Climate change is a real problem. Most people underestimate the consequences if human contributions are left unaddressed over the coming decades, but divestment is the wrong solution.

Advocates typically argue that endowment investments financially support companies emitting carbon into the atmosphere. But what does “financial support” mean in this context? One could very well infer that Georgetown is handing over money to the Exxons and BPs of the world and directly funding man-made climate change.

This assumption underscores a flawed understanding of secondary financial markets. If I buy stock in Exxon, I do so from another person willing to sell it to me at a certain price rather than from Exxon itself. This distinction is critical because the up-and-down movements of stock prices have no impact on companies’ financial resources. Divestment, thus, can only induce change by negatively affecting a company’s ability to raise capital in the future. Yet, there are two reasons why divestment would have no substantive impact.

First, the overwhelming majority of investors are profit-seeking individuals or institutions, not endowments. Pro-divestment group Power Shift lists the total value of available oil, gas and coal exploration and mining investments at $1.2 trillion and the total endowment investments in them at $17 billion, or 1.4 percent of the total market. Surely if companies had $17 billion fewer, their abilities to extract fossil fuels would be hampered. However, as argued above, endowments selling all fossil fuel investments would only affect share prices and would have no impact on the profitability of energy operations because selling stock does not equate to removing funds from these companies. A more likely scenario than a negligible price drop is an investor unconstrained by ethical considerations boosting stock prices as they fall, resulting in no net change. Advocates often indicate that divestment succeeded against apartheid in South Africa, but with a much larger market and a smaller percentage of endowment composition, the United States is unlikely to achieve such a result.

Second, even if divesting could affect the stock prices of energy companies, these companies would likely respond in the short-term by extracting more fossil fuels, not less, to boost profitability and stock prices, which runs counterproductive to the divestment cause. “Success” for divestment can only, by definition, affect share prices, but the assumption that share prices directly affect company policy is misguided. They may in certain instances, but in this one, the consequence is the exact opposite of what divestment seeks to accomplish.

Many divestment advocates claim Georgetown’s Jesuit values conflict with the university’s investments, but since investing and divesting do not tangibly affect the environment, no contradiction with values arises. One could argue that Georgetown should, on principle, never profit from companies that contribute to global climate change; the logical extension of this argument is that Georgetown’s financial investments are the means by which it symbolically reflects its values and not the means by which it seeks to sustainably fund scholarships and research. Given that stock investments and real-world consequences are distinct, Georgetown’s investments should not constitute symbolic support for these companies. However, if divestment is merely a symbolic measure, Georgetown’s bookstore should abstain from selling Nike products and the university should prohibit Georgetown University Grilling Society from purchasing charcoal on the same grounds.

Georgetown’s actions and policies that cause real-world impacts, unlike investments, should reflect its values and commitment to environmental preservation. An endowment’s moral obligation is the important task of providing stable capital for the university to fund scholarships, projects and research. Because an endowment hires managers to invest in companies on behalf of the university, divestment would not only make choosing skilled managers who would not agree to investment restrictions more difficult, but it would also fail to affect the environment in any meaningful way.
None of this is to say that Georgetown lacks any moral responsibility for climate change. Rather, it is to argue that responsibility ought to be assessed on real-world consequences.

GU Fossil Free has the opportunity to promote student mindfulness about how our own actions contribute to these problems, and it could even refocus time and resources currently directed at divestment toward boycotting the use of energy, which, unlike divestment, would affect the demand and profitability of extractive companies. If Georgetown has an obligation under its Jesuit ideals to value environmental consciousness, all of these actions could better align with Georgetown than divestment.
Ultimately, GU Fossil Free’s efforts should be directed toward causes that lead to environmental change. Voting to divest, when doing so would have no meaningful — and potentially counterproductive — effects on the environment and negative consequences for the endowment’s ability to fund research and scholarships, would be a mistake.


Deep Dheri is a senior in the McDonough School of Business.

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  1. Probably the finest thing written in The Hoya this year.

  2. Well argued, divestment is stupid!


  4. I have to say that this quote:

    “Many divestment advocates claim Georgetown’s Jesuit values conflict with the university’s investments, but since investing and divesting do not tangibly affect the environment, no contradiction with values arises.”

    Is literally the most narrow minded point of view I have ever heard. It sounds like an already hired consultant trying to justify his own point of view in a world that he clearly does not understand. This is the typical type of propaganda being taught at the MSB. I am glad this student is a senior because campus will be better off without his narrow perspective on Jesuit Values and the world around him.

