Duke University has a long history of students fighting for fossil fuel divestment, but it hasn't happened yet. Why is this? What do we need to do to get Duke to divest? If you're a student, alumni, or faculty member of Duke University, this episode is directly related to your community. If you don't have ties to Duke, this episode is STILL relevant for you because Duke's position on divestment is similar to challenges that colleges all over the world face in terms of the fossil fuel divestment movement. Why might some colleges not want to divest? What can we do to aid the divestment movement at our schools? Listen to find out!
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Hosts/Reporters: Katherine Li and Ryan Lou
Writers/Producers: Ryan Lou, Helene Gu, Isabella Kroon, Katherine Li
Guests: Brennan McDonald, Abby Saks, Lawrence Baxter
Audio Editor: Isabella Kroon
Music: Cali by WataR, carefree by WataR
TRANSCRIPT:
KATHERINE
Hello, everyone. My name is Katherine.
RYAN:
My name is Ryan.
KATHERINE:
And we are your hosts today for this episode of Operation climate. So to start off this episode Ryan, I want to ask you, do you know about Harvard University?
RYAN:
I definitely have heard of Harvard University. They're pretty big university and Ivy League.
KATHERINE:
Awesome. Yes. And have you heard about divestment from fossil fuels as it relates to Harvard?
RYAN:
Now that does ring a bell? What what exactly happened with Harvard and fossil fuel divestment?
KATHERINE:
Yeah. So back in September, I believe Harvard announced that it would try to move its endowment away from direct investments in fossil fuels. And this was like, super big news. I saw it all over social media. And that news kind of created a lot of momentum for fossil fuel divestment at Duke because everyone was like, oh, okay, so Harvard has made this move. What about Duke University? What exactly is Duke doing? So a lot of students became interested in that?
RYAN:
Well, yeah, now that you mentioned I do, I do remember this kind of surge of momentum. In fact, I think Duke actually has a pretty long history with divestment. And I was kind of wondering, Where where's due get now? Fortunately, we'll actually be answering these questions in today's episode. What progress has been made at Duke out of student activists and do administration stance on divestment, compare and contrast? And how can we reach a resolution?
KATHERINE:
And to help us answer these questions? We've got some great guests on today's show. So we'll be talking to students from the Duke Climate Coalition. We're talking to Brendan McDonald and Abby Sachs are both undergrads in DC do Climate Coalition or DCC is a student group working on environmental campaigns on Dukes campus, and this year, they're focusing all of their efforts on divestment, endowment, justice, and political education. And it kind of
RYAN:
gives us a different perspective on things. We also have Lawrence Baxter, who's a law professor at Duke. He also chairs the Advisory Committee on investment responsibility, also known as the A Cir, which works with the President to make recommendations to the Board of Trustees on responsible investment decisions, and in our case, how to engage in divestment or lack thereof.
KATHERINE:
Let's get into the episode.
To understand the future of fossil fuel divestment at Duke, let's first look into Duke's past campaigns and where the university stands now, in terms of its investments in fossil fuels, we'll talk to DCC to learn more.
BRENNAN MCDONALD:
Well, Duke has gotten rid of its direct investments in fossil fuels, meaning that any stocks that are directly owns are no longer invested in fossil fuels. Most of nukes endowment is actually held by invested in third party asset managers that still indirectly have holdings in fossil fuels. And that continues to be an issue that needs to be changed because we don't know how much money is left in fossil fuels. And it could be a significant amount given that the endowment, even if it's only 1% of the endowment, the endowment is $12 million. And that's a lot of money. So
KATHERINE:
we all know that divestment is a super, super long campaign at any university. So great job on you guys for being a part of this. I'm just curious if you can speak a little bit about the progress that has already been made at Duke from past organizers.
