In the context of an endowment, divestment means selling all investments in a particular sector. The current conversation surrounding divestment is focused on the university’s investments in companies that profit from the sale of fossil fuels, including oil, gas and coal. It is important to note that divestment cannot happen overnight: many of the investments in an endowment are “locked up,” with requirements that they be maintained over a period of years.
Thus, if there were to be a decision to divest from some sector, it would have to be rolled in over time. The white paper that accompanies the resolutions being considered in our five shared governance assemblies (the Student Assembly, the Graduate and Professional Student Assembly, the Faculty Senate, the Employee Assembly, and the University Assembly) does an excellent job of laying out arguments for divestment, and is worth reading.
Arguments against divestment come in several forms. One set of arguments focuses on negative economic impact: Divesting from one sector could have significant economic costs for the university, both direct (i.e., if the sector is profitable), and indirect (e.g., stemming from the trading costs associated with selling the assets and the costs of ensuring compliance, i.e., checking that no assets associated with the sector are in the endowment).
The second group of arguments focuses on the loss of influence that arises when you divest from a company. When you own shares in a company, you have the right of “proxy voting,” which helps to guide the policies and practices of that company. If Cornell were to divest from companies that currently produce fossil fuels, it would lose its proxy voting rights in those companies, and thus the ability to push those companies away from fossil fuels and into the alternative energy areas.
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