Summary - gof Web viewWhy UCT should divest from fossil fuels. By Fossil Free UCT. The thinning of our polar ice caps is frightening – I truly fear for the lives of my grandchildren

Why UCT should divest from fossil fuelsBy Fossil Free UCT

The thinning of our polar ice caps is frightening – I truly fear for the lives of my grandchildren. – Leon Lederman, Director Emeritus, Fermilab; Nobel laureate (Physics, 1988)

2 °C [global warming] is certain death for Africa. – Lumumba Di-Aping1

As a ‘leading Afropolitan university’, UCT can show Africa and South Africa true leadership [by divesting]. – Phoebe Barnard, SANBI and UCT

People of conscience need to break their ties with corporations financing the injustice of climate change. – Archbishop Emeritus Desmond Tutu

Every year, thousands of students graduate from the University of Cape Town with the expectation that they are embarking on long, productive careers in a generally socially and economically stable world, where their values, knowledge and skills will serve themselves, their families and society. But that stable world can no longer be taken for granted. It is now profoundly threatened by climate change (and multiple other negative consequences of undifferentiated economic growth).

Fossil fuel companies have become rogue companies intent on preserving an extremely destructive business model no matter the cost to people and planet. If they continue to resist changing their business model, they must be shut down.

Since UCT’s investments currently include interests in fossil fuels, the university is, in part, funding students’ education by contributing to the destruction of the world in which that education should be applied. This simply makes no sense.

Fossil Free UCT believes that the university, as a place of learning (not least in climate science), as a site of social leadership and with a duty of pastoral care to its students, must urgently switch to a socially and environmentally responsible investment policy. Addressing climate change is now an overwhelming priority for such a policy.

Below, we set out the case for fossil fuel divestment by UCT in detail.

Summary Humanity has set a 2 °C target for limiting global warming – but even 2 °C would bring

severe impacts for Africa. Governments have not yet taken actions consistent with their declared targets, and we are

headed for global warming of far more than 2 °C. The likely consequences of our current climate trajectory are dire. Our current carbon emissions trajectory will lead to catastrophe for Africa. If fossil fuel companies burn all their reserves, as they plan to, we will far overshoot the 2 °C

target. Fossil fuel companies are not just wrecking the climate, but also hacking democracy and

science, and slowing the development of renewable energy.

1 Sudanese diplomat and lead negotiator for the G77 bloc of countries at the 2009 UN climate change negotiations in Copenhagen.

Fossil fuel dependence is bad for economies and societies, even before its contribution to climate change is considered.

Divestment is a powerful tactic for stigmatising fossil fuel companies. Divestment helped make SA a democracy. Fossil fuel companies are becoming highly sensitive to divestment pressure.

UCT is a leading centre of learning in South Africa and Africa and has already made strong commitments to sustainability and to addressing poverty and inequality.

It is morally wrong to be invested in fossil fuels. It is also likely a very poor investment. Divestment creates opportunities for creative reinvestment. Continued fossil fuel investments defy intergenerational justice and fuel ecocide. Others are already acting. Will UCT be a laggard? Globally, support for divestment is growing fast. Conclusion.

Humanity has set a 2 °C target for limiting global warming – but even 2 °C would bring severe impacts for AfricaAll the world’s governments have agreed, in international climate change negotiations, that global warming should be kept below two degrees. But representatives of developing countries, which are more vulnerable than most developed countries, have called for even lower targets.

At the UN Framework Convention on Climate Change (UNFCCC) negotiations in Copenhagen in 2009, Sudanese diplomat Lumumba Di-Aping, then lead negotiator for the G77 bloc, which included most developing countries, referred to the two-degree target as ‘a suicide pact’. ‘2 °C is certain death for Africa,’ he said, referring to the IPCC’s AR4 report, and arguing that the 2 °C target had ‘no basis in science’.

He is not alone. Others agree that humanity’s target for limiting warming should be lower – no more than 1.5 °C:

• Following the brutal Typhoon Haiyan, the Alliance of Small Island States (AOSIS) stated: ‘Science has confirmed that unless we begin to reduce emissions immediately, the opportunity to keep global warming below the critical 1.5 °C threshold could be irrevocably lost.’

• ‘Our objective is to save [all of] humanity and not just half of humanity. We are here to save Mother Earth. Our objective is to reduce climate change to under 1°C. [Above this,] many islands will disappear, and Africa will suffer a holocaust,’ said Bolivian president Evo Morales in Copenhagen in 2009 at the COP 15 UN climate summit.

•  The Congress of South African Trade Unions (Cosatu) has said that international agreement ‘to limit temperature increases to a maximum of 1.5 degrees is essential’.2

• ‘Two degrees is not enough – we should be thinking of 1.5 °C. If we are not headed to 1.5 °C we are in big, big trouble,’ said Christiana Figueres, executive secretary of the UNFCCC in June 2011.

The 2 °C limit, expected to be roughly consistent with keeping atmospheric carbon dioxide below 450 parts per million (ppm), is a politically agreed target. Many climate scientists are not sanguine about a 450 ppm world. ‘We should not use [2 °C] as a target,’ said renowned Columbia University climatologist James Hansen in 2013. ‘It doesn’t have any scientific basis.’

Elsewhere he has written, ‘If humanity wishes to preserve a planet similar to that on which civilisation developed and to which life on Earth is adapted, paleoclimate evidence and ongoing climate change suggest that CO2 will need to be reduced from its current 385 ppm to at most 350 ppm.’3

2 COSATU Policy Framework on Climate Change: Adopted by the COSATU Central Executive Committee, August 2011. www.cosatu.org.za/show.php?ID=5679#sthash.eVpnJjCl.dpuf 3 ‘Target atmospheric CO2: Where should humanity aim?’ Hansen et al, 2008.

Nicholas Stern, former World Bank chief economist and lead author of the landmark Stern Review on the Economics of Climate Change, has said: ‘It is most important to stop the increase of flows of emissions short term and then start the decline of flows of annual emissions and get them down to levels which will move concentrations of CO2 back down towards 350 ppm.’

Governments have not yet taken actions consistent with their declared targets, and we are headed for global warming of far more than 2 °CDespite having signed up for the 2 °C target,4 with all its limitations, governments have not yet taken all the steps needed to regulate carbon emissions and prevent them from exceeding humanity’s collective carbon budget.

Certainly governments pay lip service to the need for cutting carbon. ‘We need government, businesses and society to choose low-carbon paths and to make those choices now,’ said South Africa’s minister in the presidency, Jeff Radebe, recently.5 But when assessed in terms of their actions, not their words (arguably the only proper way to assess politicians), politicians are failing us.

The result of this inaction is that the world is currently on course for potentially disastrous levels of climate change – an overall trend that will be even more painful for Africa.

‘Policies that have been implemented, or are now being pursued, suggest that the long-term average temperature increase is more likely to be between 3.6 °C and 5.3 °C (compared with pre-industrial levels), with most of the increase occurring this century,’ says the International Energy Agency.6

The likely consequences of our current climate trajectory are direIn 2007, Stern set out to calculate the economic costs of climate change for the UK government, producing his landmark Stern Review:

... the Review estimates that if we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more. In contrast, the costs of action – reducing greenhouse gas emissions to avoid the worst impacts of climate change – can be limited to around 1% of global GDP each year.7

Losing 20% of GDP sounds dramatic. But Stern has since reconsidered his original estimates:

Looking back, I underestimated the risks. The planet and the atmosphere seem to be absorbing less carbon than we expected, and emissions are rising pretty strongly. Some of the effects are coming through more quickly than we thought then.

What is the ultimate destination of our current carbon emissions trajectory? Potentially it is a global environment that can no longer support stable economies and societies. There is a strong chance that civilisation as we know it will end within the next couple of centuries, if not sooner. This is the scenario euphemistically referred to by scientists as ‘beyond adaptation’. This means that while it is already inevitable that we will have to adapt to a certain amount of climate change, if we fail to

4 This was the one measurable commitment in the 2009 Copenhagen Accord.5 The Times, 19 Sept 2014, p. 8.6 International Energy Agency, Redrawing the Energy-Climate Map, 2012.7 Nicholas Stern (2006). The Economics of Climate Change. The Stern Review. HM Treasury, London, Short Executive Summary, page vi.

cut our emissions dramatically there will come a point at which multiple impacts on infrastructure, health, food security and economies will pile up beyond our collective ability to adapt. As Kevin Anderson of the Tyndall Centre for Climate Research in the UK explains:

There is a widespread view that a 4 °C future is incompatible with an organised global community, is likely to be beyond adaptation, is devastating to the majority of ecosystems and has a high probability of not being stable (in other words, 4 °C would be an interim temperature on the way to a much higher equilibrium level).

Our current carbon emissions trajectory will lead to catastrophe for AfricaWhat will be the consequences of 3.6 °C and 5.3 °C climate change for Africa, if Di-Aping is correct in calling even 2 °C a ‘death sentence’?

The World Bank tells us that if the world warms by just 2 °C, a point that may be reached in 20 to 30 years’ time, we should expect widespread food shortages, unprecedented heatwaves, and more intense cyclones in Sub-Saharan Africa. Weather extremes will batter the continent’s growing informal settlements, harming the lives of people who have had little hand in raising the Earth’s temperature. We lose a possible 40% of our current maizelands. Water availability drops by 20%. The proportion of the population that is undernourished could increase by anything from 25% to 90%.

If we go beyond two degrees of global warming, the consequences will be devastating, particularly for Africa and its poor. A UNEP report concludes: ‘Africa’s survival is at risk: No continent will be struck as severely by the impacts of climate change as Africa. Given its geographical position, the continent will be particularly vulnerable due to the considerably limited adaptive capacity, exacerbated by widespread poverty and the existing low levels of development.’8

For a taste of what might be in store for parts of Africa, let us consider the example of Syria. A severe drought from 2006–2010 turned 60% of Syria’s fertile land into desert. By 2010, this drought had killed 80% of the country’s cattle.

Was this drought the result of human-induced climate change? Almost certainly. The US National Oceanic and Atmospheric Administration (NOAA) concluded in 2011 that ‘human-caused climate change [is now] a major factor in more frequent Mediterranean droughts’.

The result of this drought, combined of course with regional instability, has been to make Syrian the most violent country on Earth9 – as predicted by members of the Syrian government. A 2008 cable from the US Embassy in Damascus to the State Department, published by Wikileaks, details warnings from Syria’s UN food and agriculture representative, Abdullah bin Yehia: ‘Yehia told us that the Syrian minister of agriculture … stated publicly that economic and social fallout from the drought was “beyond our capacity as a country to deal with.”’10

In other words, both the Syrian and US governments knew that Syria was on the verge of climate-related breakdown three years before the actual collapse – yet were unable to avert it.

This bodes ill for Africa, a continent that is on average even less developed than was Syria. Climate change was a key driver of the conflict in Darfur, with the UN Environment programme concluding that: ‘Darfur ... holds grim lessons for other countries at risk.’11

8 www.unep.org/roa/amcen/docs/AMCEN_Events/climate-change/2ndExtra_15Dec/FACT_SHEET_CC_Africa.pdf9 Global Peace Index 2014.10 thinkprogress.org/climate/2014/01/22/3191081/dangerous-climate-change-impact/11 The Guardian, 23 June 2007, ‘Darfur conflict heralds era of wars triggered by climate change, UN report warns’. www.theguardian.com/environment/2007/jun/23/sudan.climatechange

Already, of the estimated 300,000 deaths caused each year by climate change, over 80% are of African and South Asian children.

If fossil fuel companies burn all their reserves, as they plan to, we will far overshoot the 2 °C targetIn a rational world, governments would have already taken the actions required to keep us below the 2 °C target, at the least, if not the 1.5 °C target actually required by science.

But the current trend is that overall emissions are continuing to grow at an alarming pace, such that we will hit our emissions ‘cap’ in just 15 years’ time.

According to Corinne Le Quéré of the Tyndall Centre for Climate Change Research in the UK, global emissions remain within the highest scenario of the Intergovernmental Panel on Climate Change (IPCC).

‘This is a 5 °C trajectory. It’s absolutely tragic for humanity to be on this pathway,’ Le Quéré said in November 2013.12

This situation has now been expressed in terms of ‘carbon budgets’. To reduce the chance of exceeding 2°C warming to 20%, as the world’s government have agreed to do, humanity cannot afford to allow its collective emissions up to 2050 to exceed 886 GtCO2. But, according to 2011 calculations, emissions from the first decade of this century already leave a budget of just 565 GtCO2 for the remaining years to 2050. Meanwhile, the total carbon potential of the Earth’s known fossil fuel reserves comes to 2795 GtCO2. (65% of this is from coal, while oil provides 22% and gas 13%.)13

In other words, if the world’s fossil fuel companies follow their business plans and burn all their reserves, there is no chance of preserving a human-friendly climate.

Fossil fuel companies are not just wrecking the climate, but also hacking democracy and science, and slowing the development of renewable energy.One would think that companies with a business plan based on what science shows to be massive indirect genocide would by now be social pariahs, their activities outlawed by governments around the world. This has not happened, however, because fossil fuel companies have corrupted many governments around the world by direct and indirect means. It is a widespread failure of good governance that has forced the creation of the movement for fossil fuel divestment.

‘We’ve had nearly a century of universal suffrage now, and what happens is capital finds ways to protect itself from, you know, the voters,’ writes conservative UK commentator Robert Staines.14 The BBC’s economics editor, Robert Peston, has observed: ‘To put it another way, the voices of

12 Stephen Leahy, 19 November 2013, ‘Carbon Emissions on Tragic Trajectory’, Inter Press Service. http://www.ipsnews.net/2013/11/carbon-emissions-on-tragic-trajectory13 Analysis from carbontracker.org. ‘Unburnable Carbon – Are the world’s financial markets carrying a carbon bubble?’

the super-wealthy are heard by politicians well above the babble of the crowd... It means that we are more vulnerable than perhaps we have been since the nineteenth century to the advent of rule by an unelected oligarchy.’15

In the case of Shell, Wikileaks revealed that the company had gone as far as infiltrating the Nigerian government to ensure it had access to all political decisions relating to its business.16

In the West, this influence is blatant. No less than four of the ministers in the current British government have links to Shell, while a third are linked to the broader fossil fuel industry.17

In the US, the fossil fuel lobby was spending $440,000 a day18 on lobbying Congress in 2012. Congress is arguably the single most concentrated point of political resistance to climate change action on the planet, but has been described by The New York Times columnist Thomas Friedman as ‘a forum for legalised bribery’.19 Quite apart from that vast and clearly visible stream of money from fossil fuel companies to climate change-denying politicians, research shows that US democracy has been hollowed out:

Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence.20

In South Africa, we are ignorant of the full extent of the influence of fossil fuel companies on our politicians – because there is no transparency or regulation of private funding to political parties and politicians in South Africa, and most of our parties have strongly resisted transparency.21 However, the slow response of Eskom to climate change and its sharply increasing subsidy to emerging coal interests are strongly suggestive of political influence overwhelmingly favouring coal over renewables.

In short, the reality for all too many modern nation states is that they face a global economic order in which reckless corporate power is in the ascendant, threatening the livelihoods of the poor and middle classes with no respect for borders, and against which most politicians cannot or will not deploy their full authority.22

The full extent of this influence is demonstrated not only by the failure to properly regulate carbon emissions, but by the extent of the subsidies still given to fossil fuels, vastly larger than those given to the emerging cleaner technologies that are so urgently needed. Worldwide subsidies for fossil fuel consumption amounted by one estimate to an estimated $523 bn in 2011, an increase of 27% over 2010. The International Monetary Fund estimates that on a ‘post-tax basis’, [factoring in negative externalities] total subsidies are much higher, at $1.9 trillion. Meanwhile, global subsidies

14 The Guardian, ‘How power works in Britain’, 26 August 2014. www.theguardian.com/society/2014/aug/26/the-establishment-uncovered-how-power-works-in-britain-elites-stranglehold.15 Robert Peston, Who Runs Britain? London: Hodder and Stoughton, 2008, p.346. Quoted in David Beetham, Unelected Oligarchy: Corporate and Financial Dominance in Britain’s Democracy.16 The Guardian, 8 December 2010, ‘WikiLeaks cables: Shell's grip on Nigerian state revealed’. www.webcitation.org/6SwuVg1FM . 17 The Guardian, 10 March 2013, ‘Ministers’ oil industry ties prop up high-carbon policy, report alleges’. Also, World Development Movement, March 2013, ‘The Fossil Fuel Web of Power’, web graphic archived at www.webcitation.org/6SwtuiK4z . 18 Do The Math, documentary available online via 350.org . 19 28 September 2010.20 Martin Gilens and Benjamin Page, 2014. ‘Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens’. www.webcitation.org/6SwuEsA76. For more detail on the corruption of US democracy by the fossil fuel industry, see the 2014 Greenpeace report, ‘The Kingpins of Carbon and Their War on Democracy’.21 In 2005, all the South African political parties of the day opposed a court application by IDASA for access to parties’ financial records under the Promotion of Access to Information Act. 22 The Guardian, 25 August 2014. www.theguardian.com/commentisfree/2014/aug/25/guardian-view-scotland-debate-salmond-darling .