BRENNAN MACDONALD
The first big push came in, I think it's around 2014. In the years after that, and it's my knowledge, not much change came out of that. The university continue to argue against merits of divestment and saying that it'd be symbolic, it wouldn't. It's not possible. There. There's little effective change that can come from it. And so I think another push came in 2018 2019 by another round of people in the do Climate Coalition. And while the university still hasn't fully divested from fossil fuels, they did provide the encouragement to the university to say that they would they have gotten rid of their direct investments in fossil fuels, which is, you know, it's not enough but at least it's some sort of progress.
RYAN:
To quickly summarize duke has very little direct investments in fossil fuels. But it's indirect investments which are most of Dukes assets, are a whole nother story because they're all managed by third party asset managers, and dukes administration has been pretty resistant to for divestment from fossil fuel. To understand how Dukes investments are managed, we need to know about a couple of organizations do Mac and the ACR do Mac is the actual company that manages Duke University's endowment asset. In addition to managing this endowment, they manage a bunch of other funds related to do too. They work with 131 investment advisory firms and partnerships do this. And last year in 2021, they managed around $28.6 billion worth of assets. The ACR is that Advisory Committee on investment responsibility And we spoke to Lawrence Baxter, the chair of the ICR learn more about its role in making decisions about Dukes investments.
KATHERINE:
So could you explain a little more about what the ACR Council is? And what role does it play in managing the investments that Duke has?
LAWRENCE BAXTER:
It has its roots in the anti apartheid movement in which students were protesting Dukes investment in any companies that do business with South Africa. When I say Dukes investment, I mean the the actual management company do matter that places those investments for the Duke Endowment that is a separate company, but it's nevertheless under the overall rubric of Duke University. As a result of that experience, a little while later, two committees were formed, the one reporting to the provost and one reporting to the president of the university. They were both designed to provide, shall we say conscience advice to the President and Provost respectively, depending on which committee it was about the sort of ethical nature of investments that were found to be objects with objectionable? Those two committees were merged into one in 2012. I think it was, reporting to the President and that is the current committee, the Advisory Committee on investor relations.
The committee does a couple of things, really three things. One is it provides education on the way in which Dukes endowment is invested. And any moral, ethical questions that come up. Secondly, it can provide direct advice to the executive vice president as to how proxy voting, when that becomes available to Duke, how its investments should be exercised. And then thirdly, the committee, the ACIR that is, provides advice to the President of the University, who has the discretion to accept and whole or in part or reject that advice, and can take it to the Board of Trustees.
The importance of that is that the Board of Trustees is the ultimate body that determines whether we should, for example, divest from a particular company, whether certain types of of slants and investment should be adopted and so on. There's one other thing that one should bear in mind, and that is when DUMAC itself makes its investments, it does three different things that should be carefully distinguished. The first is it has many third party or outside funds managers, and it will delegate to those funds that it selects the power to make daily investments which change all the time. The second is that DUMAC also makes direct investments, direct equity investments, for example. And it then does have the power to invest or divest and to exercise proxy voting. That often leads to self confusion because you will see a significant derivatives exposure in the climate in the fossil fuel area. But that does not mean we're invested in those companies. It just means we are tracking that and deciding how to balance our risks.
KATHERINE:
So now that we've gotten some background information into Dukes divestment, history and how divestment decisions are made, let's dive into the current divestment landscape at Duke. Duke students have been advocating for fossil fuel divestment for years, several years ago DCC even submitted a resolution to the ACR calling for Duke to divest which the ACR ultimately rejected in 2019, recommending to the President and Board of Trustees that do max shouldn't be required to divest from fossil fuels. Why did this happen? Let's hear from Lawrence Baxter.
Like you said, there's a new cohort of undergrads that come in every year. People are interested in divestment all the time. I recently attended the ACR open forum where that conversation was largely focused on fossil fuel divestment. So I guess my question for you would be, are you tired about talking about fossil fuel divestment yet? Or is there still like flexibility and ACRS position for against fossil fuel divestment?
LAWRENCE BAXTER:
you know, I'm not tired at all. First of all, I introduced that course as a direct result of student petitions to the ACR. I always knew that climate change was there was becoming very damaging that I had no idea how severe it was and totally DCC produced a memo when I become chair that was very well done. And I looked at this another Oh, my goodness, this is bad. I under estimated it, and as a result, I thought this is also going to be affected by where our money is, which is financial markets.
