News Source: 
The Daily
June 25, 2013

The trick with climate change is that there is no trick: No easy solutions exist, period. Thus, groups that claim to offer a simple way to help mitigate global warming deserve a high level of scrutiny. It is time to investigate the promises and realities of divestment campaigns.

These initiatives, like 350.org’s “Fossil Free” initiative, are well-intentioned, but completely misguided. They call for universities to divest their endowments of equities and bonds that are issued by fossil fuel producers. The activist groups claim that by divesting from these producers, who they demonize as drivers of climate change, this will somehow cause positive change.

How? The groups do a terrible job of explaining this part of the divestment initiative, because it is nonsensical.

If universities divest from fossil fuel producers, other investors who are not under such pressure will just pick up those investments. The universities will have portfolios that are less diverse, making them riskier, and to no end; since they are selling off the investments for reasons that are unrelated to the performance of the fossil fuel producers, the stock prices of these companies will not suffer.

Hence, the companies will not be driven to change their policies, because the market will not signal that change is necessary. Nothing will happen.

Categories: