and on campus revolving loan funds to support energy efficiency and renewable energy projects) can generate competitive returns.

So far two small colleges have gotten on board the divestment train: Unity College in ME and Hampshire College in MA. The students at Harvard passed a referendum with 72% in support of divestment.

So, there you have the basics of the fossil fuel divestment movements that are sweeping the nation. Subsequent posts will look at questions like: 

• What impact will divestment have? Will it affect the financial health of fossil fuel companies? Will it influence their investments in extraction vs. alternative energy sources? 
• Is the real leverage of divestment in the financial impact, or the awareness impact of shining the spotlight on the risks of fossil fuel dependence? (Does that matter?) 
• What impact might these efforts have on the policies of the investment funds that serve endowments? What about on the energy analysts at the big banks? 
• How does natural gas as a potential transition fuel factor into all of this? 
• What’s the end game of divestment? 
• What could fossil fuel companies do to deter divestment? Shut their doors? Shift a certain percentage of R&D from exploration into renewables? 
• What impacts might divestment have on endowment performance? What are the alternatives and how does their performance compare? 
• What should Trustees be considering in light of these demands? 
• And more… 

I’m intending this series to be a true exploration of very complex issues, probably with more questions than answers, and likely with my own opinions and thoughts shifting and evolving through the process.

I hope it will spark some generative dialogue, and I hope you will share your thoughts, opinions, resources, and questions liberally.  And, please let me know if I’ve gotten any of the facts wrong about these efforts, and I will make the necessary corrections.

Stay tuned… and Stay going.

[1] As You Sow; California Student Sustainability Coalition; Coal Swarm; Energy Action Coalition; Green Corps; IB5k; Responsible Endowments Coalition; Sierra Club; Sierra Student Coalition; Sustainable Endowments Institute

2 350.org; As You Sow; Better Future Project; California Student Sustainability Coalition; Energy Action Coalition; Responsible Endowments Coalition; Sierra Student Coalition; Campus Student Groups (as of Nov. 19 there were 39 campuses listed on 350.org’s Fossil Free website: http://gofossilfree.org/campus/)

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The Mountain School: Our Place

Check out this great promo video for The Mountain School -- and pass it on to any high school sophomores you might know...


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Education for the New Normal

NASA Satellite Image (NASA/Getty Images)

If there’s a silver lining to be found on the massive cloud that covered the better part of the eastern US last month, it’s this: people are talking seriously about real risks of climate change. 

From provocative headlines (“It’s Global Warming, Stupid”, Bloomberg Businessweek) to carefully selecting language and asking the right questions (“On Hurricanes…”, Dot Earth) — people are talking about climate change in ways we haven’t seen before.

For whatever reasons, Katrina, Ike, Snowpocalypse, Irene, the wildfires, the droughts, the warmest month on record — and the many other extreme weather events of recent years — failed to get people to really connect the dots between extreme weather and climate change.   

Thoughtful experts are having important conversations about whether climate change caused Sandy, or strengthened Sandy, or made Sandy more likely, or had anything to do with Sandy. But everyone seems to finally agree that we need to be prepared for more extreme events like Sandy. 

I believe the “super storm” — with its implications for presidential politics — will serve to condense the disparate events of recent years into a popular awareness that we are in a “New Normal” regarding the climate. The images of submerged New Jersey neighborhoods, exploding power plants, vehicles floating down Manhattan avenues will change our country’s collective consciousness for good.  Rising oceans will no longer be punch lines.

As we assess the damage to people in our communities, our infrastructure, and our economy, we will have the opportunity to reassess how we prepare for the impacts of climate change.  Whose responsibility is it to make sure we’re ready? Most probably think government, community groups, and maybe business should take this on.

But leadership from another sector — higher education — is also critical.

We know the importance of emergency preparedness: anticipating the risks, alerting people, and evacuating vulnerable areas. We know we need comprehensive and effective response plans. We will need to put up seawalls, restore natural barriers, and simply abandon certain parts of the coast.  This recent TED talk by Vicki Arroyo, Executive Director of the Georgetown Climate Center, provides a good overview of these and other climate adaptation strategies.

We also need to make some more fundamental shifts in how we design our communities, generate energy, produce and transport goods, and generally go about meeting our needs.