I think divestiture is always a possibility because the reasons that we decided not to do it to change, so we recommended to the President as the professor Cox's committee and that we don't invest because we felt that the level of Direct holdings of due care was so small. And in fact, the president of virtually non existent that it would be a symbolic gesture, which we thought, given the systemic nature of the problem would look very hypocritical, would have no effect on any company. And it's a highly liquid market for the stock and fossil fuels. So we would be doing if we had any would be selling either bias as to the systemic issue. You know, we're all terribly dependent on products made from fossil fuel.
And so it's a sort of global effort that we have to steadily transition away from it. But we can't do it overnight, you know, we all drove to do in cars or flew home for Thanksgiving, all of that is very fossil fuel dependent. So we felt like if we made a grand statement, it might look attractive to casual readers who don't think about it. But anybody who's really serious about it, we would look like we were posturing. That was one of the reasons, but I didn't say I can imagine coming back again.
But let's say for some reason, one of the petroleum companies that actively opposed the Glasgow statement coming out of cop 26, and say that they had vigorously opposed it, and they were doing something that was clearly detrimental to the environment, and making no effort to move to alternative energy production. I could imagine students becoming enraged to find out let's say, we were investing in our company. And so then I wouldn't be different is I would never say it's off the table. In fact, I found that one of the most engaging encounters I've ever had at the university and with both undergrads and graduates that it's your world. And so what we said to the president was, while we wouldn't recommend divestiture because there's a there's almost nothing to divest, and be, we will just look like the posturing. We do have areas that could well do with strong support from the US, the president, the provost, and the Board of Trustees. And sure enough, and I don't want to claim credit for this, because there were many others saying the same thing. That is exactly what the Board of Trustees agreed to the for last and what President price actually announced last year.
KATHERINE:
Yeah, it's definitely true that fossil fuels are quite ingrained into the way that society works right now. So it's a really difficult issue to address. But even if even if it may be a symbolic gesture to divest our direct holdings in fossil fuels, do you think that still holds political power in that in that statement? And would that have any meaning to it?
LAWRENCE BAXTER:
Yeah. So in other words, if I can put words into your mouth, the Will there come a point where it's not just sort of symbolic, it's a statement of morality, that we just don't want to have anything to do with it. I think if we had direct investments, that would be true enough to make was not investigating ESG funds as fast as they can, it may well reach that point where we're going to say we just don't want anything to do with it, just like conflict minerals. So one would have to have a very, I think, more than just a symbolic statement. Because if you make a symbolic statement, even when there's justified outrage, it can often indicate that you're not doing real things that you're just saying things to get the meteor off your backs, or saying things to make students feel good. So I think it's a weapon that should be used very, very carefully at the point where it wouldn't make a difference.
KATHERINE:
Yeah, that makes sense. So like, at times a symbolic gesture like that could get the attention away from, you know, like that Harvard's doing refusing to divest from their third third party investments, which is like a huge thing to address. So making those symbolic statements might take the attention away from that?
LAWRENCE BAXTER:
I think so.
RYAN:
So along that same line, so we're talking about Harvard. And we know that Harvard has kind of said that they'll get rid of legacy fossil fuel investments held by different asset managers. And we've kind of noted that the publication of Harvard's divestment has kind of gone into conversation. All right, what would you what are your thoughts on that kind of symbolism of being able to like spark change in other universities? And what Dukes divestment progresses related to Harvard?
