Beyond Divestment: How NYU Can Still Invest in the Public Good

May 12, 2015

The fossil fuel divestment movement on college campuses highlights two distinct aspects of the problem of climate change. The first and most obvious is that climate change and environmental issues are drastically changing our planet and require immediate action. The second is the responsibility of our colleges and universities to be stewards of responsible social change. While climate change appears to have caught the public eye in recent weeks, this question of responsibility continues to be overlooked. Both of these issues are now coming to a head at New York University (NYU).

On March 26, a working group of NYU’s University Senate voted to recommend not divesting from fossil fuels. On April 30, the larger University Senate, which encompasses both student representatives and faculty, will also vote on divestment.

The stated argument against divestment is twofold: political and fiduciary. The report released by NYU’s working group is emblematic of the faulty assumptions school administrations across the country have about divestment. The report claims that it is not in the nature of a university to take a stand on a political issue such as climate change, and that NYU would be better suited to combat climate change through increased research investments. Further, the report states that it would be financially irresponsible for the university to divest.

However, the working group’s argument is self-contradictory. The university cannot simultaneously claim to have no position on climate change and actively fund research that works to combat it. Further, the sheer existence of climate change is no longer a debate; broad consensus has been reached among independent agencies and scientists that climate change is real. The political question that does arise is what the institution is going to do about it. The working group also fails to recognize that divesting from fossil fuels and investing in research are not mutually exclusive. The administration has the power to do both while maintaining its fiduciary responsibilities.

NYU’s arguments against divestment are in no way unique; they exemplify the fundamental assumption of college administrations that an institution must choose between the social good and economic profitability. This is not the case, but the divestment movement has failed to demonstrate that university investments can be both profitable and environmentally friendly. Advocates committed to the divestment movement must provide more guidance as to how administrators can better spend their money.

While divestment is an important symbolic gesture toward a university’s commitment to sustainability, meaningful investments in green energy businesses are a more tangible request, if perhaps less likely to inspire rallies. Investment alternatives offer practical solutions that enable activists to work with, rather than against, administrations. For example, Ohio’s Case Western Reserve University has not divested from fossil fuels, but it has invested in the Evergreen Cooperatives, thereby promoting economic growth in the Cleveland community, and still maintains a commitment to tackling larger questions around sustainability and climate change.

While these investment campaigns are harder to organize around, there are students who are interested in analyzing the economic responsibility of their universities, and student involvement in this process is vital. The Roosevelt Network’s Rethinking Communities initiative is geared toward identifying and developing smarter economic decision-making practices for colleges and universities. The project is led by students who support divestment but offer smart and socially responsible local investment solutions.

NYU, for example, could stand to gain higher returns on its investments if it would simply move some of its funds from large banks like Chase into community development banks. By divesting just $500,000 (0.014 percent of NYU’s $3.5 billion endowment) from fossil fuels and moving it to community development banks, NYU could increase its returns while helping middle- and low-income residents get loans, promoting financial literacy, and providing secure financial services. This idea that investments can be both socially responsible and profitable holds true for universities across the nation.

Students are important but overlooked stakeholders in university policy. They are the ones doing the research and asking the important questions about their schools’ social responsibility. Sit-ins, protests, and rallies across the country are the product of a large number of young people feeling left out of the decision-making process at institutions designed to serve them. These students want to participate and engage with their school administrations in making financial decisions and developing viable solutions, In short, these students want to be part of universities that embody the values they teach.