Key Takeaways
- • Cambridge Associates, which advises 71% of the largest college and university endowments according to the article, published a paper titled "The Fossil Fuel Divestment Discussion" in early July 2014, its first general statement on the fossil fuel divestment movement.
- • The paper concludes that institutions, mostly schools, should weigh social policies and sustainable investments but recognize that fossil fuel divestment will change the structure of their portfolios.
- • Cambridge frames divestment's theory of change around limiting capital supply and creating public pressure; the article's author, writing for Fossil Free (350.org), rejects the capital-supply argument and points to divestment's record in campaigns on South Africa, tobacco, Darfur and adult services.
- • The article cites Barry Schachter of Fossil Free Indexes, who says daily returns of a fossil-free S&P 500 and the S&P 500 are not distinguishable over the last 10 years.
- • Student reactions quoted in the piece from Pomona College and American University criticize Cambridge's cost-benefit framing and its emphasis that divestment decisions rest with clients.
Summary
Cambridge Associates, a major investment consultant to college and university endowments, published a paper on fossil fuel divestment that the Fossil Free campaign (350.org) characterizes as its first general statement on the movement. According to the article, the firm advises 71% of the largest college and university endowments. The paper, titled "The Fossil Fuel Divestment Discussion," is described as measured and nonpartisan. Its general conclusion is that institutions, mostly schools, should consider social policies and sustainable investments while recognizing that fossil fuel divestment will alter the structure of their portfolios.
On theory of change, the paper consolidates divestment arguments into two categories: limiting capital supply and creating public pressure. The article's author states that the movement does not rely on capital-supply limits and cites the Do The Math campaign as evidence. The author argues that divestment is a proven political tool, pointing to campaigns on South Africa, Darfur, tobacco and adult services that the author says helped secure restrictive legislation.
On risk and return, the article says Cambridge compares the energy sector with the broader stock market over 20 years but does not show how a market excluding the top 200 fossil fuel companies would have performed. The author contends the relevant question is how portfolios can operate without these stocks. The article quotes Barry Schachter, an advisor at Fossil Free Indexes, who wrote that returns of a fossil-free S&P 500 and the S&P 500 are not distinguishable based on daily returns over the last 10 years, and argues that divestment can be implemented at low risk.
Student reactions included in the article offer contrasting views. Meagan Tokunaga of Pomona College praised the report as a win for the movement while arguing that Cambridge's cost-benefit framing discounts the moral case for divestment. Deirdre Shelly of American University said Cambridge's neutrality, and its deference to clients on the decision, makes the firm complicit in failing to address climate change. The article is an advocacy piece published by Fossil Free, so its characterizations of the report reflect the campaign's perspective.
On theory of change, the paper consolidates divestment arguments into two categories: limiting capital supply and creating public pressure. The article's author states that the movement does not rely on capital-supply limits and cites the Do The Math campaign as evidence. The author argues that divestment is a proven political tool, pointing to campaigns on South Africa, Darfur, tobacco and adult services that the author says helped secure restrictive legislation.
On risk and return, the article says Cambridge compares the energy sector with the broader stock market over 20 years but does not show how a market excluding the top 200 fossil fuel companies would have performed. The author contends the relevant question is how portfolios can operate without these stocks. The article quotes Barry Schachter, an advisor at Fossil Free Indexes, who wrote that returns of a fossil-free S&P 500 and the S&P 500 are not distinguishable based on daily returns over the last 10 years, and argues that divestment can be implemented at low risk.
Student reactions included in the article offer contrasting views. Meagan Tokunaga of Pomona College praised the report as a win for the movement while arguing that Cambridge's cost-benefit framing discounts the moral case for divestment. Deirdre Shelly of American University said Cambridge's neutrality, and its deference to clients on the decision, makes the firm complicit in failing to address climate change. The article is an advocacy piece published by Fossil Free, so its characterizations of the report reflect the campaign's perspective.
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