LAWRENCE BAXTER:
Right? It definitely encourages other universities. No question. And, in fact, after the Harvard statement, I got a lot of emails about, you know, what, what's Duke doing about this? And that stat is important. And if it's, if it is something that can be effective, would not discount it. I would hate to see us just be a sort of Johnny Come Lately, that oh, well, because Harvard's doing it now. We're also going to make a symbolic statement, because the investors behind the scenes are very hard nosed, they look at what the real facts are, and would not be impressed by that. Yes, we may feel better about ourselves. But the question is, can you make meaningful change? And I think it's better to focus on other things that still have to be developed. So I mentioned ESG funds, it's very hard to determine what's genuinely an environmental Lee favorable fund from a greenwashing. There's a lot of greenwashing going on, it's just a matter of, you know, where can we be most effective? There's another very thorny issue that I'll raise. But I'm not sure where I stand on that yet. Some of the biggest fossil fuel companies are funding to a large extent alternative energy export development. And they're doing it because they know that the writing's on the wall, and they will eventually be gone unless they come up with other ways to produce energy. Let's assume we were invested directly into, say shell, and we could exercise the proxy vote to support the shareholder group that forced members of the environmentally conscious members of the board, you remember, that happened about two or three months ago. And shell is saying that say they spending $200 million each year and developing alternative energy by divesting we may well be doing withdrawing the allocation of capital in a fairly efficient direction. Now why it's controversial as the answer that I've often given us, you know, good for them may only slightly making a small change and the damage that they do so why shouldn't we praise them at that money's got to come from somewhere. Now, obviously, there's going to be a lot coming from government with the build back better act, and there was already a lot of the infrastructure act, but it's also going to come from private industry. And the way you find new alternatives is you have to rely on the legacy revenue as it winds down.
RYAN:
Okay, so to recap, the ACIR has recommended against fossil fuel divestment, because they think Duke should focus on areas of sustainability development, like seeking endowment funding for Dukes ESG fund, or developing proxy voting policies to exercise investor voting powers. This position is controversial, especially with the Duke student body, let's hear from DCC about why divestment matters.
ABBY SAKS:
The administration has also claimed that they've done a lot of research in shareholder advocacy, instead of bold divestment, that would mean having using our shares in fossil fuels to make them more sustainable and more environmentally conscious. So it's like the whole engine number one company investing in Exxon are getting seats on the board there to make Exxon more sustainable, but because do probably wouldn't have enough money in those companies, it wouldn't really be able to make a significant difference. So that's not really something where we want our campaign to go down that path. And also divestment in general has a really long history at Duke, I think in the 70s. It was but a lot of the students there convinced Duke to divest any money from South Africa supporting apartheid. So there is success stories, we just haven't quite seen that level of success with this campaign.
BRENNAN MACDONALD:
Yet. Very interestingly, they say it would be hypocritical for Duke to do that.
KATHERINE:
Those arguments that they have about like the symbolism of it not not being that impactful, and the hypocrisy argument that they made, at least personally, for me, they don't make a lot of sense. I was just wondering, what would your guys's responses be if you had a meeting with the admin and you were allowed to say whatever you wanted?
ABBY SAKS:
I would say first that I think it's more hypocritical that we have a Nicholas school of the environment, and yeah, we have money in fossil fuels. That's, yeah, that's just way more hypocritical. And we have all of these things that are like striving for equity, and we're striving for social justice and Black Lives Matter. And fossil fuels are responsible for significant levels of environmental justice concerns and social justice issues. And then also ESG may not be completely reliable, but fossil fuels, their stocks have just been going down. They're not something that we can continue to use, nor something that the economy is really planning to use based on trends. So it doesn't really make sense economically to keep our money invested in these companies when their stocks we've just been worsening over the past decade.
BRENNAN MACDONALD:
The administration argues that, you know, divestment isn't very effective. So therefore, we should spend all our efforts on you know, carbon neutrality and other like advocacy and research. But one could argue that the $12 billion of investments could extend you know, even farther beyond you know, just the self contained stuff we're doing on campus like totalled million dollars carries a lot of institutional weights, and it weighs on the stock market. And even though it's symbolic, in some ways divestment shows to all the other universities and nonprofits around the world that change needs to happen.
KATHERINE:
So we're in a sticky spot with divestment at Duke because the administration and ACIR have very different positions on divestment than student groups like DCC do, but divestment is still a possibility for us, even if it seems like it's some far away goal in the future. So how do we move forward? Let's first talk about how we can directly engage with decision making bodies like do Mac and ACIR.