and financial support for renewable energy (excluding large hydropower) in 2011 totalled just $88bn, one sixth of fossil fuel subsidies.23

A full account of the anti-democratic activities of these companies must include their now extremely well-documented attempts to oppose and muddy the science on climate change through very large-scale propaganda efforts modelled on, and sometimes even using the same people as, the anti-science campaigns of the tobacco industry. Even as they have been forced to admit publicly to the human contribution to global warming, they have continued to fund organisations and individuals that work to create doubt in the public mind.24 Among these funders of climate denial are companies with significant South African footprints, such as Shell, BP, Arcelor Mittal and Eskom.25 On top of this, polluters use non-disclosure agreements to force silence on their victims, stifling informed public debate.26

Fossil fuel dependence is bad for economies and societies, even before its contribution to climate change is consideredThe World Health Organisation estimates that 3.7 million deaths annually are linked to outdoor air pollution (from various sources).27

The world’s dependence on fossil fuels is an enormous source of geopolitical and economic instability. Rising fossil fuel prices contribute to war, increased food prices and increased transport costs, with an undue burden on the poor. It is now widely acknowledged that the war in Iraq, estimated to have contributed to the deaths of over a million people, was waged in pursuit of oil.

'I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil,’ wrote Alan Greenspan, the former chairman of the US Federal Reserve Bank, in his memoirs.

‘The US military is not in the Persian Gulf to protect oil destined for the US so much as to secure the oil supplies of Europe, Japan and South Korea, and to implicitly blackmail China,’ Michael Lind recently observed in The Spectator.28

Meanwhile, countries like Iceland, with a high proportion of renewables in their energy mix, are enjoying the consequent increased economic stability. As the Icelandic president, Olafur Rangar Grimsson, observes:

[T]he development of a clean energy economy is a good insurance policy against long-term difficulties which inevitably will continue to follow the financial crises of the future; against making the downturns of economic cycles too painful.

Divestment is a powerful tactic for stigmatising fossil fuel companies. Divestment helped make SA a democracy. Fossil fuel companies are becoming very sensitive to divestment pressure

23 Ren21, 2013, Sidebar 6, page 67. www.worldwatch.org/ren21s-renewables-global-status-report-2013 . 24 ‘Denialists’ disdain for science is a vital human rights issue’, Business Day, 14 January 2014. wp.me/ppym-aH. The history and extent of climate change denialism is perhaps most exhaustively chronicled by historian Naomi Oreskes in her book Merchants of Doubt, www.merchantsofdoubt.org.25 Greenpeace, 2011, ‘The Dirty Dozen in Durban’.26 This is documented in the South African film directed by Jolynn Minnaar, ‘Unearthed’, and elsewhere. www.un-earthed.com.27 WHO, 25 March 2014, ‘7 million premature deaths annually linked to air pollution’. www.who.int/mediacentre/news/releases/2014/air-pollution/en/. However, not all the deaths due to outdoor air pollution are attributable to the burning of fossil fuels.28 Michael Lind, 30 August 2014, ‘The wars that really are about the oil’. www.webcitation.org/6T3OlyBQB.

Divestment is the process of using investment choices to withdraw funds from the rogue companies that are heavily invested in fossil fuels (particularly the 200 carbon majors identified by Carbon Tracker) and ideally reinvesting those funds in socially responsible, low carbon enterprises.

