DISCUSSION Response to: “Why Divestment Fails”

by Luke Robinson _______14th May 2014

by Stephen Davis, Associate Director and Senior Fellow, Harvard Law School Programs on Corporate Governance and Institutional Investors

Stanford University’s decision to divest from fossil fuels is bolstered, not undermined, by the experience of apartheid South Africa, contrary to Ivo Welch’s view. Here’s why.

For those pressing corporate pullouts from South Africa, economic damage was not the objective. Ending apartheid was. The sanctions price tag amounted to a slight 0.5% of South Africa’s GNP. But the impact on political attitudes was striking, according to a comprehensive 1989 opinion survey and focus groups I co-directed for the Investor Responsibility Research Center. The more whites felt vulnerable to being labeled a pariah, the more they were resigned to yield on apartheid. So Welch, in forecasting a trivial impact from Stanford’s divestment, is drawing conclusions from the wrong empirical corner. Stanford’s move may well cause no financial earthquake. But by branding fossil fuel a pariah, it could help change public attitudes on energy policy and behavior.

This letter is written as a response to:

Ivo Welch’s ‘Why Divestment Fails’

Published: May 9, 2014 The New York Times – Opinion Pages


accessed 14/05/2014