    • I appreciate the comment. As I mentioned in the article, many do argue that Georgetown’s investments in fossil fuel companies constitute “support” for their business models. I find it reasonable to at least question whether a financial investment without consequence is in fact support. If it is, how do you justify the university allowing Nike, a company infamous for immoral labor practices, to sponsor our athletics? How do you justify the university selling Apple computers, with all of the FoxConn scandals, in the bookstore? Does the university support these business practices? I don’t think so because there’s a crucial distinction between support and consequence that I try to highlight. Some may not agree but I think the discussion is worth having.

      Unfortunately, these are the issues not being discussed in that class on which people should develop an opinion. I am leaving this year but I hope the conversation continues.

      • I would argue that your highlighting of the University’s “support” of both Apple and Nike are great example of how the issue of Divestment is not solely a solution for fossil fuels. Both Nike and Apple use sweatshops to produce their products, and I do not think the university should support either of these brands. Imagine if tomorrow every school in the country cut their contracts with Nike, do you think their labor practices would change? The same is true with fossil fuels. Imagine an institution like Harvard that is both prestigious and rich. the removal of their 30 billion dollar endowment from fossil fuel investment would have an impact on our country. Divestment is a movement. And it would raise awareness. Yet, Harvard is bought off by big oil because they support researchers and fund laboratories. People doing the “little things” does not make a difference, big movements with big change are what spark people to act differently. While your understanding of how finance works is impressive, your overall understanding of how to enact social change is lacking.

        • willy dolla$ign says:

          “Imagine if tomorrow every school in the country cut their contracts with Nike, do you think their labor practices would change? The same is true with fossil fuels. ”

          Re-read the part about divestment taking place in secondary financial markets. Yes, consumers buying less Nike would hurt Nike, and would probably change the company’s behavior if it was the result of a coordinated campaign. Fossil fuels might be a bit different, since a drop in demand among current consumers would lower price, opening the door for new and marginal consumers to use more… but that’s beside the point. A large block of consumers changing their behavior is very different impact-wise than a large block of investors changing their behavior, as deep pointed out.

  5. Mark Lang shows off his ignorance and distaste for opposing viewpoints. One questions why he isn’t off at Yale screaming at professors for invading his safe space .

  6. A few words in response: GU Fossil Free knows that we are not going to make a financial dent in the profits of these companies. (However, do take into consideration that so far, $2.6 trillion have been pledged to be fossil free so far, by no means a completely insignificant dent: We don’t think that a whole bunch of divestment pledges are going to cause a gigantic market shift (or, as Deep suggests, the extraction of a bunch more fossil fuels), but that’s not what the movement is about. Divestment, alongside other symbolic moves such as the rejection of the Keystone Pipeline, are about casting a vote of no confidence in the fossil fuel industry. This is an industry that has known about the impacts of climate change, not to mention the human rights and labor abuses that it perpetuates, for decades, and has done little to nothing to counter their negative impacts. The divestment movement is asking universities like Georgetown if they really want to be invested in something that is so blatantly causing this harm. Also note that GU Fossil Free and the divestment movement at large are hoping that institutions will choose to reinvest these funds in climate solutions, perhaps renewable energy, so that Georgetown can align actions that it is already taking (i.e., reducing carbon emissions) with changes that it would like to increase (i.e., purchasing clean power and installing renewable energy onsite).

    It might also interest you all to know that “according to the MSCI, a stock market index company that serves many large asset managers, portfolios that divested from fossil fuel companies have outperformed those that remain invested in coal, oil, and gas over the past five years. This trend predates the recent fall in oil and coal prices, as MSCI’s fossil free index outperformed those holding fossil fuels throughout 2012 and 2013.” ( The point here is that the fossil fuel industry is increasingly volatile, and it makes financial sense to find more stable investments. A stronger endowment that is more aligned with our morals is something I think we can say yes to.

    The financial argument aside, however, GU Fossil Free is asking for fossil fuel divestment as a SYMBOLIC (yes, symbolic) move to say that we are choosing not to profit from these companies anymore. To say that “Many divestment advocates claim Georgetown’s Jesuit values conflict with the university’s investments, but since investing and divesting do not tangibly affect the environment, no contradiction with values arises” is incredibly short-sighted. This is not about the direct effect of divestment on the environment, but about divestment as a way to say publicly, “these companies have clearly disregarded human rights and a huge global problem, and it is time that we say that that is not how we want to grow our endowment.”

