As of today, 234 other universities across the world have committed to divesting their endowments from fossil fuels, meaning that they no longer invest any portion of their endowments in the stocks, bonds, or funds of oil, coal and gas companies. In a recent report by the Duke Advisory Committee on Investment Responsibility (ACIR), Duke has recommitted itself to the opposite, deciding once again that profits and loyalty to its fossil fuel shareholders come first, before the precious Climate Commitment and before the future of our world. As President Price said in a recent interview, "It is presently not practical for DUMAC to account for carbon emissions in its portfolio."
That sentence should enrage you. The Duke administration does not believe that it is practical to make sure that we have a livable future. The production plans of every major fossil fuel company have us on track to achieve at least 2.4 degrees Celsius of warming — a temperature at which we will face the "potential collapse of natural and socioeconomic systems," per a 2023 report. But sure, it is not practical to stop supporting those companies. Not to mention, fossil-free investing is actually more practical for ensuring the endowment remains stable in the face of climate risk (see pages 14 and 15 of our recent report). (As a side note, we would also argue that it is not practical for Duke to still label itself as carbon neutral if it’s not going to include its investment portfolio’s emissions, but that is beside the point.)
The ACIR’s report is in response to two 2022 reports by Duke Climate Coalition (DCC) asking for divestment and endowment transparency. DCC followed up in 2023 with an extensive literature review on the efficacy of divestment in reducing the emissions of fossil fuel firms. In this OP-Ed, we explain the ACIR’s response to these three submissions. The first thing to note is its title: "Response to 2022 DIVESTMENT PROPOSAL and Literature Review on the Pros & Cons of Fossil Fuel Divestment," with the date of the report’s release (Feb. 16, 2024) underneath. That is to say, DCC submitted a proposal for divestment in early December of 2022. The ACIR voted and released their response in February of 2024 — over 14 months later. One of the main pitfalls of college activism is simply the fact that students are only here for four years. The administration is well aware of that. They took nearly a third of our time at Duke to respond to our proposal. We are meant to think our voice is heard, but this proves the opposite is true. Waiting over a year for a response to a 10-page proposal is unacceptable and undemocratic.
Looking at the actual content of the ACIR’s report only further shows the ways in which information is distorted to delegitimize the effects of divestment in fighting climate change. They first discuss whether divestment affects stock prices, beginning by citing a blog post by an NYU Stern professor. It is laughable for a world-renowned research institution like Duke to base its divestment report on an anti-ESG activist’s blog. In a meeting between members of DCC and ACIR, we were informed that anything we wrote in our 2023 literature review that cited a non-peer-reviewed source was not taken into consideration. Such sources included a 2013 report by three Oxford professors and a 2021 report by five major environmental groups on how much money major banks are giving to fossil fuel companies, as well as news articles from reputable media outlets. We used these sources because they have information that is simply not found in peer-reviewed literature: Scientific journals are not the watchdogs of the fossil fuel industry in the same way that NGOs are.
Still, the ACIR chose to ignore anything we argued that used these non-peer-reviewed sources, which seems like an understandable decision at first glance. However, the ACIR report twice cites a non-peer-reviewed blog post by an NYU Stern professor, which even he admits are his "not-so-profound thoughts" about impact investing. Even The Chronicle misrepresented this article, calling it a study when, again, it is just "musings on markets." Moreover, ACIR uses a variety of other non-peer-reviewed sources, including a working paper that has since been revised and articles in magazines like The Economist and The Harvard Business Review. To be clear, the content of these sources is interesting. However, using them while simultaneously disregarding the arguably more legitimate sources that we provided in our literature review is an unfair double standard that reflects the administration’s lack of respect for student research and advocacy.
The report’s further discussions of the effects of divestment on share prices offer no conclusion and fail to acknowledge several sources that DCC provided in its literature review. They distort quotes from sources to imply greater ambiguity around the effects of divestment. For instance, the report cites Braungardt et al. (2019) as saying that they "do not claim to offer a definite answer [on the effectiveness of divestment]," notably omitting the second part of that sentence that explains that it’s because they "intended to maintain as much objectivity as possible, which means weighing up the arguments is virtually impossible." Indeed, if you continue to read that article, you will also see the authors explicitly conclude that "divestment as an institutional strategy can contribute to increasing support for a climate agreement and effective climate policies in the medium and long term."
