Study: Divestment Hurts College Students

National environmental lobbyists are ramping up campaigns at college campuses urging the “divestment” of natural resources from university endowments, falsely equating investments in energy production to profiting off of environmental “wreckage.” Members of the radical movement are convinced that cutting oil, natural gas, and coal out of universities’ portfolios will hurt energy companies financially and advance their climate change agenda. In reality, these tactics are more likely to make it harder for low-income students to attend college.

Affordable energy provided by America’s abundant natural resources forms the foundation of modern society and facilitates economic growth. As such, the energy industry represents an important component of the $400 billion in U.S. university endowment assets. A new study by Dr. Bradford Cornell confirms that divesting from energy resources would cost universities hundreds of millions of dollars, negatively impacting student life, research funding, and financial aid.

The report, commissioned by the Independent Petroleum Association of America, estimated the cost of divestment for five universities: Harvard, Columbia, Massachusetts Institute of Technology, New York University, and Yale. The study reconstructed each school’s endowment performance from 1995 to 2015 by modeling portfolios with natural-resource investments compared to divested endowments. The study found that the current shortfall for Harvard would be $108 million, Yale $51 million, Columbia $14 million, NYU $4 million, and MIT $18 million if the colleges had divested from fossil fuels in 1995.

Divestment would have left these elite universities with almost $200 million less to invest in scholarships, financial aid, and academic programs for thousands of young college students. This underscores the irony of the “divestment movement”—their leaders, dominated by national lobbying groups, flock to college campuses to make students the face of a cause that actually harms students.

Another irony, as the study explains, is how divestment may hinder the development of alternative energy sources:

“When a company faces an increase in its cost of capital, the response is to forego investment in marginal projects. At major energy companies, those marginal projects are unlikely to involve the bread-and-butter business of producing carbon-based fuels. Instead, what is more likely to be cut is research and development into more speculative investments, such as those involving alternative energy. In this way, divestment advocates might actually accomplish exactly the opposite of what they hope to achieve.”

Divestment will have an immediate negative impact on scholarship and student life at colleges across the country. If the movement achieves its stated goals, it will result in the opposite of what the activists hoped to achieve and still have no effect on global climate change.

div-button-revised

Speak Your Mind

*

Anonymous says:
Your email has been received. Thank you for signing up.