Bill McKibben Recruits Vermont for the Next Climate-War Offensive: Divest From Big Oil

Bill McKibben’s new front in the fight against climate change is less about tree hugging and more about number crunching. The renowned climate activist and Vermont resident is headlining a cross-country bus tour calling on schools, churches and governments [1] to divest from fossil-fuel companies.

Modeled after the successful campaign of the 1980s to divest from companies doing business in apartheid-era South Africa, the fossil-fuel divestment campaign — as led by McKibben’s environmental group 350.org [2] — is targeting the 200 top fossil-fuel companies [3] in the country, among them Exxon Mobil, BP and Royal Dutch Shell.

Vermont climate activists are heeding the call, with groups such as Vermont Public Interest Research Group [4] calling on the state to strip its pension funds of big oil in favor of more socially responsible investments.

“I don’t think financially we can cripple them. They’re so big and so rich,” McKibben says of oil companies during a phone interview. “I do think we can have a very powerful effect on changing their status, on removing their veneer of respectability.” Divestment, McKibben says, represents an “inherently moral call, saying if it’s wrong to wreck the climate, it’s wrong to profit from that wreckage.”

Vermont student activists have taken up McKibben’s cause, with gusto. At Middlebury College, five students made headlines [5] after issuing a spoof press release claiming the college had divested its $907 million endowment from environmentally destructive companies. Members of a socially responsible investing club have pushed Middlebury for years to enact similar reforms.

At the University of Vermont, a new student club inspired by McKibben’s campaign asked the board of trustees this month [6] to divest its $346 million endowment from big oil. UVM vice president for finance Richard Cate says that it’s impossible for the school to break out exactly how much of the endowment is invested in fossil fuels, because a large chunk of the endowment is tied up in hedge funds rather than individual stocks.

In the meantime, though, students are targeting two mutual funds in UVM’s portfolio that they say are heavily invested in oil and gas companies: BlackRock All-Cap Energy & Resources Portfolio and Eaton Vance Small-Cap Value Fund. The combined value of UVM investments in the two funds is $5.4 million.

“We’d like to be the first public university to take a solid, principled stance on this,” says UVM senior James Billman, an environmental studies major from Boston, Mass. “Fossil fuels are on the way out. It’s no longer a stable economic investment.”

VPIRG is still crunching the numbers to determine what percentage of the state of Vermont’s $3.3 billion pension fund is invested in fossil-fuel companies. In particular, the group is looking for companies with significant quantities of fossil-fuel reserves and utilities that will profit from the burning of fossil fuel.

A quick scan of investments published on the state treasurer’s website [7] shows Vermont’s pension fund is invested in eight of the top 10 fossil fuel companies, as identified by 350.org: Royal Dutch Shell (in which the state has $4,482,554 invested); BP ($2,097,063); Total SA ($2,032,263); Chevron ($1,972,850); Anglo American Oil ($281,145); Exxon Mobil ($210,502); ConocoPhillips ($205,470); and Lukoil ($25,645).

“Really, any amount is too much,” says Ben Walsh, VPIRG’s clean-energy advocate. Pressed on whether divesting from these companies might have an adverse effect on retired and current state employees, whose pensions depend on fund performance, Walsh never wavered.

“There are plenty of profitable companies in this country that don’t have anything to do with fossil fuels,” he says. “I don’t think Vermonters want their pension funds invested in companies that are ultimately making their kids’ and grandkids’ lives far harder to live in the future.”

VPIRG plans to push for divestment legislation in the coming session — and at least two key lawmakers are investigating the feasibility of divestment. State Rep. Kesha Ram (D-Burlington) and state Sen.-elect Chris Bray (D-Addison) — who both serve on UVM’s 25-member board of trustees — have scheduled meetings to discuss divestment policies with State Treasurer Beth Pearce’s office. Vermont already has a few on the books: The state does not invest pension funds in tobacco companies or terrorist states.

McKibben, for one, believes Vermont could be a leader in the fossil-fuel divestment movement.

“We’re small enough that we have a hard time affecting the amount of carbon in the atmosphere in a direct way,” he says. “But that doesn’t mean we can’t have a very outsized effect on the political environment.”

On his divestment tour, McKibben is barnstorming up and down the coasts and across the Midwest, talking to sell-out crowds in playhouses and concert halls. 350.org spokesman Daniel Kessler describes the show as part TED talk, part revival meeting. McKibben is traveling in Mary J. Blige’s old tour bus, a biodiesel-fueled vehicle piloted by Johnny Cash’s former driver. It’s a “little less luxurious” than it sounds, McKibben says.