Colleges and universities have a unique responsibility in preparing society for this New Normal.  In many ways, they are already fulfilling that role, particularly when it comes to reducing climate change pollution. More than 660 colleges are actively participating in the American College & University Presidents’ Climate Commitment (ACUPCC). They are publicly reporting progress on climate action plans; providing education, research, and community engagement on climate; and pursuing net-zero greenhouse gas emissions from campus operations. Together they represent over 6 million students, offer 10,000 sustainability-related courses, and have avoided 1.6 million tons of carbon dioxide equivalent (reducing emissions 25% on average) in the past five years. 

With regard to climate adaptation, much of the research that helps us understand climate change impacts, and strategies for dealing with them, comes from our country’s universities.  There are early signs that climate preparedness is making its way into the classroom, and some instances of campus-community collaboration around implementing adaptation strategies.

Last year, I facilitated a group of higher education leaders, scientists, and sustainability experts, in developing Higher Education’s Role in Adapting to a Changing Climate.  The report provides an overview of trends in the sector and some exciting examples of what’s happening individual campuses.  But the group concluded that higher education institutions “as a whole, have not focused on adaptation sufficiently to date.”

In addition to more research, colleges and universities have opportunities to experiment and role-model solutions on their campuses, and partner with local communities to implement successful strategies more broadly.  Perhaps most importantly, they have the opportunity — and responsibility ­— to ensure that all graduates, from all disciplines, understand the climate challenge and are prepared to lead society through it.

Weather they become politicians or office administrators, architects or CEOs, artists or engineers; all citizens need to understand our new climate. And they must be prepared to minimize the drivers of further climate change, while creating safer communities and more resilient economies.

Stay going. 
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10 Steps To Transform Capitalism

Check out this quick list from John Elkington and Charmian Love: 10 Steps To Transform Capitalism with some good video clips from the Breakthrough Capitalism Forum.

Thanks to MSLS friend & colleague Molly Doyle for passing this one along with a condensed summary:

"You want change? Time to collapse your easy but misleading dualisms, the stark blacks and whites, and see the world as it is: Complex and dynamic. This is not easy work and there are no silver bullets. System change on your own is an oxymoron- don't isolate yourself. Understanding networks can be your biggest strength. Use maps to identify critical pressure points in the relevant systems. And in mapping, don't let media coverage warp- tomorrow's economic leaders currently operate far from today's spotlight. It's time to be mega-ambitious. Start projects so huge that their results are beyond your lifetime. This is not about an infusion of new thought into an existing system, it’s a fundamental redesign."

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What's going on... a quick news round-up

There has been a lot happening related to sustainability recently, particularly around climate. Of course, Sandy's devastation has people talking.

Here are a few highlights of articles and reports from the last couple of weeks that are of particular interest:

1) Investor Jeremy Grantham's opinion piece in Nature urges climate scientists to be more aggressive: "Be Persuasive. Be Brave. Be Arrested (if necessary)"

• Commodities prices have reversed their downward trend of the 20th century, rising dramatically over the past ten years. 
• Climate change exacerbates these trends, particularly around food prices, which is particularly dangerous in light of the pending shortages of potassium and phosphorous fertilizers. 
• "We need oil producers to leave 80% of proven reserves untapped to achieve a stable climate." 
• "This is not only the crisis of your lives — it is also the crisis of our species’ existence."

2) World Bank Report: "Turn Down the Heat: Why a 4 degree C Warmer World Must be Avoided"

• Warns the world is on track to a “4°C world” marked by extreme heat-waves and life-threatening sea level rise.
• Bank eyes increased support for adaptation, mitigation, inclusive green growth and climate-smart development.

From WB president (and former Dartmouth College president) Jim Kim: "Lack of action on climate change threatens to make the world our children inherit a completely different world than we are living in today. Climate change is one of the single biggest challenges facing development, and we need to assume the moral responsibility to take action on behalf of future generations, especially the poorest."

3) International Energy Agency: World Energy Outlook 2012

• US could be energy independent by 2035 according to the report's central scenario (I've seen a few analysts question this conclusion). 
• Global fossil fuel subsidies reached $523 Billion in 2011.
• A carbon price of $120 is needed to avoid the worst impacts of climate disruption. 

4) Obama made waves with comments at his first post-election press conference that could be interpreted as "climate action vs. jobs."

• President Obama: "I think the American people right now have been so focused and will continue to be focused on our economy and jobs and growth that, you know, if the message is somehow we're going to ignore jobs and growth simply to address climate change, I don't think anybody's going to go for that."
• Bill Becker of the Presidential Climate Action Project wrote a good piece about a report from the Center for Climate Strategies showing that climate action can support economic activity and jobs.

