Why the fossil fuel divestment movement is a farce
College campuses across the country have been abuzz with protests calling for the divestment of university endowments and public pension funds from fossil fuels. As a result of the pressure, Stanford University has begun to divest its $18.7 billion endowment from coal stocks. Union Theological Seminary in New York has begun a divestment process as well. Cities have born the brunt of protests as well, and a growing number of them are making decisions to stop investing city funds in dirty energy.
Conflicts of Interest
Further crippling the campaign is its questionable line of funding. According to a report from Inside Philanthropy and 350.org’s IRS filings, 350.org receives millions of dollars from billionaire hedge fund manager Tom Steyer. It has also received at least $350,000 from Jeremy Grantham, a hedge fund manager who oversees more than $500 million in assets for public pension funds in Massachusetts. (The organization declined to state exactly how much money it has received from Steyer and Grantham.)
Farallon Capital Management, which Steyer founded, has major investments at all levels of the fossil fuel economy. While he is no longer at the helm, during his leadership it pursued major deals in fossil fuels, as a recent report from Reuters showed. In fact, the firm had been a target of student activists before he began funding them. Activists criticized Farallon for attempting to privatize a massive aquifer in Colorado in 1994. More recently, Farallon has made major investments in coal mines in Indonesia and Australia.
Grantham, for his part, argued in an interview with The Guardian that he felt that student activists should “stamp their feet” to get their university endowments to divest from fossil fuels “because they can do that.” With his firm’s significant investments in the fossil fuel economy — according to first quarter 2014 filings, $1.2 billion in Chevron, $570 million in ExxonMobil and $240 million in Monsanto — he, apparently, cannot.
The campaign endangers its legitimacy — and shows how toothless it is — by accepting funding from Steyer and Grantham. Both have a clear financial interest in routing pension fund and endowment investments further from publicly traded securities and into the private markets dominated by their firms. In other words, they stand to benefit from a successful divestment campaign that focuses only on publicly traded securities.