Did divestment work as an anti-apartheid tactic? Twenty-five years on, opinions remain divided. But it seems some rather key observers agree that they were effective:

When I met FW de Klerk, the last president of the apartheid regime, in Chicago two years ago, he was clear: ‘When the divestment movement began, I knew that apartheid had to end.’ And when I met with Mandela in 1990 in New York, he said that divestment was a crucial factor in ending apartheid.29

One study has concluded that ‘… direct impacts of fossil fuel divestment on equity or debt are likely to be limited.’ But also that ‘[t]he outcome of the stigmatisation process, which the fossil fuel divestment campaign has now triggered, poses the most far-reaching threat to fossil fuel companies and the vast energy value chain.’30

As author Naomi Klein observes, the power of divestment campaigns is that they are:

…taking aim at the moral legitimacy of fossil fuel companies and the profits that flow from them. This movement is saying that it is unethical to be associated with an industry whose business model is based on knowingly destabilising the planet’s life support systems.31

Probably the most powerful indication that fossil fuel divestment could be effective is that the companies targeted are complaining about the divestment movement with increasing stridency. In Australia, the mining lobby has gone as far as to contemplate asking for a ban on divestment activism.32

UCT is a leading centre of learning in South Africa and Africa and has already made strong commitments to sustainability and to addressing poverty and inequality.UCT is a signatory to the ISCN-GULF Sustainable Campus Charter and the Tailloires Declaration, which states that ‘urgent actions are needed to address these fundamental problems’ of ‘environmental pollution and degradation, and the depletion of natural resources’. It is hard to reconcile continued investment in fossil fuels with these long-standing commitments. We hope that the university is ready to live up to the very specific words of these declarations and undertake correspondingly transformative action.

This is, of course, far from being the only context in which the university has explicitly committed itself to transformative social engagement. The Vice-Chancellor writes on the UCT website that the university ‘has a proud tradition effecting social change and development’, and that UCT students ‘are introduced to a life of leadership and service through social engagement’.

The UCT African Climate & Development Initiative (ACDI) website33 states that ‘Climate change is a fundamental threat to sustainable development and the fight against poverty’.

29 Adele Simmons, 15 December 2013, ‘Skeptics were wrong; South Africa divestment worked’, Chicago Tribune.30 Smith School of Enterprise and the Environment (University of Oxford), (2013, undated) ’Stranded assets and the fossil fuel divestment campaign: what does divestment mean for the valuation of fossil fuel assets? ’ 31 Naomi Klein, 17 October 2014, ‘Climate change: how to make the big polluters really pay’, The Guardian.32 The Guardian, 18 April 2014, ‘Mining lobby may join industry push to ban environmental boycotts’.33 African Climate & Development Initiative. www. acdi .uct.ac.za .

UCT’s Poverty & Inequality Initiative asks why inequality is deepening in South Africa – even as UCT profits from investments that inflict climate change on the poor!

As Richard Calland34 said at the Fossil Free UCT launch on 30 July 2014:

Climate change hits the most vulnerable the hardest. Therefore it is about issues of equity, social responsibility, social justice… This is not an issue where there is a shortage of knowledge or a shortage of money. This is a matter where there is a shortage of will… We know how to fix it… It’s just a question of making the right decision to do so.

… Universities to my mind have a responsibility to lead because they have the intellectual horsepower, because they have the convening power, because they have a particular position and status in the community, because they have the responsibility to teach and to research.

A university that has that knowledge, that has the ability to shine this light in the crevices of these difficult issues, has in my view a responsibility to act in a way that is consistent and that is not hypocritical… UCT runs the risk that its reputation will be sorely undermined if it continues to invest in fossil fuel industries.

It is morally wrong to be invested in fossil fuels. It is also likely a very poor investment.There are increasing warnings coming from the economics and investment world over the dangers of being heavily invested in fossil fuels. If international negotiations lead to binding emissions reductions targets, the reserves on which the value of fossil fuels companies is based will become so-called ‘stranded assets’.

The governor of the Bank of England, Mark Carney, has said that the ‘vast majority of reserves are unburnable’ if global temperature rises are to be limited to below 2 °C.

The cofounder and chief investment strategist of Grantham Mayo van Otterloo, Jeremy Grantham, was identified by Bloomberg Markets in 2011 as one of 50 individuals having ‘the ability to move markets or shape ideas and policies’. He acquired particular renown after predicting and dodging the sub-prime bubble in 2008. GMO manages over $150 billion in assets (roughly 400 times the size of the UCT endowment). In May 2013, he outlined the simple business case for getting out of fossil fuels:

I believe anyone investing in tar sands is very likely to end up with stranded assets in the next decade or two. Solar is getting cheaper by the minute, whereas petroleum is getting more expensive. It is only a matter of time before their expenses cross.

