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.
“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.”