Are we screwed, p.16
Are We Screwed?, page 16
At the same time, the financial risks of destroying the planet are growing. Carbon Tracker has estimated that if and when governments take serious steps to limit global warming to relatively safe levels, more than $300 billion worth of oil, coal, and gas reserves could become effectively worthless. In the meantime, such investments are becoming less and less socially acceptable—a trend that Morgan Stanley, for one, has attributed directly to student activists like Chloe Maxmin. “Though divestment has a mixed track record as an investment strategy, it often leads to increasing public pressure to take regulatory action,” the bank concluded. “It has sparked a robust debate among investors about how to address fossil fuel risk in their portfolios.”26
Suddenly this strange meeting I was attending in Manhattan started to make more sense. Of course banks like Morgan Stanley were aware of how much people my age distrusted them. And of course it was in their best interest to present a less greedy image to the world. But when Roselle closed the meeting by stating, “We have to start measuring things [differently],” I was inclined to agree with him. The steps that Morgan Stanley was taking toward a new economic system were for now far too small to make any tangible difference. As I waited for the elevator, I nevertheless reflected on how remarkable today’s meeting had been. Here was one of the “top five” investment banks in the world acknowledging that the economic system demanded by people my age was more profitable and less risky than the system we currently have. And with a ding, the elevator doors opened.
One of the reasons Bill McKibben’s Rolling Stone essay affected Chloe Maxmin so deeply is that it struck a personal note. It coincided with an experience that showed her how our economic system really works. The path that would lead her there began when she joined a campaign to keep Canada’s tar sands out of Maine, which centered on a 236-mile pipeline from Portland to Montreal. Since 1941 the pipeline had pumped conventional oil from the East Coast up into Canada. But with Canada’s tar sands booming, demand for use of the pipeline had shrunk. In 2009 its operator, the Portland Pipe Line Corp., which Maxmin would later discover was mostly owned by ExxonMobil, began exploring the option of reversing the pipeline’s flow. Doing so would enable it to move tar sands oil from Canada to the east coast and provide a badly needed export hub for the landlocked industry. By 2012 a coalition of environmental groups had sprung up to oppose the idea.
To Maxmin, it was like a repeat of the Plum Creek standoff. Once again her home was being threatened by a company that cared only about profits. The Portland-to-Montreal pipeline crossed hundreds of waterways. It ran next to Sebago Lake, the drinking water supply for over 15 percent of Maine’s inhabitants. Leaks had not been an issue for decades, but tar sands can be more corrosive than regular oil—especially on a pipeline more than seventy years old. One day Maxmin decided to go actually see what she was fighting. “I drove through dense woods and followed yellow poles that marked an underground pipeline,” she wrote. “Most people didn’t know that toxic sludge could soon be running under their feet.”27
As protests against the pipeline reversal became louder, the Portland Pipe Line Corp. did something strange. It denied that such a reversal was even under consideration. “Its website says there are no active plans to move [tar sands] from western Canada through Maine,” read a local news story.28 A major tar sands transporter up in Canada also denied it: “We have been absolutely clear on the fact that the company is not pursuing” oil transport through Maine, said the pipeline builder Enbridge (the same one Andrew Frank was fighting in Chapter 4).29 Yet behind the scenes both of these companies were quietly pursuing the permits and approvals needed to get tar sands to Maine’s east coast. “Now that they are being watched, Big Oil wants to hide the ball,” read a blogpost that summer from the National Wildlife Federation. “But their plans to bring tar sands to New England are becoming increasingly clear.”30
Chloe Maxmin couldn’t believe it. In public, fossil fuel companies assured people they had no interest in Maine. But in reality they were trying to set up a transport route that would endanger her homeland and increase tar sands consumption at a time when our world badly needed to reduce it. “It just blew my mind,” she said. “The more I got to understand the fossil fuel industry and how it acts, I realized we were dealing with a systemic problem.” It was a system that put profits before the survival of her home and generation. Until then Chloe had assumed climate change was caused by people’s daily choices—each time, for instance, they chose plastic bags over canvas ones. But after reading McKibben’s essay, she realized this was only part of the bigger picture. “We are being coerced into this system,” she said.
Chloe returned to Harvard that fall determined to do something about it. What, though, was unclear. To achieve any kind of meaningful change, she would have to take on the $5 trillion fossil fuel industry—one that in 2012 alone had spent $153 million opposing Obama’s clean energy policies.31 How could one college sophomore ever hope to challenge that kind of power? In early September the youth-led climate group 350.org, which we met in Chapter 3, reached out to one of the environmental clubs Chloe belonged to with a potential solution. It was looking for students interested in taking up McKibben’s call for a divestment campaign. Instead of fighting the fossil fuel industry head-on, students would pressure their schools to remove oil, coal, or gas stocks from their financial endowments. If enough colleges decided to divest like this, it would send the message that fossil fuels are morally unacceptable investments.
