Trustees Vote to Divest and Dissociate from Fossil Fuel Companies

Recent news that Exxon Mobil will invest nearly $5 billion to reduce carbon dioxide in the environment illustrates the manifest silliness of the trustees’ decision to dissociate from the company (On the Campus, November 2022). Exxon is buying Denbury, a pipeline operator that moves CO2 from smokestacks to underground reservoirs. To put that investment in context, it comes to nearly 14 percent of the value of Princeton’s endowment. Altogether, Exxon says it will spend $7 billion on low carbon businesses by 2027 and $10 billion to curb its own emissions. 

Critics will doubtless berate the company’s actions as “greenwashing.” Professors of Economics 101 might remind them that market-driven corporations respond to signals from consumers (who need gasoline) and governments (which subsidize public goods like carbon capture). They do not respond to virtue signaling by university trustees. Will the trustees now remove Exxon from its naughty list? And how much of Princeton’s resources, financial and intellectual, are being frittered away in the pointless search for culprits thought to warrant dissociation? 

While the University’s Board of Trustees may have done the appropriate thing for the University and its stakeholders by divesting wholesale from all fossil fuel-producing companies in one sweeping move, it should be recognized that this is not the correct move for all investors around the world. In South Africa, where I have lived and worked for the past 25 years as a financial/economics writer, with its population of around 158 million, the economy is heavily dependent on coal as an energy source, accounting for around 80% of all energy production and directly employing some 93,000 people in coal mining (the U.S., with its population of 333 million, employs around 60,000 people), and another 250,000 work in the local oil industry. A sudden halt to the provision of capital to coal producers would bring the country to its knees. That is why the SA government and local investors have adopted a “just transition” approach, focusing on the gradual introduction of green energy sources in cooperation with the private sector. Investors are facilitating fossil fuel companies in their transitions, so that their cost of capital for implementation doesn’t become too onerous. While all would agree that there must be an end to the use of fossil fuels to produce energy and stop global climate change, there is no “one size fits all” approach to this transition, and this should be recognized by global investors. Their divestment could come with very real and destructive consequences for others.

A few reactionary alumni have criticized members of the broad and burgeoning divestment movement for failing to free ourselves from gas-guzzling cars and single-use plastic (Inbox, December issue and PAW Online). It’s true that the proliferation of fossil fuels touches nearly every aspect of modern life, just as slavery’s economic impact was once inescapable — even for white abolitionists in their starched white cotton shirts.

What’s also true, as I write this on a 70-degree day in late fall in Astoria, New York, is the severity of the worsening climate crisis and its underlying causes. In 1965, the American Petroleum Society told its members that carbon dioxide would produce “marked changes in climate” by the year 2000. The fossil fuel industry has known for more than half a century the havoc it would wreak on people’s lives.

In those 50-odd years, the industry has not only sought to hide its own culpability, but waged a relentless public relations campaign, full of spurious arguments against the growing number of concerned citizens it considers its enemies. Twenty years ago, for instance, when British Petroleum began heavily promoting the term “carbon footprint,” the company did so to shift blame from corporate malfeasance to individual lifestyle choices.

Note that BP is unfortunately and inexplicably missing from the list of companies from which Princeton has committed to dissociate. For alumni truly committed to the “service of all nations” — and for anyone worried about famine and drought, fires and hurricanes, rising temperatures and rising seas — we need to keep fighting.

I am a 1957 graduate (M.S.E.) of the program in plastics engineering, which at the time was the only graduate course in the U.S. for the subject of high polymer engineering. Louis Rahm and Bryce Maxwell directed the plastics laboratory, and they catapulted me into a highly successful professional career as a result.

The purpose of this letter is to compliment Princeton on another matter — that of the announcement (PAW, November 2022) that the University was divesting and dropping endowment holdings plus cutting all ties to 90 companies in the business of fossil fuels.

I am ashamed to have to admit that as a successful high polymer chemical engineer I was part (unwittingly) of what has transpired since I graduated in the 1950s. My only excuse is that in those days the problems with the fossil fuels and polymer waste did not exist.

Please convey my compliments to the president and trustees on their actions. I’m in full support.

Re “Princeton Divests” in the November issue: The University’s newly adopted policy of dissociating from fossil fuel companies it disagrees with calls to mind the Puritan practice of shunning (The Scarlet Letter, anyone?). But there’s a difference. In Princeton’s case, the shunners continue to benefit from the sins of the shunned. Our trustees will keep driving, flying, heating and cooling their homes, and plastic-wrapping their leftovers — all while ostracizing those whose labors make these amenities possible. They can’t know whether a gallon of gas they buy at the pump originated in a well drilled by Exxon Mobil, which they have decided to shun, or one drilled by BP, Chevron, or Saudi Aramco, which they haven’t (yet). Meanwhile, since Exxon’s (perfectly legal) practices are unlikely to change, the company will continue adding to world supply, making it a tad cheaper for Princeton’s hierarchs and the rest of us. Is the University’s decision to dissociate the definition of hypocrisy, or what?