Some market commentators are extremely worried that there is a possible bubble in the fossil fuel industry. A landmark article in the conservative UK Daily Telegraph, long the home of climate deniers and cheerleaders for fossil fuels, recently concluded that:

The epicentre of irrational behaviour across global markets has moved to the fossil fuel complex of oil, gas and coal. This is where investors have been throwing the most good money after bad. They are likely to be left holding a clutch of worthless projects as renewable technology sweeps in below radar, and the Washington-Beijing axis embraces a greener agenda.

Globally, the overall trend is for the costs of nuclear energy and fossil fuel generation to continue to increase, while the costs of renewables continue to decline. It seems most probable that the best investments are in the emerging technology. According to analysis by Citibank, in countries like

34 Calland is an associate professor in the UCT Law Faculty.

Chile the so-called shale gas revolution is already taking a back seat to solar. The costs of solar energy have reached socket parity (equal cost to consumers) in many countries, and grid parity is approaching fast. ‘Solar is more affordable to develop in most regions globally.’35

However, even if divestment were to bring a hit on returns, that is preferable to the consequences if we continue on the fossil fuel path.

In 2006, the Stern Review concluded that we should immediately invest 1% of world GDP to combat climate change. Otherwise, the resulting climate chaos could cost rise to costing 20% of world GDP per year.36 (Beyond that, the concept of GDP may cease to be meaningful.)

Divestment creates opportunities for creative reinvestment‘The Age of Renewables is Beginning’ trumpets a headline – not from Greenpeace, but from Citibank. This analysis concludes that renewables easily beat coal and nuclear on a levelled cost of energy (LCOE) basis, and are close to outpacing natural gas technology as well.37 A writer in the Washington Post argues for ‘[t]he coming era of unlimited – and free – clean energy’, noting that solar power has doubled in capacity every year for 30 years, and suggesting that it is 20 years away from supplying 100% of humanity’s energy needs.38

Detailed scenarios39 for transitioning the world to 100% renewable energy within just three decades have been worked out. The obstacles are no longer technical – they are purely political, and the politics are still driven by the deeply entrenched but undemocratic power of the fossil fuel lobby.

The full emerging potential of renewable energy is beyond the scope of this paper, but can perhaps be in part communicated by the graph below,40 which shows the astonishing plummeting costs of solar energy compared to the steadily rising costs of fossil fuels.

A recent Deutsche Bank report indicates that by 2016, solar electricity will be as cheap or cheaper than average electricity prices in no less than 47 US states.

There are significant opportunities for creative reinvestment of money that is withdrawn from fossil fuel investments. Carleton College in Northfields, Minnesota has an on-campus wind turbine that 35 Citibank, 28 July 2014, ‘Energy 2020: The Revolution Will Not Be Televised as Disruptors Multiply’. www.webcitation.org/6TVmcOUoY.36 Julie Rehmeyer, 21 May 2010, ‘Discounting' the future cost of climate change’, Science News. www.webcitation.org/6TVniry64.37 Citibank, 23 March 2014, ‘Evolving Economics of Power and Alternative Energy'. www.webcitation.org/6Swv8ahoX.38 Vivek Wadhwa, 19 September 2014. www.webcitation.org/6SwvS0vvB. 39 WWF. The Energy Report: 100% Renewable Energy by 2050. 40 EIA, CIA, World Bank, Bernstein analysis. Also see Tree Media film on how ‘green tech’ can meet energy needs: youtu.be/XKoch5z0B9Q.

supplies 40% of campus electricity needs. Many US universities are finding that the returns from decarbonising their operations beat the returns from conventional investments.41

Continued fossil fuel investments defy intergenerational justice and fuel ecocideThe principle of intergenerational justice is a matter of obvious and simple morality. It is also codified in the South African Bill of Rights, which specifies that:

Everyone has the right… to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that: i) prevent pollution and ecological degradation.

Students are leading the campaign for fossil fuel divestment around the world. But students are those least responsible for the crisis we face. Yes, students need to pursue this struggle. But they need to pursue it because older generations, particularly leaders in big business and governments, are failing in their responsibility to act. Some in the university community have suggested that it is principally up to students to pursue this campaign. This is both an abdication of intergenerational responsibility and a failure to discharge their pastoral duty to the young people entrusted to them during their time at the university.

There is also a growing international movement for recognition of the crime of ecocide, the wholesale destruction of biodiversity – which is both a cause and an effect of climate change.