    GU Fossil Free is always happy to engage in this dialogue with students. Please see our website ( and feel free to email us at if you have further questions.

    • I agree that the symbolic point may be have been under-covered in the article. The key assumption in divestment is that investment constitutes support for or acceptance of business models. I don’t think this a true statement. Would you say Georgetown supports Nike or Apple’s unethical business practices by directly profiting, unlike investments which are indirect profits via stock returns, from their sales in the bookstore? If the answer to that is no, then indirect profits surely cannot be considered moral support. Even if the answer was yes, indirect profits should not be considered support since the environmental consequences of investing are distinct from the investment itself. I think considering investing as a stamp of approval on business processes is flawed reasoning because endowments have a moral obligation to fund the university’s budget, provide capital to expand financial aid and scholarships, and promote research, not approve of the ethics of business model.

      On the MSCI point, a portfolio that has outperformed another over a 5-year period is not sufficient to say that it would outperform in perpetuity. Financial markets have existed for over a century. One fundamental rule in investing is that past performance is not indicative of future results. To say that we should divest because fossil fuels generate volatility and bad returns is disingenuous. Commodities fluctuate in prices; at points they are bad investments, at others they are good investments. My argument is that decision should be left to investment professionals and current market conditions.

      • Your claim that an endowment doesn’t have approving business models as its goal/purpose/”end” (in the old-fashioned sense of the term) is sketchy. As MLK said, “budgets are a moral documents,” and how we spend our money most certainly reveals our moral positions, just like all economic decisions reveal our ethical framework. All the classic ethics puzzles (should Jean Valjean have been sent to jail?) are questions of how to allocate economic resources (how do we decide who gets the limited supply of bread?).

        Even if I cede you that point, however, the Law of Unintended Consequences still comes into play. It might not be the goal/purpose of investing to approve business practices, but practically speaking, investment do so anyway. By investing in something, you are funding its practices and allowing them to continue, and to take part in facilitating a practice without approving of it would be hypocrisy and should be avoided.

        • An endowment is not a budget. The money that an endowment uses to invest in stocks and bonds does not go to that company. If the Endowment buys $50,000 of Chevron’s stock, Chevron gets $0 of this $50,000 because these shares have already been issued. The Endowment is not purchasing from Chevron, but from another seller in the market. This is different than say spending $50,000 on meat from a company with questionable ethics because in that case, all $50,000 goes to that company. Therein lies a key difference between money spent through a budget and money used to invest in the stock or bond market.

          So, the law of unintended consequences is not applicable because by investing in the stock of a company, you are in no way funding their practices.

  7. Concerned Hoya says:

    The main problem with the divestment groups is they have no understanding of how investing works. You can’t just look at 5 year performance to determine whether one sector is better than another.

    If you want to understand which sectors perform better over time, read this:

    The above article records the performance of sectors in the market since 1933:
    (1) Tobacco Products
    (2) Beer & Liquor
    (3) Petroleum and Natural Gas

    TL;DR Yes, divesting from fossil fuels will hurt performance.

  8. Strandedasset says:

    The Bank of England, Citigroup, HSBC and other financial institutions are all looking at stranded asset risks and how they might materially impact the value of fossil fuel assets, and of the equities if companies that own them. Thus ignoring to consider stranded assets in the decision to divest or not goes against the fiduciary responsibility of the endowment.

    And for those who think the divestment movement is meaningless, even the CEO of Shell admits it has played an key role in the US rejecting Keystone XL, which makes a huge difference in keeping tar sands in the ground, and in the long-term financial values of companies involved in tar sands:

    • Seeing as rejecting Keystone was myopic and relatively pointless in the short and long run, its not much to brag about except showing that common sense is in far too short of a supply lately.

  9. This article is well-written and well-argued. Even if you concede that the divestment movement is warranted due to the symbolism of the act of divesting, should we really be focusing all that time and energy for what is only symbolic? Imagine if GUFF spent the time and effort they’ve been using fighting for something that is merely symbolic and has no impact on the environment, to looking into real solutions that can help Georgetown’s sustainability. Literally just sifting through trash to sort out recyclables would be a better use of time. Divestment is a lazy solution that makes students involved in the movement feel better about themselves for ‘fighting the man’ without actually taking the time to look into whether their actions have any real impact or having to inconvenience themselves to change any of their own daily habits.

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