Playing the Divestment Card

In 2002, President Lawrence H. Summers infamously remarked that a petition for divestment from companies operating in Israel was “anti-Semitic in effect, if not intent.” Outrageous as many, myself included, found the accusation to be, what was most surprising was that an immensely powerful man found such a dinky little petition circulated on a rudimentary website the least bit noteworthy—that is, that he thought the petition was going to have an effect, of whatever kind.

As a signatory to that petition, I think none of us expected Harvard to divest from companies doing business in Israel. The petition represented the loosest kind of divestment demand: a blanket statement of general responsibility and a request to take a strong but vague moral stance. Historically, Harvard does not meet demands of this sort.

There is, however, another kind of divestment demand to which Harvard does sometimes respond: demands that trace the funding of evil back to Harvard’s endowment money. The call for Sudanese divestment was such a case, as were Harvard’s divestment decisions regarding tobacco companies, Gulf oil, and apartheid in South Africa.

These two kinds of divestment campaigns can both have real though very different effects. What class of argument for divestment a campaign makes will determine which of the two categories it falls into and what kind of effect the campaign can have.

The first type of divestment demand is first and foremost a tactic used by organizers to manufacture an opportunity to talk about the actual issues. In this light, Summers did the petition-circulators an immense favor: he catapulted a hopeless divestment call from obscure e-mail lists to the pages of The New York Times. Summers likely did this to establish in the national press a strong test for discrimination with respect to anti-Semitism. (Summers, notably, would never support such strong a test for discrimination on any other issue.) He harnessed the same power of the divestment demand that the organizers had attempted to use.

Four years later, the University decided to divest its holdings in PetroChina due to the company’s financial ties to genocide in Darfur. The effect was, even just superficially, quite different—public attention focused on the magnitude and intractability of the problem, and Harvard divested for the fourth time in its history.

Like Summers’ comments about Israel, the basic message about Darfur took advantage of the gravitas of the Harvard name. While the United Nations waffled on what word to apply to the mass murder, displacement, and rape going on in the Sudan, Harvard stated that the genocide in Darfur was something the University took very seriously. And, indeed, one of the most powerful statements Harvard can make is nominating what things we, as a society, should take seriously.

Nonetheless, the argument for divestment from PetroChina was much more profound than both general gravitas and the other common argument for divestment, the infliction of financial pain on evildoers. In the second category of divestment campaigns, the demand is that Harvard terminate a direct money flow between the endowment and the finances of injustice, because even just remotely funding evil is morally intolerable.

Having served on the Advisory Committee on Shareholder Responsibility during the PetroChina decision, the most important question in deciding to divest from PetroChina was the money flow. Harvard’s investment money went to a company that used that money to purchase oil from a Sudanese oil exploration effort, which in turn used that money to finance the militias that slaughter people. It mattered that it was oil; had PetroChina been in the coffee business and sourced coffee from Sudan, Harvard likely would not have divested—there was no straight line from the coffee export industry to the militias. It mattered that firewalls between the various corporate actors were judged incomplete. It mattered that the ultimate activity was immoral. But it did not matter that PetroChina was broadly associated with the Sudan, or whether Harvard’s investment was big or small, or whether other investors would fill in where Harvard stepped out, mitigating any financial punishment.

The effect of Harvard’s divestment decisions, however, hinge on their place in a broader debate. Powerful as it is, Harvard alone cannot bring down the militias, or apartheid, or the tobacco industry. Harvard’s decisions have to fit within a broader movement. On apartheid, Gulf oil, and tobacco, other investors followed suit, and Harvard’s move carried large public weight. So far, Harvard’s divestment from Sudan has been largely neglected externally, and progress on Darfur has been slow. But at least as far as PetroChina is concerned, Harvard has done what it can, and we must now look to other institutions to follow suit.

Emma S. Mackinnon ’05 served on the Advisory Committee on Shareholder Relations from the fall of 2002 to the spring of 2005.