​Balancing the books on divestment

Last month, the University’s Advisory Committee on Investment Responsibility hosted a public forum to discuss with students the transparency and management of the University endowment. A central question regarding any major university’s endowment is how socially responsible its investments are. On the one hand, ACIR maintains the growth-driven interests of endowment management and that divestment may seem initially appealing but is nonetheless a complicated movement. On the other, Divest Duke voices student opinions from a national movement that divestment is both possible and effective as part of approaching a sustainable future.

After meeting with Divest Duke members and taking in ACIR’s public positions, we believe the intentions of the divestment movement are reasonable and certainly noble, but its choice of means invites too many problematizing questions to justify constraining our endowment’s investments. Divest Duke and advocates of the status quo approach the endowment with fundamentally different expectations of its purpose, and their discussions therefore lack productivity.

Though we wrote last year strongly in favor of increased transparency, we recognize the practical argument that the vast majority--almost all--of the endowment’s investments are either legally confidential or so frequently shifting as to make periodic disclosures pointless. In terms of divestment, we agree with Divest Duke that withdrawing financial investments from fossil fuel companies would make a political statement. We turn, however, to the response of Harvard President Drew Faust to the divestment movement where she says it is prudent to “be wary of steps intended to instrumentalize our endowment in ways that would appear to position the University as a political actor rather than an academic one.” Universities should presume against taking political stances with their endowments because of their strictly academic raison d’etre. Facilitating high quality scholarship on environmental science and sustainable energy research is among the best ways universities can contribute to a sustainable future, particularly with the policy focus of the Nicholas Institute for Environmental Policy Solutions. The “either or” of the situation is ultimately that a university’s academic purpose is distinct from its endowment’s more business-savvy purpose.

Further, while it is true that Duke divested from South Africa and Sudan in 1986 and 2008, respectively, we think it inappropriate to politically equate fossil fuels with apartheid and the gross human rights violations of the Sudanese government in Darfur, as ACIR chair and Brainerd Currie professor of law James Cox pointed out in Monday’s forum. The better mode of political expression against fossil fuel companies than voting with our feet against the massive energy lobby is to work with professors who are field experts and innovators in providing effective and economically preferable solutions for down the road. While we understand the passion of students in favor of divestment on account of the environment’s importance and the harm fossil fuels are causing, we believe the harder road of building long-term solutions in science and business will do more for a sustainable future than a political statement that treats university endowments as a means to their ends.

Professor Cox and ACIR have had a positive and communicative relationship thus far with Divest Duke, and we believe both parties have hashed out their platforms over the years. ACIR should continue to be open to all criticisms of how socially responsible our endowment’s investments are even as it holds its ground on the purpose of the endowment. Divest Duke, in turn, should reconsider its approach to engaging fossil fuel companies but certainly continue advocating for a sustainable future.