Editorial: Loyola should think hard before divesting

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Editorial: Loyola should think hard before divesting

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A movement to make Loyola University divest from fossil fuels has exploded on campus. The Rev. Kevin Wildes, S.J., university president sent out an email saying that he would begin conversations about divesting from coal with the Board of Trustees and the Finance Committee. We want to throw our hat in the ring by pointing out that Loyola’s investment policy should not be based on feel-good proposals, but instead allow flexibility to make profit-maximizing investments that help fund our university.

In its petition, which 310 people have signed to date, Divest Loyola says that only when we divest from fossil fuel investments will we “honor the 450 years of Ignatian tradition” and “restore the ideals of our institution.” Those are necessary commitments, but we must first ensure that we even have an institution before we wax eloquent about ideals and tradition.

In a time when the university is trying to avoid a financial crisis, every dollar matters. It seems financially unsound to cut off a source of income when what we need is more of it.

Compare the TIAA-CREF Social Choice fund — which screens its investments based on ethics — with the S&P 500 ETF — which measures the 500 biggest companies on the stock market, and doesn’t take into account any ethical concerns. The five-year average returns from the social choice fund were 9.75 percent, and the S&P 500 index showed a five-year return of 11.44 percent.

If Loyola invested its entire $200 million endowment in the social choice fund five years ago, it would have grown to $325 million. If Loyola had invested the same amount in the S&P 500, it would have grown to $353 million. The difference would be almost $30 million, or $6 million per year.

Of course, students can pick up the tab. $6 million spread over the 310 people who have signed the petition to divest equals out to around $20,000 per person, per year. Spread over the entire student body — which has overwhelmingly not asked for divestment — the number goes down to around $700 each semester, per student.

One might object that $700 per semester is worth saving New Orleans from going underwater. But if Loyola divests from fossil fuels, will that do anything to lower the projected six inches of sea level rise? Loyola divesting from fossil fuel companies won’t change the fossil fuel industry or cut carbon emissions — in south Louisiana, the United States or anywhere else in the world — but it could change the future of our college for the worse.

If Loyola passed along its stake in fossil fuel companies to other investors, the world would not be a more moral place. Now, our humble Jesuit institution with a robust commitment to social justice is the beneficiary of these investments. If we divested from them, we would be passing that profit onto investors who might not share our system of ethics or use that profit justly. Investments don’t dissipate once they’re divested. Is it more ethical for money to flow into our classrooms, or executive offices?

The petition issued by Divest Loyola argues that fossil fuel emissions disproportionately impact people of color, indigenous communities and lower-income neighborhoods. These are also the people who are most reliant on affordable energy, and vulnerable to rises in energy costs. Perhaps those who are privileged enough to have a college education or spend all their time in academia can afford solar panels, wind turbines and electric cars, but the less economically well off might not be able to.

According to one climate science research organization, virtually all of New Orleans could be underwater by 2100 — regardless of whether the world reduces carbon emissions. So, even if we wanted to give up industrialized civilization and abandon fossil fuels entirely to reverse the direction of climate change, we won’t solve the problems that Divest Loyola wants us to.

Instead of devoting all of our time to efforts which won’t lead to a more ethical society, won’t make any meaningful gains to stop the impact of climate change and could harm the university, we should be pressuring the city of New Orleans to start planning on how we can adapt to our changing environment. It’s easy to see universities playing a role in this planning, so it would be a shame if Loyola didn’t have the finances available to
do that.

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