One common response to the observation that something bad is happening, and that some corporations are either benefitting from that bad thing, contributing to it, or both, is to look to put pressure upon those who have invested in those corporations.  Is it a good way?

For example: some activists believe not only that Israel has denied its Arab citizens basic human rights in violation of international law, but that U.S. based corporations such as Boeing are actively assisting it in this.  Some of those activists are students at the University of Michigan – Ann Arbor.  They recently and successfully pressed for that university to divest its endowment of holdings in Boeing.

Any such campaign for divestment raises a lot of questions: not least, does this really achieve the goal of lessening the harm done?  Is the life of any Palestinian any better, for example, because of UM’s divestment from Boeing? Might divestment in fact even have contrary consequences?

Related: might divestment involve giving up leverage? In the UM case, the position in Boeing might have given UM a voice in the deliberations of Boeing. The student activists might have directed their efforts toward changing how that voice was used, if it was used at all, in Boeing’s internal counsels with regard to the corporation’s close connections to Israel.

The same type of controversy exists over the question of the emission of greenhouse gases, contributors to global warming. If one has some connection with an entity that invests in, say, a coal company, then does one have a duty to concern one’s self with that coal company’s impact on the environment? And if one does, does that duty mean one ought to argue for divestment?  What are the consequences, drawbacks, and limits, of a coal, or of a fossil fuel, divestment campaign?

Left Wing View

The terms “left” and “right” have to be used here, even more than usually, in a tentative and relative way. In the United States, much of what calls itself the “right” denies that the emission of greenhouse gases amounts to a major problem at all, and sees anti-emissions activism as a plot to hinder productivity, economic growth, etc.

But the issue of interest today is voice-versus-exit in such matters as divestment from certain corporations. In that context, both sides agree that there is a problem with the activities of those corporations. The issue between them is how to address it. In that context, for the purpose of convenience only, one might call the “voice” faction the right wing view, and “exit” the left wing view.

The “left wing view” then, is one that draws on what some leftists see as the lessons of earlier campaigns against South African apartheid and the tobacco industries. Such campaigns have a direct impact (loss of share price for the companies targeted) as well as indirect impacts (they mobilize sentiment; create a platform for publicizing the activists’ view of the evil to be remedied, etc.)

With regard to coal in particular, some pro-divestiture campaigners are claiming victory. The industry, they say, is dead and they helped kill it.

Right Wing View

Of course, in campus contexts the debate over divestiture may be made more complicated by the programs and degrees that a particular college is offering. If a college teaches, say, mining engineering, won’t its students and alumni be at risk if it also orders its endowment fund to divest from the employers of mining engineers?

Leaving colleges out of the equation and focusing on public pension funds: the “voice” side of the voice-or-exit dispute is represented by Thomas DiNapoli, Comptroller of New York State, and thus the overseer of that state’s Common Retirement Fund, which has more than $200 billion in assets under management.

Under DiNapoli’s leadership, that fund has $1 billion invested in ExxonMobil, an old school fossil-funds dependent company if ever there was one. He is not apologetic about this and, though he does believe a transition to a more sustainable energy system is critically important, he has no plans for an exit from that position.  Indeed, DiNapoli credits his own place at the table with the recent success of a shareholder resolution requiring ExxonMobil to prepare annual reports detailing how its business will be affected by climate change.

“We think it was a positive step forwards,” DiNapoli said of that resolution. Any success for the “vote” strategy can be taken as an implicit rebuke to the “exit” strategy since the two are logically incompatible. That point is made explicitly here.

A more explicit argument against divestment is that the target companies for the campaign are poorly, arbitrarily, chosen.  They tend to be chosen based on their size, and as Scott Wisor has written for Ethics & International Affairs, a campaign on this basis not only does not make better actors out of the companies it “simply creates a (very minor) incentive to be smaller.”

Finally, opponents of the divestment campaign have a variety of arguments about how the usual analogies to successful divestments of the past – South Africa, tobacco – are facile and misleading.