5) 350's "Do The Math" tour has been moving around the country, getting people engaged city by city.

• The numbers: we need to keep global average temperatures from rising more than 2 degrees. That means we can only release 565 more gigatons (at most) into the atmosphere. there are 2,795 gigatons in reserves - we can't burn it all. (see Grantham's point that we need to leave 80% of reserves in the ground) 
• On Nov. 18 Protesters went to the White House opposing the Keystone XL Pipeline.
• Part of the tour is focused on getting university endowments (and other institutional investors) to divest from fossil fuels.  Unity College's Board approved divestment and 72% of Harvard students voted in support of divestment. 

Stay going. 

Vicki Arroyo: Let's prepare for our new climate

Vicki Arroyo, Executive Director of the Georgetown Climate Center, talks about preparing for the impacts of climate change in a recent TED Talk.  Hopefully Sandy will help us get better at this.  Thanks to Climate Adaptation Knowledge Exchange (CAKE) for passing on this on:



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Promised Land

Powerful trailer for Promised Land, coming out in December.


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Sinfonia Antarctica

DJ Spooky.  Check out this interview with him at Grist.


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I Vote the Environment #BecauseILove ...

Great tune by Wilco.  Great reminder to get out and vote. Check out the #becauseilove hashtag on twitter.



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Adapt or ... Mitigate?

Adaptation or Mitigation?  These are two terrible terms used to communicate possible responses to climate disruption (and its causes).

Adaptation refers to preparing for and dealing with the impacts of climate disruption.  Adaptation efforts can range from building sea walls higher around coastal cities (to stem the damage from storm surges and rising sea levels) to developing diverse, resilient, local food systems (to reduce dependence on far-off monoculture agriculture operations that are vulnerable to single threats like drought or pests).

But adaptation is a problematic term.  To many, it represents giving up on efforts to stem the human drivers of climate change (primarily carbon dioxide emissions). It's the term of choice for Big Oil — because they can spin it so it sounds easy to adapt: 'we're an adaptable species, after all, this is nothing new.'

Nothing could be further from the truth.  The impacts of climate disruption that we're already feeling and that will intensify without dramatic action will be unlike anything humans have adapted to during the past 10,000 years of civilization — as Dianne Dumanoski calls it, the "long summer" in the climate record that has made human civilization possible.

Bob Perkowitz, founder of ecoAmerica, outlines this issue well here, and calls for the use of the term "preparedness" instead of "adaptation."

Mitigation is another clunky term.  It means stopping the activities that drive climate change — namely greenhouse gas emissions and land-use changes, like deforestation.

As action on mitigation has been woefully inadequate over the past three decades or so that we've been at it, many are now focusing more adaptation, after years of hopeful resistance.  As the impacts become more plain, we're forced to do so.  Furthermore, we must reconcile the fact that there's plenty more climate disruption locked in — even if we stopped all emissions today, time delays in the system ensure that we'll be feeling the impacts from past emissions for decades to come.

So, this new dynamic leads to some practical strategic planning dilemmas on the ground.  How do we organize and differentiate our mitigation and adaptation efforts?  Our work with colleges through the ACUPCC started with a strong focus on mitigation — part of the commitment is eliminating net greenhouse gas emissions.  Last year, we published a white paper looking at higher education's role in preparing society for the impacts of climate disruption.  This process led us to questions like: 'where does adaptation fit into the ACUPCC?' and 'do we need a parallel initiative focused on adaptation?'

This article by Mark Trexler — Why it's okay to mix up climate mitigation, adaptation — published in GreenBiz  yesterday offers a welcome solution on how to think about it.

As we emphasized in our higher ed preparedness report (and as most adaptation advocates stress), there are plenty of ways to prepare for climate impacts that also contribute to reducing greenhouse gas emissions.  For example, better building design and insulation can protect against the dangers of heat waves, while also keeping people cool with less energy-sucking AC.

Keep an eye out for the continued increase in focus on preparedness, and hopefully a focus on smart efforts that make our communities safer, while also reducing our contributions to climate disruption.

For a great in-depth discussion on some of these issues, check out this segment — "An Inconvenient Silence" — from HuffPo Live (it's worth suffering through the Google Hangout echo issue).  And this recent interview with John Kerry from Grist.

Stay going.