When discussing the effects of divestment on share prices, the ACIR also notably omits a comprehensive study by Cojoianu et al. (2021) on divestment commitments in 33 countries that found that increased divestment pledges were significantly linked to a decreased flow of capital into oil and gas companies. Rather, they discuss how a study of just four countries suggests that divestment is not effective. They do later discuss the Cojoianu et al. study but only that the authors suggest that federally-mandated divestment commitments can force domestic banks to invest in fossil fuels more abroad. That may be the case, but it is unclear why the effects of federal mandates on divestment would be relevant to the policies of Duke, which is not a federal government and whose divestment policies would thus not have that same effect. Again, it is a blatant warping of the facts to only include information that questions the legitimacy of divestment while ignoring any data that supports it.
Later discussions of the effects of divestment on fossil fuel companies’ emissions again cite arguments made in the blog post, including data showing that private equity firms have invested over $1.1 trillion in fossil fuels. This blog author and the ACIR both use this as an argument against divestment, but we would argue the opposite. The same phenomenon originally occurred for coal until divestment from coal became the norm even for large banks; we need the same thing to happen with oil and gas. That will only happen when divestment is normalized, when private institutions across the board commit to a fossil-free future, when fossil fuel companies are seen as unequivocally evil and any private equity firms investing in them are betting against the odds and against our futures.
A wide-scale movement out of oil and gas is not some pipe dream. Divestment from coal was normalized, so much so that coal facilities have been retired earlier or have been made to emit less, as a recent study from the University of Pennsylvania shows. Of course, the ACIR calls this peer-reviewed research into question, saying that, because coal is more carbon-intensive than natural gas, divestment from coal does not apply to divestment from natural gas. If that logic doesn’t make sense to you, join the club (maybe even join DCC). The ACIR made its conclusions despite the authors of the study explicitly noting that, "Our results should bear external validity to the oil and gas industry, the largest source of carbon emissions, as it is similarly capital intensive and dependent on bank-intermediated financing."
The ACIR also argues against the evidence provided by this University of Pennsylvania study because, in their eyes, the starvation of capital will only work if polluting firms are "locked into business strategies that compelled them to continue to be environmentally unfriendly." They talk about how shipping companies provided with more funds became greener. That may be the case for shipping companies. However, fossil fuel companies are fossil fuel companies. They are "locked into business strategies" that "compel" them to be environmentally unfriendly because their entire business models are based on our continued consumption of fossil fuels. There is little incentive for them to seriously pursue alternative energy sources. Doing so would mean facing a market that is more competitive and has more participants in comparison to that of fossil fuels, where current big players have a profitable monopoly that allows them to gouge prices and construct favorable regulations however they wish.
The fact that every fossil fuel company has either reduced their environmental commitments, cut their renewable energy plans or canceled their biofuels departments demonstrates their lock-in to a fossil-fuel-centric business strategy. Just in the past year, BP scaled back its emissions reduction goals for 2030 from 35% to 20-30%, Shell decided to not increase its renewable energy investments for 2023, and Exxon’s CEO announced his plan to double their oil production in the next five years. It’s ignorant to say that fossil fuel companies’ business strategies are not inherently unsustainable when their business models continue to revolve around fossil fuels and there is no market incentive for them to change.
Duke has no concrete commitments to make its endowment more sustainable. Other institutions that have not divested are still leaps and bounds ahead of Duke in terms of the sustainability of their portfolio. Montreal-based Caisse, a pension fund with over $390 billion in assets, has committed to reducing its portfolio’s carbon intensity by 60% by 2035. Arizona State University Foundation has committed to achieving a net zero endowment by 2035.
Even if Duke refuses divestment, some clear objectives that outline how the university will improve the sustainability of its $13 billion endowment would be better than the whopping zero commitments that we have today. And such commitments should not rely on shareholder advocacy, regardless of what Duke would have you believe. Not only is it impossible given the structure of how Duke’s endowment is managed, but putting faith in fossil fuel companies is like trusting an arsonist to put out a fire, as Oil Change International campaign manager David Tong put it.
As DCC, we call on Duke to improve its endowment transparency, divest from fossil fuels and other destructive industries, reinvest in the Durham community, and facilitate endowment-related communications between interested student groups and the administration promptly. We also reiterate our request to Duke to prohibit research funding from fossil fuel companies and climate denial foundations. Such funding skews the results in favor of fossil fuels and provides legitimacy to a relationship between academic research and a planet-killing industry. We want to see Duke make concrete goals and systemic changes instead of only advertising its Climate Commitment.
With contributions from Trinity junior Felicia Wang, Trinity senior Abby Saks wrote this column on behalf of the Duke Climate Coalition.
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