Martha Hall Findlay, a former Member of Parliament, is an Executive Fellow at the School of Public Policy of the University of Calgary and is chair of the Advisory Council of The Partnership for Resource Trade (www.powerofcanada.ca); Jean Charest, Partner at McCarthy Tétrault and former Premier of Quebec, chairs the Partnership’s Steering Committee.
The so-called divestment movement, encouraged by the environmental group 350 (www.350.org), calls for universities, churches, other non-profits and individuals to divest their investment holdings from major fossil fuel companies. Although based on legitimate concerns over climate change, the idea is fundamentally misguided.
Most of us agree that the burning of fossil fuels contributes to climate change. Many individuals and enterprises are responding through conservation, reducing their own energy use. Many are developing technologies that improve efficiency in the use of fossil fuels and in the processes of extraction. We are achieving much better gas mileage in cars and trucks. We are reducing GHG emissions from the production and burning of a barrel of oil, a cubic foot of natural gas, and from the production of electricity. But we also know that we still have a long way to go.
The underlying question, though, is this: Does the GHG emission problem lie with the fossil fuel producers, who are fulfilling existing demand, or with those creating that demand? Is it the fault of the people driving cars, or the trucking companies? (Transportation produces fully a quarter of Canada’s GHG emissions.) Should we blame the manufacturers that provide jobs? Or the consumers who create demand for the things that those manufacturers make?
The problem lies with the demand – it’s not the fault of those meeting the demand.
Besides, many of those “big bad fossil fuel” companies are also the biggest investors in renewable energy such as solar and wind power generation, and in research (including university research) for technologies to improve conservation, efficiency and overall environmental sustainability. Will divestment of these companies reduce their ability to invest in these other efforts? In any case, it will do nothing to reduce the market’s reliance on, or demand for fossil fuels.
Yet, according to a report released by the Sustainable and Education Policy Network (SEPN) (www.sepn.ca) there are now 27 active Canadian post secondary divestment campaigns. Most of these are student-led, and until recently, have not resulted in any actual changes in investment policy. However, in November 2014, Concordia University became the first university in Canada to agree to partially divest $5-million of its endowment from fossil fuels in order to consider alternatives.
Now a student-led campaign at UBC (UBCC350) has encouraged the UBC Faculty Association to hold an online referendum on the issue (voting to occur between Jan. 26 and Feb. 6).
If, as an individual, you choose not to invest in otherwise profitable companies because of personal ‘moral’ issues, that is your call. But investment decisions for university endowments must be based on one thing: which investments will bring the best financial returns. If fossil fuel companies are a bad financial investment, that’s reason to divest. Otherwise, divestment is inappropriate.
Donors (and potential donors) may be concerned that their donations will not go as far if invested with less than optimum return.
Canadian taxpayers (including many of those fossil fuel companies) provide by far the majority of university funding. Taxpayers do not get to choose where their taxes go, but should be concerned that the money used by universities, including endowment money, goes as far as possible to benefit the university and its operations. (Endowments are not tax-funded, but indirectly supported by taxpayers by way of tax-deductibility of donations.)
As for the students so actively campaigning for divestment, many of them also call for lower tuition, better facilities, better programs, smaller classes, better research funding – all of which require money from those taxes and those endowments (and sometimes direct funding from the very companies they are targeting). They also call for jobs when they graduate – a good number of which may be in, or reliant on, the energy sector. Many of them also drive cars, and most live in heated apartments, cook food and use mobile phones and computers. That energy needs to come from somewhere. As long as we use fossil fuels, even as we move to other sources, what purpose is served by punishing the producers?
Much good is being done by groups such as 350 and SEPN, but their promotion of the so-called divestment movement is misplaced. Most of us are concerned about climate change and want to reduce the world’s emissions of GHGs. The answer, however, is to focus on reducing the growing worldwide demand for fossil fuels, not to target those simply meeting the demand.Report Typo/Error