Sunrise Answers Student Questions: The 1991 Ban
Editor's note: To learn more about the 1991 Ban, attend Sunrise Swarthmore's debate hosted by SGO at 7pm, 4/16/18 in Sci Center 101.
What is the 1991 ban?
The 1991 Ban refers to a policy put in place by the Board of Managers in 1991, following their divestment from South African Apartheid in 1989. The policy states that the “Investment Committee manages the endowment to yield the best long term financial results, rather than to pursue other social objectives.” This may sound benign, but its history and implications are questionable. The reasoning behind this ban on social considerations was that after an 11-year long student led campaign against investment in apartheid, two black board members announced that they would step down if the Board did not divest. The Board has been quoted as having felt “scarred” by this situation, and, never wanting to face something of the like again, put this policy in place to close off future pressure to not invest in morally bankrupt industries.
What is the referendum process/how do we know it is representative?
Referendums are mediated by SGO. A referendum is launched after 10% of the student body signs a petition calling for it. Sunrise submitted a petition with over 10% of the student body on March 29th. Within three weeks from submission, the referendum must be held over a 48 hour time period, and a debate must be held before the polls open. In order to be considered valid, at least 1/3 of the student body must vote in the referendum, and over 50% must vote in the affirmative for the referendum to pass.
How is the 1991 Ban connected to divestment?
In the past when the Board has rejected student pressure for fossil fuel divestment they have primarily cited two reasons: the first was financial, the second was this 1991 Ban. After the 2015 month long sit-in and our referendum for partial divestment last spring, we have addressed the financial concerns and shown how divestment not only doesn’t hurt our finances, but betters them. So, then, the Board was forced to bring up this 1991 Ban as their last barrier against us. So, we’ve decided to address it head on. Yes, it deals with divestment as it is a policy that bars even considering divestment, but it is also an ethically defunct policy that implies the Board regrets divesting from South African Apartheid. Moreover, it is most definitely not in line with our institution’s values.
Isn’t the Board’s responsibility to keep college finances safe? Why is the Ban a bad thing?
Swarthmore College, as an institution, claims to be guided by Quaker values which uphold civic responsibility and engaged citizenship. The Board has a duty to the college as an institution as well as its finances; morally informed investments are not at odds with either of these responsibilities. It’s worth mentioning that Greg Brown, the chair of investments, has mentioned in the past that Swarthmore tries to practice socially responsible investing— for example, they ask their investors their stance on climate. They simply refuse to create a policy that holds them accountable to these values. Very few, if any, of our peer institutions have policies that issue a blanket ban on all social considerations— why should we?
Why divest from fossil fuels? Is the fossil fuel industry that bad?
Divestment from fossil fuels, a campaign that began here on Swarthmore’s campus, has spread across the globe. The result of this has been significant financial loss for fossil fuel billionaires, as well as an increased stigmatization of the companies they run. These companies are directly responsible for the drastic increases in climate extremes over the past decades all over the globe. Further still, the way these companies function result in the direct exploitation and targeting of low income and people of color communities, as they are well aware these communities are less enfranchised and valued on a global scale. Oil spills do not happen in Mar-a-Lago; pipelines are not built through Beverly Hills. Yet when a hurricane hits Puerto Rico, it is left without power for six months.
None of this is accidental— fossil fuel billionaires have deliberately lied to the public about climate change since 1979. They’ve spent millions of dollars buying out politicians, challenging and ousting Republicans who express dissent. None of this is a coincidence- it’s a decades long strategy to put their money over our lives.
Is fossil fuel divestment effective?
Yes, fossil fuel divestment has resulted in severe social stigmatization of the industry. An Oxford University study, “Stranded Assets,” found that “the outcome of this stigmatization process, which the fossil fuel divestment campaign has triggered, poses a far-reaching threat to fossil fuel companies and the vast energy value chain.” Stigmatised firms “suffer from a bad image that scares away suppliers, subcontractors, potential employees, and customers,” leading to the “cancellation of multibillion-dollar contracts or mergers/acquisitions.” Further still, The Minerals Council of Australia, a coal industry group, is even attempting to render divestment illegal, claiming that it unfairly burdens them because “stigmatization [from divestment] makes it difficult for an industry to engage with its customers, attract employees and more importantly access capital for investment purposes.” In January of 2017, when we were having a national walk out against fossil fuel investments, the American Petroleum Institute tweeted “Stay in class.” Across the spectrum of companies that fossil fuel divestment targets, they have all expressed deep disdain and worry over the strength of the divestment movement. The movement has, over the past eight years, resulted in schools, towns, cities, and nations divesting. This means a lot of lost money and a lot of bad press for big oil.
Will fossil fuel divestment hurt financial aid?
There’s no reason to believe that fossil fuel divestment will hurt our endowment at all, let alone financial aid. Hundreds of institutions have divested, including many that prioritize fiduciary responsibilities. The Board’s original “estimated cost” of divesting is no longer applicable to our current proposal for partial divestment. The cost they have estimated is incurred from switching financial managers— under our proposal, we’re simply asking our financial managers who already have fossil free portfolios to switch our investments into those portfolios. This means that our endowment would be similarly diversified and the returns would be similar as well.
In fact, divesting from fossil fuels is, in the long run, the financially responsible option. As the fossil fuel industry’s business model becomes increasingly infeasible— something that’s already starting to happen— and as over 80% of their reserves will have to be left in the ground, oil investments will become less and less profitable. By keeping our money there, we’re essentially betting against ourselves: the only way our investments succeed is if our planet doesn’t.
It’s worth mentioning that many institutions that have divested or partially divested would not have done so if it incurred any significant cost. Yale University, with an endowment structured much like ours, has partially divested. So have the Rockefeller Brothers and New York City. And finally, the Norwegian Sovereign Wealth Fund, which had billions of dollars invested in Exxon, Shell, and other fossil fuel companies, announced last year that they divested solely for financial reasons— staying invested in fossil fuels was too risky.
Finally, even if fossil fuel divestment does decrease the returns on our endowment— and that is already making a huge and unjustified assumption— there’s no reason to think that it will harm financial aid. College endowments average around a 10% return each year, and Swarthmore only spends 3.7%. That means that even a fractional decrease in returns would still leave us with plenty of spending room to spare. Sunrise will not support a plan for divestment that damages our financial aid— and there’s no reason for the administration to propose such a plan except to divide the student body.
Will this referendum do anything?
This referendum is representative of students voices and demands. This means something, to both the Board and our own administration. President Smith has agreed that, should the referendum pass in the affirmative, she will personally present it to the Board of Managers at their meeting in May. Moreover, as this referendum addresses the policy that set precedent for the Board’s previous rejections, they will have no precedent to fall back on. Essentially, they will have to actually read, contemplate, and address our demands as a strong call for a holistic investment policy with significant support from students and faculty, presented to them by the administration. This referendum is our only way to speak to the Board through structural means, and we intend to take full advantage of it. Outside of Board action, the referendum passed by students last Spring calling for partial divestment set the path for SGO and SBC divesting.