Others are already acting. Will UCT be a laggard?So far, 13 American universities have made commitments to varying degrees of divestment. Notably, Stanford University has committed itself to dropping all its coal investments. In October 2014, Glasgow University became the first European university to divest. Two Australian universities have divested. Cities that have committed to divestment include Seattle, San Francisco, Portland, Boulder, Oxford in the UK, and Dunedin in New Zealand. A great many churches, such as the Australian Anglican Church, as well as many foundations have also committed themselves to divestment.

Globally, support for divestment is growing fastKey figures are also weighing in to support divestment. A statement from 190 faculty members at Harvard issued in April 2014 reads:

Our University invests in the fossil fuel industry: this is for us the central issue. We now know that fossil fuels cause climate change of unprecedented destructive potential. We also know that many in this industry spend large sums of money to mislead the public, deny climate science, control legislation and regulation, and suppress alternative energy sources.

‘Through policy reforms, we can divest and tax that which we don't want, the carbon that threatens development gains over the last 20 years,’ said World Bank president Jim Yong Kim at the 2014 World Economic Forum.

Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change, has said:

Investment decisions need to reflect the clear scientific evidence, and fiduciary responsibility needs to grasp the intergenerational reality: namely that unchecked climate

41 ‘Where should the divestors invest?’ Economics for Equity and Environment blog. www.webcitation.org/6TVHs7pkc.

change has the potential to impact and eventually devastate the lives, livelihoods and savings of many, now and well into the future…

US president Barack Obama, speaking on climate change at the University of California, Irvine in June 2014, has said: ‘You need to invest in what helps, and divest from what harms.’

ConclusionThere is almost universal agreement that climate change is the most urgent issue facing humanity.42

The onus is on those who argue against divestment to propose alternative strategies for breaking the political deadlock that we are up against.

It appears that some on the UCT Council fear that if they respond to this particular call for socially responsible investing, the door will be opened to other issues. But it is both unlikely that any other issue quite as urgent as climate change will come knocking, and unlikely that the pursuit of broader socially responsible investing will hurt UCT’s long-term returns. As we have argued, it may even help them.

The UCT Council obviously has a duty to manage the resources at its disposal to ensure that the university is able to meet its needs. But that responsibility cannot be discharged in a way that will add to the misery of Africa’s poor; that will contribute to compromising, if not destroying, future economic and social development; and that may leave today’s students highly qualified but stranded in a world of ever-increasing misery.

The leader of 350.org, Bill McKibben, who helped initiate the divestment movement, has described the simple logic of this campaign: ‘If it is wrong to wreck the planet, then it is also wrong to profit from the wreckage.’

Companies such as Sasol, BHP Billiton, Anglo American, Exxaro, Xstrata and Shell are corporate killers. They have known the effects of their business model for decades now, yet still fight change, despite earning vast profits that could be deployed into transforming their businesses.

Archbishop Desmond Tutu, long the moral conscience of South Africa and a firm supporter of the international divestment campaign, has called on UCT to divest, saying, ‘I ask UCT to examine urgently the extent of your investments in fossil fuel companies and to make a strong commitment to phasing them out as soon as possible.’ During the UN climate summit in New York in September 2014, UCT’s own chancellor, Graça Machel, urged world leaders to ‘have the courage to tell business that it is not only about the profits but about our collective survival and wellbeing’.

In a world where governments were responding quickly and competently with policies that matched the threat of climate change, there would be no need for UCT to divest. Unfortunately, we do not live in that world. UCT is a place of learning – and a place of privilege. Staff, students and faculty are arguably far better equipped than most South Africans to properly understand the climate issue and the need for action. A university is a place where we begin to create the future, not a place to participate in its destruction.

If UCT is indeed the leading university on the continent most vulnerable to climate change, then we have a particularly urgent responsibility to act, and act swiftly. Given the pace of the international divestment movement, university leaders will probably not have to wait long to feel vindicated in what may feel today like an uncomfortable decision.

42 ‘If we take a global view, then [climate change] is clearly the world’s principal long-term worry.’ Thomas Piketty, Capital in the 21st Century, p. 567. Also, see the views of opinion makers polled at the World Economic Forum in 2013/14.

– Please sign our petition calling on UCT to divest. If you’d like to be involved in our Fossil Free UCT campaign, or the broader Fossil Free South Africa campaign, please also register your support.