So Duke has already divested from the top 200 carbon emitting corporations, but Robert Monroe On do Mac I think he says that about 80% of Dukes investments are managed by third parties. Yes. So what can be said about their investment practices? And does ACIR, or we as students have any power over those?
LAWRENCE BAXTER:
We have very little direct, but we have a lot of influence and power in the tree, keep asking them, when you are picking third party funds. Are you looking for ESG funds, ones that are environmentally responsible? The answer that we get back is yes, they have had a number of meetings with some of the biggest advisors, people like Morgan Stanley, for example. And whereas ESG funds in general were not profitable until about a year ago, they are starting to show better profits now. And that will attract do Mac to toggleable, funds managers there. Do Max individual managers in the different specializations are very well aware of the pressure to find profitable, environmentally responsible third party funds
RYAN:
On that note, what advice would you have for students who want to make their voices heard?
LAWRENCE BAXTER:
Totally. One thing that always makes sense is to read the mandate, it's on our website. And it's quite important because the Board of Trustees approved it. And there's some fine distinctions, one has to do this. So divestiture has the highest level, which is it has to be a generally accepted view of the Duke community that the activity involved is morally abhorrent. That's a hard, hard hurdle to clear. But that doesn't mean we don't provide other advices. I say with President price, we gave four other recommendations and handset to all of them. One was a little spongy, which was to do more work on carbon taxes. But the others were very specific, mentioned the seed funding, and proxy voting that was not really focused on before. So I haven't said it's open to anybody. And I've had some of the best input is coming from you guys.
RYAN:
If you're a student at Duke, you may be interested in getting involved in the divestment movement on campus. And good news, because the movement is gaining momentum. Let's hear from DCC to learn how the divestment campaign is going and how you can get involved.
You guys mentioned mentioned like this push and pull within, do Climate Coalition, advocacy groups administration, how has cooperation especially like were working I see room to grow in terms of cooperating with the administration, any ways they can budge? And any plans you guys have in case of future like continued opposition to divestment,
BRENNAN MACDONALD:
what is actually going to cause the administration to budge? And what is going to actually cause them to see that they should join all the other universities, nonprofits that have started to divest, we are, you know, going to try holding the student referendum and Student Government resolutions in favor of divestment to show widespread student support. And we also have are possibly exploring, using the legal methods used by the Harvard divestment team to try to compel the administration that, you know, in a more forceful manner that they have to divest.
KATHERINE:
That's really interesting and touching more on Harvard, how his recent news of other universities successes in their divestment movements, how has that affected the movement at Duke, either with with the efforts that you plan to hold or other actions,
ABBY SAKS:
It just shows that more institutions are going to do it and it looks really bad if Duke is the last one, because if we want to be the climate University, like Brennan said, it's gonna look really bad if every other institution has divested from fossil fuels, and we're still the ones with money. Often it was just like, we did it because we were forced to and everyone else had done it already.
BRENNAN MACDONALD:
They argued that getting rid of indirect investments in fossil fuels would be just not feasible. But we found an example just a few weeks ago of I think it was University of Toronto in Canada, which is a major university, they said, We're gonna get rid of direct investments within like the next year or two, because that's easier. But by 2030, we're gonna have eliminated all indirect investments and fossil fuels as well. So it's possible and other universities have done it. It's no longer a valid argument for do they continue to say that they can't do it.
RYAN:
Yeah, you kind of touched on this before with like, the plan of like, holding student referendums. And now we're seeing like this pushed by major universities, Harvard, you mentioned University of Toronto, pushing for divestment. Do you kind of see like this build of momentum for divestment at Duke? And do you think it's required for divestment to be really successful? Or what do you think also needs to be in the play here for divestment to really be successful?