After some initial discussions, Chloe, along with student activists at twenty-nine other U.S. colleges, agreed to give it a shot. She knew it wouldn’t be easy. Harvard’s endowment of $31 billion was the largest in the world. An estimated $79 million of it was invested in oil, coal, and gas companies.32 At the first meeting she scheduled in the fall, only nine students showed up, “and none of us knew what we were doing,” she recalled. But she was undeterred. “My goal was to get Harvard to stop investing in the companies that were fucking up my home [back in Maine]. That is what I devoted myself to.”
Her first goal for the new campaign was to get a referendum on whether Harvard should divest from fossil fuels into that fall’s student government election. She and other activists spent hours gathering signatures in heavily trafficked areas like the Harvard Yard. They had a simple but compelling argument. “Our schools invest in our future,” Chloe would tell the students who stopped to listen. “Yet at the same time, they are supporting corporations that are actively threatening the future of all life on earth.” Within a week and half of their first meeting, her team had gathered 550 signatures. “The Harvard campaign is picking up steam,” she declared. By the end of the month, she had all the signatures needed to get divestment into the student election. On voting day in mid-November, she was astounded by the results: 72 percent of voters supported it. “This is an incredible milestone,” Chloe wrote in response. “We launched this campaign a little over two months ago, and it has become one of the major issues on campus.”33
Not only at Harvard, it seemed, but across the country. Over that same period, divestment campaigns had spread to one hundred colleges—a more than 300 percent growth rate. Partly it was due to the tireless activism of Bill McKibben. Beginning in November, he set out to leverage his viral Rolling Stone article “Global Warming’s Terrifying New Math” by going on a months-long Do the Math speaking tour across the United States. “Everyone who came was asked to join a growing [divestment] movement,” read the tour’s website. By December, divestment had made it into the New York Times. “In recent weeks,” read the front-page business section story, “college students on dozens of campuses have demanded that university endowment funds rid themselves of coal, oil and gas stocks.” Student organizers such as Chloe were described as “the vanguard of a national movement.”34
Divestment provided a powerful outlet for young people’s frustration with the world’s political and corporate leadership. In an era of gridlock and polarization, it let students take direct action on their campuses against a very clear target: their school’s fossil fuel investments. The campaign immediately forced school administrations into a debate about the morality of the fossil fuel industry. “It’s simplistic but it’s true: Are you going to keep investing in an industry that is literally destroying our planet, and everything we love and care about, or are you going to take a stand and chart a new course?” Chloe later explained. “The choice defines the person or institution.” All those local choices, and the student-led actions that caused them, were then amplified by the larger divestment movement. They became plot points in a developing story. “It’s an inherently empowering framework,” she said.
Which helps explain why divestment grew so fast. As the year progressed it would take root on more than three hundred university campuses around the world. It “has spread extraordinarily rapidly,” Harvard professor David Keith remarked. “The divestment movement marks the first time in my quarter century involvement with climate change that I have encountered such a strong and disciplined commitment to activism.”35 Even as its reach grew, however, divestment’s arguably most critical battleground remained under Chloe’s command. “Not only is Harvard the richest university in the world,” read a story in the Canadian oil and gas publication Alberta Oil, “but its divestiture would be a symbolic victory for leaders of a much wider movement.”36
The first major step Chloe took toward achieving it came in early February 2013, when school trustees agreed to meet with the Divest Harvard leaders. Students filled the administration building’s halls in anticipation. “Overall, the tone of the meeting was very positive,” Chloe later recalled. “The trustees recognized the urgency of climate change and the moral authority of younger generations who will be feeling the impacts of [it].”37 Yet they were hesitant about divesting Harvard from fossil fuels. They argued that society is built on fossil fuels, and that billions of people across the developing world can’t escape from poverty without them. It wasn’t at all convincing to Chloe, but the meeting achieved its aim. It had initiated a moral debate about our status quo with the Harvard administration—one that she was convinced she would win.
For the next seven months, Divest Harvard did all it could to keep that debate alive. It rallied hundreds of students in the Harvard Yard, got 67 percent of law students to vote for divestment, delivered thousands of student and faculty signatures to the school’s administration, and kicked off the fall 2013 semester with a teach-in and more demonstrations. The wider global movement continued its rapid growth, but it had yet to convince a major university to drop fossil fuel stocks from its financial endowment. The objection from schools like Vassar, Middlebury, and Swarthmore was consistent and predictable: that divesting could hurt the school’s financial returns and was unlikely to have any impact on fossil fuel companies.
