Divestment continues growing in concern with students on Pitt’s campus. Already, a group of students called Fossil Fuel Free Pitt has collated against Pitt’s fossil fuels investment and continues to pressure university executives to reallocate their funding elsewhere.
They have occupied common areas and toted megaphones and posters from class to class. They have stormed various intersections through Pitt’s urban campus, the same ones that are overlooked by big, orange eyes from Boulevard of the Allies. The message is clear: Pitt’s student body demands that the university withdraw investments from oil behemoths.
Climate-related harms threaten the livelihoods of adult-life for many students; the permanent harms from centuries of environmental damage are upon this generation of students. As representatives and economic investors of the University, students are demanding that the University drastically reform their investment model to contribute to a cleaner, eco-friendly future for themselves and for the student body.
Eagerness to “fight-the-man” typically bulldozes the nuances of such justice movements. So, how exactly does Pitt invest their money, and what’s at stake for the institution ? Why should the University care about the harms caused by big oil? What is the University currently doing, and how could they make it better? Here’s your Pitt edition guide to the argument of divestment.
Pitt’s Economic Model: A Non-Expert’s Explanation of How Pitt Invests
The University of Pittsburgh is a public, nonprofit institution, which requires the university to operate under an economic model that does not prioritize revenue. These nonprofit models prioritize ventures that contribute to the holistic quality of the university, such as the expansion of educational and research-based opportunities, the renovation of the William Pitt Union, shampooing the smog off of Cathy, and so forth.
Of course, Pitt also pays its professors, deans, and relevant administration with the revenue the school is able to bring in from tuition, merchandise sales, room and board, investments, etc. This ultimately incentivizes Pitt to invest their money in certain projects and equities that are likely to make a profitable return, regardless of the University’s technical — and conveniently tax exempt — status. Enter: energy and oil!
In 2019 the energy and oil industries amassed 2.47 trillion dollars. Even after the major damages brought on by the pandemic, the market still earned around 1 trillion dollars by the end of 2020. With the industry growing by trillions of dollars annually, the decision to invest in energy and oil companies and projects that reap the benefits of those margins is a reasonable economic strategy for an institution looking to make money.
One can see how and why Pitt would want to place their money in a highly profitable industry; however, the moral and financial risk associated with investing in institutions that are perceived as being (at best) morally ambiguous, far outweigh the return Pitt will get on their investments.
The Obligations of the University
One of the primary reasons why students want Pitt to divest is to mitigate the harm brought about by big oil. In other words, since major universities have the most money to invest in various oil companies, pulling their large investments will put pressure on the oil companies to alter their harmful practices. Theoretically, companies that use these investments will not be able to financially sustain their practices without the necessary funds from major contributors — like universities. If oil companies can’t engage in destructive practices, then the harm that those practices bring about will be reduced. The divestment movement asserts that if Pitt doesn’t divest from these types of harmful practices, then Pitt is complacent and just as accountable for the damages brought on by them.
Arguments regarding morality and harm mitigation, with consideration to the aforementioned moral principles, are twofold. First, all existing institutions (and people, for that matter) have an obligation to protect the health of future generations. Second, a university that claims to be dedicated to bettering its community should not engage in practices that will bring harm to that community. These two ideas are the foundation of the divestment movement’s moral concerns with Pitt’s investment allocations.
All members of existing generations have an obligation to take care of the world for the sake of future generations. If existing institutions are engaging in practices that pose a significant threat to future generations, such as investing in harmful oil drilling practices and pipeline construction, then we must convince them to stop participating in those practices.
Future generations have no agency in the institutional practices of today. When existing institutions and industries do not exercise caution in practices, they have a massive impact on people who are unable to make decisions about those practices but who will have to live with the consequences of them. You’d expect a reasonable agent to avoid participating in something that is going to bring about some harm to their children and grandchildren .
Pragmatically, Pitt as an institution has already entrenched itself as a future-looking institution by the nature of investing, contributing to the community, establishing professor tenures, research projects, and more. Engagement in these practices has demonstrated Pitt’s clear investment in technology that could benefit future generations, and therefore recognizes their obligation to future people. This is intimately related to the way Pitt portrays itself to the community.
As explained by Jeremy Moss in their essay “The Morality of Divestment,” since Pitt portrays itself as a benefactor to the community, then they shouldn’t engage in nefarious revenue practices that directly violate their public image. Therefore, Pitt should invest in all levels of their future, not merely ones that are deemed profitable. In fact, by only engaging in profitable future endeavors, Pitt is not upholding its nonprofit status, again in violation both with the way they project themselves to the public and to their solvency as an institution.
Burst the Big Oily Bubble
Now that we understand why Pitt has invested in fossil fuel companies, and why they are morally obligated to pull those investments, the issue becomes how they plan to balance profit and morality.
However, as concerns about the environmental harms from fossil fuel companies continue to grow, concerns about the possibilities of a ‘carbon bubble’ grow with it. Chelsie Hunt and Olaf Weber explain the nuances of the carbon bubble in their essay “Fossil-Fuel Divestment Strategies: Financial and Carbon-Related Consequences.” They argue that since the value of fossil fuel companies is linked to their reserves of energy sources, if governments penalize companies for using these energy sources, then those companies will no longer buy or invest in those reserves — rendering them useless.
Those now-worthless investments cause their investors to lose money, miss out on their expected return, and economic turmoil if they don’t have a diverse investment portfolio. For a nonprofit like Pitt, a major loss of expected return could result in consequences, such as higher tuition prices for students, cutting salaries for professors, and cutting research programs. In these instances, the University would actually be sacrificing the very thing that makes them a nonprofit. Not only does this make the University appear disingenuous from a public relations standpoint, but the participants in the University, particularly students, are bound to bear the brunt from the profit loss. To avoid this, the University should diversify its investment portfolio into green and renewable energy companies and research projects, if not for the betterment of ethical energy consumption, then at least to create a safety net of diversification.
Lastly, diversifying investments away from fossil fuel goliaths and into green energy is also likely to produce highly profitable publicity for the University. Prospective students will be drawn in by the University’s modern investment strategies as well as their truthful dedication to bettering the community. Students passionate about these types of green energy products will attract be attracted to the University’s energy conservation and environmental engineering.
As the world continues to suffer from the harmful effects of climate change, the demand for more environmental engineers is growing, and the University has the unique opportunity to educate them. While bad investment is not likely to disincentivize prospective students from attending the University, green investment can incentivize students who otherwise wouldn’t have considered Pitt. Divestment can help the University construct a narrative about how they continue to help their community — one that isn’t undermined by their involvement with environmentally harmful practices.
So, What is Pitt Doing? (The Answer: Not Much.)
Unfortunately, the University fumbled their response to this pressure. The Ad Hoc Committee on Fossil Fuels released an out-of-touch statement given by the University that was full of vague promises and unclear goals. While the report promises that they’ve “cut investments by 45%”, the companies that they are cutting out are significant to the divestment process. For example, if Pitt invested 45% of their fossil fuel funding on smaller energy companies that aren’t as harmful as large companies, then the cut in their investment has an insignificant effect on the harms the divestment movement seeks to mitigate. Furthermore, there is a significant lack of transparency in their financial documents. The University has made no effort to translate complex banking documents that would otherwise reveal where they are keeping most of their investments. Instead, the public is forced to rely on the interpretations published by the Ad Hoc committee, which, as previously discussed, comes across as unreliable. Pitt’s current efforts towards divestment come across as lazily acquired bones that they decided to throw to the ravenous public.