The tour comes on the heels of McKibben’s blockbuster article last summer in Rolling Stone, titled “Global Warming’s Terrifying New Math.” [8] The “math” boiled down to three numbers: two degrees Celsius, the amount of warming scientists believe the planet can sustain before catastrophe; 565 gigatons, the amount of carbon dioxide we can emit before we exceed that two degrees of warming; and 2795 gigatons, the estimated amount of CO2 that oil companies have extracted or could extract. The article went “strangely viral,” says Kessler, and still ranks among the most popular pieces on Rolling Stone’s website.

McKibben authored one of the first books for a general audience about global warming, 1989’s The End of Nature. But since then, he says, environmentalists have made precious little headway in fighting climate change.

“I spent the last 25 years devotedly hoping to be proved wrong, literally praying to be proved wrong,” says McKibben. Instead, he says, the opposite happened. The science is essentially unchanged, but the effects of global warming are coming faster than most scientists anticipated.

McKibben says his one advantage, after more than two decades fighting an uphill battle, is that he knows what doesn’t work. Changing lightbulbs, while useful, won’t change the math of climate change. Nor, he says, will sending off scientists to Washington, D.C., where they’ve been “spectacularly unsuccessful” in swaying public policy.

“I think we’ve peeled away the layers of the onion. I think we’re at the heart of it,” says McKibben. “That’s why this campaign is all about going after [the fossil-fuel] industry … It’s an industry so blinded by the size of its profits, the size of its greed, that it’s literally willing to take down the planet.”

Why start with colleges?

“In a broader sense, it makes real sense for young people to be leading this charge,” says McKibben. “I’ve got another 25 years, if I’m lucky, on this planet. But if you’ve got 60 or 70 staring you in the face, it behooves you even more to make sure the planet isn’t going to hell for the last 40.”

So far both Middlebury College and UVM have been noncommittal in response to students’ calls for divestment. At UVM, the student activists will make a more detailed proposal to the Socially Responsible Investing Advisory Council in early December, which in turn will make a recommendation to an investment subcommittee of the full board of trustees.

Cate says that UVM welcomes students’ input on investment practices, but he warns that divesting from fossil fuels would require significant changes in the university’s overall financial strategy.

“I think it’s always good that students are activists at heart,” says Cate. “The question is whether the approach that they’re proposing is the best way to have an impact.”

350.org estimates 100 campuses will have divestment movements by the end of the fall semester. A few schools have taken it further: Trustees at Unity College in Maine voted earlier this month to divest their endowment entirely from fossil fuels, and Hampshire College in Massachusetts pledged to do the same in October.

Emily Flynn works for the Sustainable Endowments Institute, a Massachusetts-based organization that researches sustainability in college operations and endowment practices. She notes that Unity and Hampshire are small schools known for being “a little counterculture,” and it’s too soon to know whether others will follow suit. But she applauds both schools for “walking the walk and talking the talk” and hopes they’ll serve as models for schools with larger endowments.

In fact, earlier this month students at Harvard University voted three to one to support divestment. At $30.7 billion, the Harvard endowment is the largest of any university in the country — outpacing its closest competitor, Yale, by more than $10 billion.

Flynn says the world of complex investments sometimes feels like “a cult of expertise” but adds the new attitude among today’s student activists amounts to: “You can be involved in environmentalism, but you also have to be financially savvy.”

“Financially savvy” certainly describes Eric Hanson, the president of Burlington-based Hanson & Doremus Investment Management, who warns that divestment campaigns are typically most successful — both in terms of rallying support and protecting investors — when the focus is specific and narrow. Take the South Africa campaign. Hanson says the number of businesses eligible for divestment at that time was fairly small, meaning investors could excise them from their portfolios without serious ramifications.

“However, if you divest energy companies, you’re divesting a tremendous slice of the U.S. economy,” Hanson says. “It’s a different kettle of fish.”

He also warns that the line between acceptable companies and unacceptable ones isn’t always clear-cut. For instance, should investors cut out chemical companies that use oil to make plastic? In general, Hanson says, socially responsible investors shouldn’t have to sacrifice their financial returns on account of their values. But he adds one caveat: “If you exclude the entire energy sector … you are going to affect your portfolio results negatively.”

But divestment proponents argue the status quo has its costs, too. Groups such as the Investor Network on Climate Risk, an organization focused on the risks and rewards posed by global warming, argue that climate change could wreak havoc on investments. UVM senior Kerry Wilson, an environmental studies major from East Charleston, Vt., points to the mounting price tag in the wake of Superstorm Sandy — New York City alone is estimating costs at $19 billion — as evidence of that risk.

“[Fossil-fuel companies’] profit is coming from harming the environment,” says Wilson, “and it’s not something that’s sustainable.”