Politics & Law

Monetary Morality
Students often push the University to ditch “immoral” investments. Results have varied.

By Jack Brook '19 / September–October 2021
August 19th, 2021
Divestment illustration by Fernando Cobelo
Illustration: Fernando Cobelo

On the border of the Gaza Strip in 2017, Drashti Brahmbhatt ’19 watched Palestinians passing through a tense checkpoint monitored by young Israeli soldiers with powerful guns and fingers on the trigger. Brahmbhatt, observing the checkpoint as part of a winter semester course on Israel and Palestine, wondered what it would be like if her own father had to commute to work this way.

“I could imagine my dad in that situation and that really scared me,” she recalls.

Back on campus, Brahmbhatt joined student groups advocating for Palestinian human rights in Gaza and the West Bank. By February 2019, Brahmbhatt and a coalition of students under the banner of Brown Divest began pushing for a campus-wide referendum against University investment in companies they claimed were complicit in human rights abuses. Along with collecting hundreds of signatures for a petition and presenting its case to the Undergraduate Student Council, Brown Divest engaged in a robust campaign to raise awareness and discuss the divisive issue with the student body. 

“A lot of people forgot that divestment is a tool at our disposal to engage in international politics,” Brahmbhatt says. “We wanted to show that the Palestinian human rights abuses are connected to human rights abuses around the world.”

She points, for example, to Raytheon, which produces missiles responsible for more than a thousand Palestinian civilian deaths. (Brown’s investment holdings are not public, so any investment in Raytheon is conjecture.)

About a quarter of the total student body voted in favor of divestment in late March 2019. President Christina Paxson responded with a letter opposing divestment, saying “the endowment is not to be used to assert views on contested social and political issues.” 

Even so, in December 2019, Brown’s Advisory Committee on Corporate Responsibility in Investment Policies (ACCRIP) recommended the University divest from companies complicit in Palestinian human rights abuses. Composed of faculty, staff, students, and alumni, ACCRIP examined issues of “social harm” connected with companies the University was invested in.

“For me, and I think for many people, we recognize that something like home demolitions and forced evictions, the killing of children, the excessive use of force and unjustified arrests, unfair trials, and indications of torture constitute significant social harm,” says Professor of Medical Science Chi-Ming Hai, former chair of ACCRIP, which has since morphed into ACURM, the Advisory Committee on University Resources Management.

Hai said in this case divestment was a matter of moral principle rather than something that would have much impact on University endowment returns. He also stressed that divestment was not meant to condemn Israel as a country, but rather the treatment of Palestinians under occupation.

Nothing new

This was far from the first time Brown students have pushed the University to wield divestment in confronting human rights issues. Matt Carroll ’86 had not thought of himself as an activist before coming to Brown, but the movement on campus to divest from South Africa’s apartheid state inspired him to engage with the issue. 

As student body president in 1985-86, Carroll had the responsibility of responding to a student referendum urging divestment. “I learned that there are times when you need to step forward and disagree publicly and openly when there are important issues of justice at stake,” Carroll says. The  University agreed to divest from certain
companies involved in South Africa within a year. 

Students were not satisfied with what many viewed as a partial divestment and four students began a protest fast in Manning Chapel, stopping only after the University eventually disenrolled them. That April, students constructed a shanty on the Main Green to symbolize the poverty and oppression produced by apartheid. The next year, dozens of students disrupted a University corporation meeting, leading then–Dean of Student Life John Robinson to ask them to write down their names for him if they wanted to take responsibility for their actions, according to an account by the Harvard Crimson. The 20 students who did were put on probation.

sustainable investing

By October of his freshman year, Scott Warren ’09 was meeting with then-President Ruth J. Simmons to make the case for divesting from Sudan, given the ongoing genocide against ethnic tribes in the Darfur region.

Simmons was receptive, and by February 2006 the Corporation had agreed to vote on the issue. Warren recalls it was a frigid Saturday morning and 50 students were beginning a rally on the Faunce steps with a bullhorn when the Chancellor came out to thank them, explaining the University had agreed to divest. Brown was one of the first of many universities to do so.

Brown also divested from tobacco companies in 2003 and agreed in 2011 not to make new investments in HEI Hotels and Resorts following serious labor violations. 

In 2012, a student movement called Divest Coal got ACCRIP to support divestment from 15 coal companies, but in 2013 the University declined to withdraw those investments, with President Paxson arguing that Brown’s investment in coal companies was small and that divestment would “convey only a nebulous statement—that coal is harmful” without pushing for better solutions.

Nathan Bishop ’13, one of Divest Coal’s organizers, believes that argument actually strengthened the reasons for getting the University’s investments out of coal—divesting wouldn’t harm the endowment and would still send a strong moral message. He’s still proud of  the campaign. “The Board had to sit with that decision [not to divest], knowing that its actions were directly against the will of the student body,” he says. “Divestment represented the general will of the student body. It was clear. And that was an accomplishment.”

There’s a moral value in students pushing for an institution to invest money ethically, says Professor Alex Poterack, who teaches an environmental economics course. But practically speaking,  divestment is not necessarily an effective strategy for making a meaningful economic impact on fossil fuels, he notes—the efficient markets hypothesis means that in the long run stocks will always trade at their fair value.

“If some people say ‘Oh these oil stocks, I don’t want to own them,’ that will drive the price down,” Poterack explains. “But that will make them a comparatively better return and so other people will say ‘Oh wait I do want to own this’ and that will bid the price back up.”

As renewable energy becomes more profitable for investors, Poterack says, fossil fuels become less attractive. In fact, Brown decided in 2018 to ditch fossil-fuel investments, which Paxson announced in March 2020, describing climate change as “an existential global threat” and adding that divestment is now the sensible economic decision: “As the world shifts to sustainable energy sources, investments in fossil fuels carry too much long-term financial risk. We do not plan to make new investments in fossil fuel companies unless and until they make significant progress in converting themselves into providers of sustainable energy.” 

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Related Issue
September–October 2021