Divest to reinvest in a better future
Rochester Business Journal by Abigail McHugh-Grifa
June 10, 2024
Divestment has been in the news a lot recently, due to student protests demanding that universities sell off investments in companies that may be complicit in Israel’s invasion of Gaza, but the concept of divestment is nothing new. Back in the 1980s, over 150 educational institutions fully or partially divested from companies that did business in South Africa, as a result of anti-apartheid divestment campaigns. Since 2011, student-led campaigns focused on climate change have successfully persuaded Harvard, Stanford, Cornell, Brown, NYU, Syracuse, and many other universities to shed their investments in the fossil fuel industry. Large pension funds, major foundations, faith organizations, insurers, and at least one country (Ireland) have also divested from fossil fuels, with additional institutions likely to follow suit, as fossil fuels become an increasingly risky investment.
There’s plenty of debate about whether these divestment efforts are a good idea. Research has shown that divestment doesn’t meaningfully impact companies’ stock price or behavior, at least in the short term, because indifferent or unscrupulous investors quickly scoop up shares when they become available. Some analysts argue that this makes things worse, because the new investors are less likely to object when the company does harmful things. On the other hand, divestment campaigns are an effective tool for raising awareness about important issues and pressuring key decision makers to take those issues seriously. Over time, these campaigns can chip away at an industry’s “social license” to operate and limit companies’ expansion by increasing the cost of capital.
My personal retirement savings have been invested in ESG funds for several years, and they seem to be doing just fine, but I’m not a particularly savvy or ambitious investor. I am, however, applying the concept of divestment (and reinvestment) more broadly in my life, and that process has been quite enlightening and satisfying! Please allow me to explain what this means:
To successfully mitigate the climate crisis and many other social and environmental issues, I firmly believe that we need to shift our economy away from its current “extractive” or “take, make, waste” structure to something more “regenerative” that equitably meets human needs and supports human wellbeing, while repairing environmental degradation and allowing us to live within the boundaries of what the planet can provide. I can and do advocate for systems-level solutions that will move us collectively in that direction, but I don’t have the power to change those systems by myself. However, as a participant in the economy, I can divest my personal resources (e.g., time, attention, energy, money) from extractive pursuits and reinvest those resources to support regeneration. This is a process that cannot happen overnight, in part because it’s not always clear what’s extractive and what’s regenerative, so I’m learning to think more critically about the consequences of my actions, both for myself and others.
For example, I’m becoming more intentional about what I eat, because food can be produced in ways that are (1) bad for the Earth, bad for people who work in the food industry, and bad for my body, or (2) good for the Earth, good for people who work in the food industry, and good my body. Because I prefer to use my consumer power to support the second of those options, I aim to buy foods that are mostly plant-based, locally produced, minimally processed and packaged, and organically or regeneratively grown. Of course I’m not always successful, even though I spend a lot of time, energy, and money procuring high-quality food, cooking meals from scratch, and educating myself about the food system, but ultimately I think it’s worth the investment, because I feel physically healthy and morally comfortable with what I eat. I’m grateful for the unearned privileges that make this possible for me.
Here’s another example: I avoid forms of media that promote and/or glorify hate, violence, and consumerism. So I refuse to watch scary movies that might evoke irrational or unnecessary fears, and because I understand that (1) social media is designed to grab and hold my attention, and (2) social media companies often accomplish this by feeding users content that triggers our worst instincts and insecurities, thereby creating conflict, misery, and division, I rarely give them my attention. Instead, I focus on things that promote my personal growth and wellbeing, including sources of accurate, minimally biased information about history and current events.
Final example: Though I genuinely like my job and believe my work is important, I am no longer willing to give it so much time and energy that I have nothing left for fun, family, exercise, etc. Even within a workplace that truly values employee health and wellbeing, work can become extractive, simply because we live in a society that promotes productivity, work-related self-sacrifice, and professional “success” above all else. But I’m done with that! Rest is regenerative. Fun and pleasure often are too, depending on the specifics of how you pursue them. So for me, resisting the urge to overwork is an important aspect of what it means to responsibly opt out of the extractive economy.
In Paul Hawken’s book “Regeneration: Ending the Climate Crisis in One Generation,” he provides a list of 12 guiding questions to help organizations and individuals determine if a proposed activity supports the transition to a regenerative economy or not. Those questions include…
“Does the action heal the future or steal from the future?”
“Does it enhance human well-being or diminish it?”
“Does it prevent disease or profit from it?”
“Does it restore land or degrade it?”
“Does it increase global warming or decrease it?”
“Does it provide workers with dignity or demean them?”
“Does it serve human needs or manufacture human wants?” and
“Does it reduce poverty or expand it?”
I would add to that list, “Does it make me feel like a jerk, or does it make me feel good about myself,” because at this stage in my life, that gut check seems to be a pretty reliable decision-making guide.
These questions have informed my own divestment and reinvestment efforts, and I hope they will help you too. The enormous social and environmental challenges we face as a community are not due to a shortage of resources, but rather a misallocation of resources. This is very good news, because it means we can change course. So please join me in divesting from the extractive economy — quickly and equitably — to free up the resources we’ll need to co-create a better future.