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Why Stanford’s Coal Divestment Could Work

By Fran Hawthorne

Mount Storm Coal-Fired Power Station in West Virginia (by user Raeky via Wikimedia Commons)
Mount Storm Coal-Fired Power Station in West Virginia (by user Raeky via Wikimedia Commons)

“Even if Stanford [University] divested itself fully of all its stocks, both fossil fuel and nonfossil, it would probably take the market less than an hour to absorb all the shares. It would not lead the executives of the affected companies to engage in soul-searching, much less to changes in operations.”

Ivo Welch, a finance and economics professor at UCLA, wrote those sentences recently in a New York Times Op Ed column, after Stanford announced that its $18.7 billion endowment would dump all holdings in coal-mining companies.

But where else have we heard that refrain? Ah yes, about 30 years ago, during the movement to divest stockholdings in companies doing business in apartheid South Africa.

Selling a few shares of stock won’t do any good, the refrain goes. Instead, you should do A or B or C...

Back during the South Africa divestiture movement, skeptics said that people who really hated apartheid ought to keep their money in General Motors and other multinationals, and then use their clout to pressure those companies to improve conditions for nonwhite workers. For his part, Professor Welch says that Stanford should invest in “research and development of clean-energy technology.”

However, these naysayers are proffering a set of phony choices and premises.

For starters, why can’t Stanford do A and B and C?

In fact, why can’t individual consumers take multiple alphabet steps, too?

Professor Welch is right that Stanford is a world-renowned institution with tremendous brainpower that could be put to work researching and commercializing more energy-efficient fuels. But meanwhile, the school has to invest that $18.7 billion somewhere.

And maybe $18.7 billion is only a drop in a total worldwide stock-market bucket of more than $60 trillion, but who says Stanford has to be the only institution dumping coal stocks? When enough coal-stockholders sell, the share price drops, which means the coal companies’ market value shrinks—and believe me, that will prompt some soul-searching.

As individuals, our little stock portfolios are, of course, even punier than Stanford’s. Nor do most of us have the ability to invent better solar panels or windmills. Still, we have a lot of potential power. After all, we have to get to work somehow and illuminate our homes in some manner.

Here are a few things we can do just in the environmental area: Take mass transit, bike, or walk instead of driving; buy recycled paper; recycle and compost our paper, glass, plastic, aluminum, and food scraps; use energy-efficient light bulbs and appliances; turn off lights and appliances unless we really need them; try to reuse, or share, or purchase used goods, to cut back on shopping; and invest in “green” mutual funds.

Ironically, within a few days of Stanford’s announcement, four major scientific reports were published, all showing that climate change is happening faster and more powerfully than experts had expected. For instance, West Antarctic glaciers have retreated so significantly that a sharp rise in sea levels is irreversible. Climate change even poses risks to national security, according to a U.S. naval advisory board.

Such warnings underline that not only can we, and Stanford, take all these green steps—but we must.

Hear Fran Hawthorne talk more about socially responsible investing, climate change, responsible consumerism, and her award-winning book 
Ethical Chic: The Inside Story of the Companies We Think We Love on Patrick McCarty's Insight Radio (skip to 37:13 for “Fran's Corner”):



Fran Hawthorne, photo by Leonard YakirFran Hawthorne is the author of Ethical Chic: The Inside Story of the Companies We Think We Love. This post is adapted from Fran’s Corner, her weekly show on the global political-cultural talk show Insight Radio, available on the CNN Website at