Escalating campus protests in America have coalesced around a central demand: that their universities yank investments with companies linked to Israel or businesses that are profiting off its bombardment of Gaza.
The rally cry: "Disclose, divest, we will not stop we will not rest!"
Divestment is, very simply, cutting off capital to the company or industry or government doing something you disapprove of. It's voting with your wallet, or, in the colleges' case, your endowment.
The point is not only to reallocate funds to more ethical investments but also to take a stand publicly and, in theory, influence others' behavior, my colleague Nicole Goodkind writes.
Students at Columbia University in New York, the epicenter of the latest pro-Palestinian demonstrations, want the school to sell its holdings in Google, for one, because the company has a large contract with the Israeli government. Other protests have targeted funds run by BlackRock, arms maker Lockheed Martin, and even Airbnb, which has allowed home listings by Israeli settlers in the West Bank.
So far, administrators aren't budging.
Divestment's pros and cons
Divestment campaigns can be effective, but not always in the way they're primarily intended.
One study found that divestment campaigns targeting apartheid-era South Africa in the 1980s had almost no effect on the share prices of the companies involved. That's likely because when you sell shares, someone else in the market steps in to buy them, inviting more capital flows to the very assets you were trying to devalue.
Of course, the money is just one prong in the strategy. The real value, advocates say, lies in how divestment can change public perceptions — a useful outcome for any campaign, but one that's decidedly much harder to measure.
Divestment in Big Oil hasn't killed the fossil fuels industry, of course. But it has arguably played an outsize role in stigmatizing it.
The challenge with Israeli divestment
The current crop of campus demonstrators has tried to distance itself from the "Boycott, Divestment, Sanctions" movement, which rights groups have long rejected as antisemitic because it singles out Israel.
The students calling for divestment have said their focus is on Palestinian freedom, not on the destruction of Israel. That's a distinction that university leaders so far don't appear swayed by.
"Any university supporting divestment would be sending a clear signal that they either: a) acquiesce in; or b) support the destruction of the State of Israel and its citizens," Jonathan Macey, a professor at Yale Law School, told CNN.
An alternative protest
Critics of divestment say there are other, more effective ways to effect change.
Using the fossil fuel example, an investor could have a bigger impact by holding onto their assets and running them into the ground, Tom Johansmeyer wrote in the Harvard Business Review in 2022.
"Running off an asset instead of selling it simply means holding it until can be terminated ... This could entail holding a fossil fuel company's debt to maturity and then not renewing or extending another loan, or it could mean operating a physical asset (like a refinery) until it is no longer useful."
Of course, a complex, long-term "run-off strategy" doesn't work as well in a protest chant.
"Explaining a fossil fuel run-off strategy requires complexity, nuance, and patience," Johansmeyer wrote. "In the long run, it's worth the effort."
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