Campus protests have sprung up across the country. Despite what you think of them (and we’re not getting into the details here, thank you) there is one important part of those protests that deals with finances: divestment. What is it and how does it work?
Here’s Five Fast Facts about Divestment:
- 🤔 What Is It? - At its most basic, divestment involves an investor or institution selling off its share of a company to avoid complicity in any activities that might be seen as damaging or unethical.
- ✂️ Why Would They Do That? - Divestment is intended to reallocate funds to more ethical investments, but also make a public statement that can pressure a company or government to change.
- 📜 Has It Happened Before? - Yes. In the 80s, Columbia University students were able to get the college to divest from South Africa. Columbia and other universities have also divested from fossil fuels and private prisons.
- 🤷 Does It Work? - Not really. Research shows that there’s very little correlation between divestment and stock value or a company’s behavior. It’s basically symbolic.
- 🎓 How Does It Work for Colleges? - Many university endowments are managed by asset managers and are invested in dense, confusing, and hazy private equity funds. The global economy would make it almost impossible to completely divest from it.
🔥Bottom line: Like anything else associated with any economy, divestment is confusing, weird, and very specific. And to be absolutely clear: we are not weighing in on the protests at all and we do not have an opinion about them. But we hope this article helps you understand at least part of what is happening.
What do you think of divestment?
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