The Daily Pennsylvanian is a student-run nonprofit.

Please support us by disabling your ad blocker on our site.

Fossil fuel divestment is often misunderstood by opponents, so we’re here to debunk common myths.

Myth One: “Divestment hurts Penn’s portfolio.”

In the short-term, excluding fossil fuel stocks does not meaningfully lower returns or increase risk. Three studies conducted independently by MSCI, Impax Asset Management and Advisor Partners — with a combined $75 billion under management — confirm that portfolios excluding fossil fuel companies perform as well or better than non-divested benchmark portfolios. Accordingly, there are fossil-free investment instruments, such as World Bank-issued green bonds, that offer many reinvestment opportunities for Penn’s Investment Office. The referendum includes a five-year window for the Investment Office to explore such options in order to divest pragmatically.

Even if short-term portfolio returns were slightly affected, this would not inhibit Penn’s capacity to provide important programs. In FY2009 Penn’s endowment suffered a negative return of 15.7 percent, while financial aid increased 13.6 percent. Yearly changes in endowment returns do not translate to poorer-funded University programs. The more important question then becomes whether divestment harms the portfolio on a longer horizon.

In the long-term, continuing investments in fossil fuel companies is financially unwise. Due to the finite carbon budget, either 86 percent of their fossil fuel reserves must remain in the ground and the valuations of our fossil fuel assets evaporate, or the world suffers global warming beyond two degrees Celsius and our whole portfolio is damaged by climate change’s harms on all businesses. These business fundamentals are incompatible with the future; a failure to divest can permanently damage Penn’s future portfolio, which would actually affect school programs from financial aid to Skimmerfest.

Myth Two: “Fossil fuel companies invest a lot in clean energy.”

The largest players have actually been quitting renewables en masse. Chevron exited its solar and geothermal business in 2014, along with units that performed solar and efficiency installations. Similarly, Shell exited the solar industry in 2006, with BP following in 2011. Exxon Mobil never invested much in renewables, preferring to actively fund climate change denial. Reinvesting in clean energy companies, where all investments directly support clean energy, has a much higher impact on improving the climate compared to the lip service and abandonment by oil companies.

Myth Three: “Shareholder engagement is better than divestment.”

Shareholder engagement alone cannot solve stranded assets or carbon bubble risks. Proxy resolutions that sought to fundamentally challenge these companies’ extraction-combustion business model have failed repeatedly. The slow shareholder resolution process additionally means our endowment would continue funding these corporations’ immoral practices for many years before any hope of altering their practices. Finally, each dollar that remains in fossil fuels has an opportunity cost of a dollar directly invested in clean energy technologies, which have a much higher marginal benefit to the climate.

Myth Four: “We should focus on other causes like research or energy efficiency.”

Sasha Klebnikov’s guest column mentions that instead of divesting we should be “incentivizing more fuel efficient cars [and] switching to more efficient light bulbs.” He’s right that such initiatives are important —- but divestment and these initiatives are not mutually exclusive. In fact, divestment combats the funding source of fossil fuel lobbyists who actively obstruct incentives for quicker, wider adoption of these exact same forward-looking technologies.

Myth Five: “Voting yes is useless.”

Penn’s financial clout extends beyond the dollars it directly holds. According to a University of Oxford report, university divestment movements lead the way for other funds such as pensions to divest, increasing pressure against the targeted companies and ultimately causing multiple compressions in the stock price. For example, in 1977, U.S. universities spearheaded divestment campaigns, which spurred cities and states to divest, culminating in federal action and the fall of South African Apartheid. Tobacco divestment campaigns were also successful — smoking in the U.S. has decreased dramatically, largely due to divestment’s diminishing of tobacco companies’ lobbying power, which ended science-denial and allowed proper laws to be passed.

The fossil fuel divestment movement’s power is to revoke the fossil fuel industry’s social license and minimize its ability to spend millions of annual lobbying dollars on attacking science and economically sensible climate policies. Currently, Penn sanctions and literally finances these lobbyists. Voting yes means you want that to change.

If you are an undergraduate, please go to Your vote matters.

CONNIE CHEN is a Wharton junior studying environmental policy and management, finance, operation & information management. Her email address is She is the co-founder of Environ Group. 

WILL JOHNSON is an Engineering sophomore studying mechanical engineering & applied mechanics. His email address is

THOMAS LEE is a Wharton and Engineering sophomore studying computer science. His email address is He is a writer for Penn Sustainability Review. 

Comments powered by Disqus

Please note All comments are eligible for publication in The Daily Pennsylvanian.