BRENNAN MACDONALD:
I mean, I think it's just a combination of the continuous stream of reports MBA from IPCC saying that we have dwindling amount of time or non existent amount of time to hold ourselves to only 1.5 degrees Celsius of warming, in addition to you know, all the other institutions and universities around the country and around the world that are seeing the need for divestment. honestly don't
ABBY SAKS:
I don’t think that we're going to pass the referendum and then the administration is gonna be like, Okay, we're going to divest now because that's obviously really unrealistic. I think that if we show that a lot more students than just the environmentalists, like the hardcore environmentalist care, it would definitely be good. So besides just signing the referendum when we start to have actions to because we are planning on having actions if the referendum doesn't bring about divestment, which again, it's not likely to. So I think there's having more students show up, besides just the environmental club members would be good. And then writing op eds, if you can, we've started doing that in the Chronicle. And just like showing support outside of signing the referendum, so that it doesn't seem like only a small select group of the student body cares about this.
RYAN:
And then you've kind of touched upon like this responsibility of the Board of Trustees, whether it be for like a nonprofit, or managing the endowment funds to do and we kind of see that some trustees on the board are very connected to fossil fuel oil holdings. How do we tackle that conflict of interest? Is there a way to tackle that conflict of interest?
BRENNAN MACDONALD:
I mean, I feel like Yeah, I mean, once people are aware of you know, that there's people who have connections to big industry and fossil fuels, and other areas like that, well, the board members who have connections to these industries have financial incentives to continue to protect the industry as they also are like public figures. They don't want to be shamed and look bad. So I feel like there is some influence and leverage we have over, you know, views that the public has of them, we can leverage that to pressure some changes.
KATHERINE:
What calls to action or advice do you have or other undergraduates who want to get involved in the divestment movement at Duke?
BRENNAN MACDONALD:
Even if you're not interested in directly becoming involved in the the Duke climate coalition's efforts or other clubs efforts for divestment when they're public opportunities to make your voice heard on areas related to investments and other climate change matters, take advantage of every opportunity to to participate in those because a common problem the administration has said is people don't care about these issues. People didn't show up to the forums for learning more about investments. Well, if we all show up and show them that we care about these issues, they're going to have to start to listen.
ABBY SAKS:
Also, once a referendum is released, sign it. And then for future events, I guess I would just say follow our Instagram group divestment to see when we are having future events, and also just to say educated and updated on the campaign, but also definitely joined New Climate Coalition. So from this episode, we have learned a lot of things. One of them is pretty good news is that Duke currently has very little direct investments in fossil fuels, which is great. But when we're talking about full divestment from fossil fuels, it's a really complicated story, because indirect investments are a whole nother complicated issue that is really difficult for us to get information on in track.
RYAN:
Now, as you may have just heard, there seem to be a lot of conflicting views regarding divestment, especially between two organizers, as we've heard from the do Climate Coalition, and do some illustrations such as from Lawrence Baxter, who chairs the ACIR, there seems to be married to both sides of the argument. divestment is a very attainable goal. But when we're talking about indirect divestment, it does bring into the old shareholder advocacy, and just how much indirect divestment really contribute to the issue.
KATHERINE:
Yeah, definitely. But even with all of this, no matter what your stances on divestment, it's really, really important to get involved in the divestment issue on our campus because it affects you.
RYAN:
Yeah, I mean, you definitely don't have to be a quote unquote, environmentalist. Yeah. involved in this issue.
KATHERINE:
Yeah. So we encourage you to go seek out the resources, learn more about do Climate Coalition and the ACR. And also learn more about money and fossil fuels because there's a lot of interesting connections in that. Thank you so much for tuning into this episode of Operation climate to make sure to subscribe on Spotify and Apple podcasts or anywhere you get your podcasts to stay updated about future episodes, to also stay updated about Operation climate and get some cool climate education and climate news. Follow us on our socials. We are @Operationclimate on Instagram, @opclimate on Twitter and @Operationclimate on TikTok, head to our website at bit.ly/operationClimatepodcast to get a full transcript of this episode and links that you can explore to learn more about this issue that we covered today. And also we want to hear from you. So give us a rating and or review on Spotify and Apple podcasts that will literally help us so much. Thank you. We love you. Okay, hope to see you next time. Bye
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