The following Op-Ed was published by Reinvest Vanderbilt Co-Chair Michael Diamond in The Vanderbilt Hustler (http://www.insidevandy.com/opinion/article_6c3dfe48-66ab-11e2-bd0c-0019bb30f31a.html).
Two wrongs, and a right
I’ve heard it said that climate change is the moral issue of our generation. I disagree: Climate change is not only the moral issue, but also the economic and political issue of our generation. Long after the terribly named “fiscal cliff” is just a footnote, history books will remember what we decide to do about the “climate cliff.” So, what exactly are we doing about it?
Well, we’ve already taken the necessary first step: setting goals. In 1992, world governments agreed at the Rio Earth Summit to take action to prevent “dangerous” levels of man-made global warming. Since then, there has been rough agreement that two degrees Celsius of warming is the level at which climate change becomes unacceptably dangerous. At the Copenhagen Summit in 2009, President Obama set a goal of cutting U.S. greenhouse gas emissions by 83 percent by 2050 to help keep global emissions at a “safe” level. These targets are useful as a guide, but mean nothing unless serious action is taken to meet them.
Meeting our obligations will require using a bit of simple math: We can emit approximately 565 gigatons of carbon dioxide and still meet our target of keeping warming below two degrees Celsius. Unfortunately, there are 2,795 gigatons of carbon dioxide in reserves waiting to be burned, five times the “safe” limit, and fossil fuel corporations are searching for more reserves every day. If we’re going to keep warming low, at least 2,230 of those gigatons will need to stay in the ground.
What does all of this have to do with Vanderbilt? Vanderbilt has been a sustainable leader in recent years, building LEED-certified facilities, implementing a Green Fund to fund sustainable student-designed projects and even offering a new minor in Environmental and Sustainability Studies. The university was awarded a well-deserved place on The Princeton Review’s “Green Honor Roll.” Yet at the same time, according to the university’s most recent financial reports, at least 4.5 percent of the Vanderbilt endowment is invested in the energy industry.
It is unclear how much of this money is invested in fossil fuel companies; indeed, it is even difficult to ascertain how much is invested in energy companies overall, as the financial reports no longer distinguish between timber and energy investments. Whatever fossil fuel holdings the endowment has, however, are bad investments, both ethically and economically. It is time for Vanderbilt to seriously consider divestment from these holdings. In other words, we should drop our investments in fossil fuel companies that, rather than becoming part of the solution, insist on being part of the climate problem.
Without divestment, there are two possibilities: The world can continue emitting business-as-usual and blow past the 2 degree target, or action could be taken to keep 2,230 gigatons of carbon dioxide in the ground. Under the first option, a fossil-fueled endowment is morally bankrupt; under the second, it’s just plain ol’ bankrupt. Here’s why.
If Vanderbilt keeps its investments in fossil fuel companies and warming exceeds 2 degrees, we — all of us — will have been complicit in creating a world “so dramatically different from today’s world that it is hard to describe accurately.” Those aren’t my words — they’re the words of Dr. Jim Yong Kim, the president of the World Bank Group, which recently commissioned a study of what a world would look like with four degrees Celsius of warming. The findings aren’t pretty.
Recent extreme heat waves, such as those that devastated Europe in 2003 and Russia in 2010, will become the new norm. Most coral reefs, battered by heat-induced bleaching and dissolved, literally, by rapidly acidifying oceans, could be wiped out, with severe consequences for natural ecosystems, fisheries, coastal protection and tourism. And, as this summer’s intense heat and drought in the American heartland has shown, agriculture may be much more vulnerable to global warming than previously believed.
What’s worse, those affected most are likely to be those who have contributed least to global emissions. People living in the tropical latitudes and on low-lying islands will suffer disproportionately in a warmer world, both because of factors such as the greater impact of sea level rise on these locations and because of their lesser ability to adapt due to lower levels of development.
If, instead, the climate was stabilized at two degrees, but Vanderbilt still invested in fossil fuels, we could all sleep a little easier at night. But our endowment would take a hit.
Remember those 2,230 gigatons of reserves that the fossil fuels were planning to burn? Well, keeping those in the ground destroys their market value, unsurprisingly. And, unless the oil and coal giants become true energy companies and move to renewables, that’s going to hurt. Badly.
As Steve Coll, author of “Private Empire: ExxonMobil and American Power,” reports, “equity oil,” another term for fossil fuel reserves, is “fundamental to Exxon’s (and any other fossil fuel company’s) stock market valuation.” Indeed, studies have shown that a fossil fuel company’s market worth is in large part determined by how much it controls in proven reserves. Hence the rush by oil and gas companies to find and acquire as many fossil fuel reserves as possible, even in politically sensitive areas like Nigeria and Aceh, Indonesia (ExxonMobil) and environmentally sensitive areas like the Arctic (Shell). ExxonMobil even tried to weasel its way around SEC accounting rules by counting unconventional tar sands oil as proven reserves in investor reports to boost stock prices.
Oil, gas and coal companies plan to burn five times more carbon dioxide than scientists say can be burned to meet the two-degree Celsius target. Thus, if the target is met, oil, gas and coal company stocks are up to five times overvalued. Investing in these companies is a risky bet that the current policy of the United States government and governments around the world will fail.
I think that’s a bad bet.
Luckily, these two “wrongs” are not our only options. We can also choose to do right — right by our planet, right by future generations and right by our current and future students — by divesting.
If the fossil fuel companies are not stopped and a four-degree Celsius world still comes to pass, at the very least the blood is not on our hands. If we are successful in protecting the climate, then we — all of us — will have been part of one of the greatest social movements in history. A decision by Vanderbilt University and other universities to divest from fossil fuels and reinvest in renewables would be a significant step toward realizing a more sustainable world.
— Michael Diamond is a a sophomore in the College of Arts and Science and co-founder of Reinvest Vanderbilt, a coalition of student environmental groups advocating for fossil fuel divestment. He can be reached at firstname.lastname@example.org.