To fight global warming, Stanford should have kept its coal

Stanford University
Anti-fossil fuel campaigners declared Stanford's recent divestment a victory, but some argue that engaging with companies and organisations to improve their practices is better. Image: Shutterstock

On Tuesday, Stanford University announced that its endowment will not make direct investments in coal companies. Anti-fossil fuel campaigners declared victory.

But is divestment the right move if the goal is to compel companies to alter what they do? Divestment campaigns are great for raising awareness and sparking debate — but not for getting companies to change their practices.

In 2002, the Canadian company Talisman Energy divested from an oil project in Sudan under pressure from campaigners concerned about foreign investment propping up a repressive regime. ONGC, India’s state oil and gas company, bought Talisman’s stake in the project, stopped all communications with stakeholders interested in monitoring the situation there, and ended the community investment programs that Talisman had set up. Some activists cheered Talisman’s departure, but oil production increased — which was probably not the original vision of those calling for divestment.

A more effective strategy is to engage with a company as shareholders — not to divest. The Rev. David Schilling is the program director of human rights for the Interfaith Center on Corporate Responsibility (ICCR), a coalition of faith-based organizations that use their position as shareholders to convince companies to improve their environmental and social practices.

A more effective strategy is to engage with a company as shareholders — not to divest

“There are others that will pick up the shares; that’s pretty clear,” Reverend Schilling told me. “Then you’re left with this other set of tactics, for sure,” such as lobbying policymakers to strengthen regulation. “But direct engagement is one that we have historically affirmed.”

Indeed, ICCR has a track record of results. In part due to ICCR member efforts, ExxonMobil agreed to disclose how it assesses financial risks from climate change. (No, they’re not getting out of the fossil fuels business, but it is an important step.) Other companies, including Cabot Oil and Gas and Archer Daniels Midland, agreed to set and disclose goals related to energy and climate change after ICCR pressured them to do so.

Such changes don’t come about quickly. “Our approach is to stay at the table and engage, engage, engage,” said Schilling, “and not for a year or two years but 10, 15, 20, 25.”

I can personally attest to the efficacy of Schilling’s strategy of active engagement. I spent nine years with BP, mitigating risks to the communities living near major company projects in the developing world; commissioning expert assessments on issues ranging from human rights to impacts on fisheries; hiring community liaison officers, and partnering with nongovernmental organizations.

I had moral and financial support for my work from the top levels of the company, in part because BP’s investors were concerned about social risk. These weren’t solely faith-based or socially responsible investors like those in Schilling’s coalition, but mainstream investors who wanted assurance that BP could get these projects up and running on time and keep them operating smoothly — without the social strife that has plagued extractive projects around the world, causing harm to people and to corporate bottom lines.

Investors made us change our practices. Divestment campaigns did not.

I would like to see Stanford and other large universities join forces with the likes of ICCR to engage with the companies they invest in, and actively move all of us towards a more sustainable world. To me, that would be a real college try.

Christine Bader is author of “The Evolution of a Corporate Idealist: When Girl Meets Oil” (Bibliomotion). She worked for BP from 1999-2008. This post originally appeared in Reuters’ The Great Debate.

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