Harvard president Drew Faust had barely said a word about divestment this entire time. The $31 billion endowment she presided over was the largest of any school in the world. So the entire movement paid attention in October 2013, when she released her decision on divestment: an eloquently worded no. Divestment would gamble the school’s income, turn it into a “political actor,” cut its ability to influence fossil fuel firms as a shareholder, and do little to lessen reliance on oil, coal, and gas. “The endowment is a resource, not an instrument to impel social or political change,” she wrote.38 Chloe was disappointed, of course. But Divest Harvard had forced Faust to make a decision about the morality of our economic system. And as Chloe and several others wrote in the Nation, “she has chosen the wrong side of history.”39
Later that spring Stanford University became the first major U.S. college to choose the other side. In May 2014 it decided to divest its $18.7 billion endowment of all investments in coal-mining companies. Stanford remained invested in oil and gas, as well as power and steel-making companies that burn coal. It was nonetheless a gigantic victory. “Stanford, on the edge of Silicon Valley, is at the forefront of the 21st century economy; it’s very fitting, then, that they’ve chosen to cut their ties to the 18th century technology of digging up black rocks and burning them,” said McKibben.40 To Chloe, it was proof that a new economic paradigm was emerging, that “we can align our values without sacrificing anything financially.”
That continued to be a tough sell to Harvard president Faust. Since deciding against divestment in October, she’d refused to meet with Divest Harvard. Its members had to find creative ways to confront her. Earlier that spring divestment activist Alli Welton followed Faust into Harvard Yard and got her to state on camera that it “is not the case” that fossil fuel companies are blocking the transition to clean energy. (“Does Faust seriously believe that?” the climate blogger Joe Romm wrote in response.41) That May campus police arrested another student, Brett A. Roche, after activists blockaded all the entrances to Faust’s offices in Massachusetts Hall.
By the time Chloe began her last year at Harvard, divestment had spread to four hundred campuses. With that growth came a backlash, particularly from older observers. They argued that the tactic was polarizing. That it would have no impact on fossil fuel companies. That it was diverting attention from more meaningful causes. That it would hurt financial returns for colleges. That it was fundamentally naïve. Harvard professor Robert Stavins patronizingly urged divestment leaders “to focus on actions that can make a real difference, as opposed to actions that may feel good or look good.”42 The world-renowned climate scientist Mike Hulme dismissed it as “gesture politics.” A former premier of the Canadian province of Quebec deemed it “inappropriate.”43 An ExxonMobil vice-president said it was “out of step with reality.” To some student activists, all this attention was good. “It’s proving that we’re being effective,” one explained.44
To Chloe Maxmin, it proved that many older people just didn’t understand what she was trying to accomplish. Divestment’s primary goal was never to have a direct financial impact. It was to force a debate about our economic status quo—and to rebrand it as immoral. But as the movement grew bigger, something unexpected happened. Mainstream investors began to take it seriously. They debated whether a financial system without fossil fuels could still be profitable. One executive described it as “one of the fastest-moving debates I think I’ve seen in my 30 years in markets.” Two months after Stanford divested from coal, the global clean energy research group Bloomberg New Energy Finance released a paper examining if it would be feasible to redirect the nearly $5 trillion invested in fossil fuels into less destructive alternatives. Its conclusion: “not yet.” But the paper’s author, Nathaniel Bullard, argued that “perception can change this paradigm.” He went on: “for all of the tools available for financial analysis, institutional investment remains fundamentally human. People choose portfolios, and people assess risk.”45
The Swiss financial services giant UBS, which holds over $2 trillion in assets, was coming to a similar realization. Throughout 2014 it held a series of meetings with its clients to determine their views on divestment. In the meetings a consistent pattern emerged. “Interns and young professionals feel very strongly about the need to move away from fossil fuels,” UBS explained in a research note. This, coupled with the fact that divestment is primarily a student-led movement, struck the bank as extremely significant. “It is the consumers, voters, and leaders of the next several decades who feel so strongly about fossil fuels,” UBS noted. “In our view, this single fact carries more weight than any other data point on the planet for this issue.” The bank predicted it could have a profound impact on our global economic system: “We would not necessarily expect a sweeping step change in the immediate future. But we do think the fossil fuel divestment campaign indicates a long-run change.”46
Meanwhile student activists were doing all they could to change Harvard’s position on divestment. By that November they still hadn’t succeeded. So seven law students decided to take matters into their own hands. They sued. The $79 million Harvard was estimated to have invested in oil, coal, and gas companies would jeopardize “the ability of students to study and thrive free from the threat of catastrophic climate change,” the students argued.47 Major news outlets covered the lawsuit, including the New York Times, ABC News, the Guardian, and the Daily Mail. And though a judge dismissed the lawsuit that March, law student Joseph Hamilton was undeterred. “We are viewing this as a longer process,” he said, “and this is just a first step.”48
By then, Divest Harvard wasn’t only making a moral argument; it was making an increasingly strong economic one. In the final months of 2014, a global oversupply of oil caused the price to plummet from $100 a barrel to less than $50. In 2015 it would fall a further 30 percent. With it went the earnings of the planet’s largest oil companies. ExxonMobil, for one, saw its revenues drop by $26 billion. Its rival Chevron lost $14 billion over the same time period. Fortune magazine warned of “major disruptions in the oil industry in the near future.”49 At the same time, clean energy investment soared. A study called Tracking the Energy Revolution found that a record $367 billion was invested in clean energy in 2015, almost 50 percent more than in fossil fuels. “It’s clear that clean energy is going mainstream,” its authors concluded.50
