Divest what? The flawed thinking behind university divestment

a/Opinion by

A large part of the difference in the policy prescriptions that we see from the Left and Right can be attributed to the logic they apply to political and policy problems. In terms of social issues, we see that those on the Right tend to frame problems within an absolutist moral framework, and anything that falls short of this standard is vigorously opposed. An obvious example is the insistence of the American religious right on “abstinence only” sex education, on the grounds that teaching contraceptive use would promote immorality. Those on the Left, meanwhile, tend to frame the same social issues in terms of “harm reduction.” That is to say that even if you don’t like teenagers having sex, or people using drugs, these things are happening; therefore we should teach contraception, or have safe injection sites, because the best intervention the state could engage in would be to reduce the harms of the activity, as opposed to vainly trying to eliminate them altogether.

Ironically, when we shift to environmental issues, we can see the more absolute moral framework being applied by left-wing activists.

The recent spate of campaigns by left-wing campus groups to get universities to divest from companies linked to climate change have occurred on campuses across North America, including McGill. On our campus, from General Assembly (GA) resolutions to petitioning university administrators, students have argued that McGill, as an institution that has shown commitment to sustainability, should not invest any of its money in companies or financial institutions involved in natural resource extraction.

The problem with these campaigns is that whether or not divestment will actually produce any changes in the behaviour of these companies is at best, a secondary consideration. The text of the resolution put forth at the Fall GA shows a document rooted mostly in normative argumentation, with many appeals to McGill and SSMU’s (Student Society of McGill University) stated principles on the environment. This is in many ways falling into the trap social conservatives fall into when advocating against harm reduction strategies. They focus on the moral stand their own actions are making against the societal wrong, with little consideration of how this stand affects overall occurrences of the wrong; if company X continues to exploit the environment after divesting, their logic seems to be, ‘at least we removed our money and can clearly say that we aren’t playing a part in it.’

This sort of stance is certainly respectable in the abstract, but is dubious in the real world. If you take a stand against investing in a company, or stock portfolio based on whether or not they derive profits from activities you find socially objectionable, where do you draw the threshold? How do you quantify the level of social harm, and decide who loses money accordingly? It may be easy to say that the oil rig operator is engaged in an unethical activity that should be divested from, but what about the bank that financed the drilling expedition? The company that built the drill? A close reading of the SSMU GA divestment resolution—which passed in the Fall GA as a consultative body—would suggest that there is no threshold. The resolved clauses push for divestment from companies involved in the oil sands, and “other companies that have negative impacts on their social, political, economic and environmental surroundings,” which is an incredibly nebulous standard; any company larger than a ‘mom and pop’ business can be construed to have some “negative” impact on its “surroundings.”

The flip side of the coin, and the real problem with a divestment strategy is that, by removing university stock from any or all of these companies, the university also removes its main means of direct influence over their activities. Publicly traded corporations respond first to their shareholders, and the likelihood that the public attention generated by university divestment will make companies change their behaviour more than any action universities as shareholders could take is dubious at best. Public outcry has limited and brief effectiveness as a tactic against the actions of large corporations.

So when we look at the issue of divestment, we must question the logic behind it. Are we simply trying to register our own opposition to a social harm, or will our action tangibly reduce the social harm? Being able to say that you aren’t a part of a social harm has little real value if your action does little to change the behaviour of the actors that matter.

  • Greg Frame

    Well argued, I would further add the example of Canadian Oil Sands Limited. COS currently adheres to a stricter environmental mandate (adopted in 2008 by its Board of Directors, largely the culmination of an 18 month consultation with environmental engineers and NRC scientists) than required under the Canada Fisheries Act and the Environmental Enforcement Act. That’s not to say that environmental policing should be left to BoDs, but rather that any substantive environmental amendements require multi-partner consultations, NOT puritanical divestment.

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