Dimitri Lascaris discusses whether divestment or engagement is the better strategy for effecting meaningful change in the relationship between higher education and the fossil fuels industry
SHARMINI PERIES, TRNN PRODUCER: Welcome to The Real News Network. I’m Sharmini Peries in Baltimore.
More and more universities across the continent are being asked by their student bodies concerned about the environment to divest from fossil fuels. The University of Toronto has recently been petitioned by the University of Toronto chapter of 350.org. Our guest was asked to present the petition to the president of the university.
Here with us to discuss this is Dimitri Lascaris. He’s a partner with the Canadian law firm Siskinds, where he heads the firm’s securities and class action practice. He is also a member of The Real News Network’s board.
Thank you for joining us, Dimitri.
DIMITRI LASCARIS, SECURITIES CLASS ACTIONS LAWYER, CANADA: Thank you, Sharmini. Happy to be back.
PERIES: So how did this movement get started?
LASCARIS: Well, I think a major impetus for the movement was the publication in April 2009 of a paper authored by researchers from the United Kingdom, Germany, and Switzerland in the prestigious scientific journal Nature called “Greenhouse-gas emission targets for limiting global warming”. And what this paper did was it formulated for humanity something it called a carbon budget, which is to say, the amount of CO2 that can be emitted in the future without causing average global temperatures to increase by more than 2 degrees Celcius. And we’ve already experienced an increase of 0.8 degrees Celcius.
By the way, the 2 degrees threshold is one that is not uncontroversial. In fact, there are some scientists who believe that it is too aggressive and that anything significantly above 1 percent is going to be catastrophic, particularly for drought-stricken areas of Africa and low-lying island states that could easily be swamped by rising sea levels.
But that paper nevertheless embraced the proposition that if we stayed below 2 degrees Celcius, we would be within a range of safety. And what it determined, these researchers led by a climatologist named Meinshausen, was that if we emitted 1,437 gigatons of CO2 between 2000 and 2050, there was a 50 percent chance that we would not exceed the 2 degrees Celcius limit. If we emitted 886 gigatons, so a little more than half of that amount, 1,437, then there was an 80 percent chance that we would not exceed this threshold. Meinshausen’s group also calculated that we had already emitted since 2000 240 gigatons of CO2.
So this work was then taken up by a group of green-minded investors based in London, England, who termed their project the Carbon Tracker Initiative. And what they determined, based upon public filings with the SEC, primarily, of major fossil fuel companies, was that the top 200 fossil fuel companies had collectively 2,800 gigatons of CO2 within their fossil fuel reserves and that 240 or approximately a third of the 886 gigaton limit that Meinshausen had calculated had already been emitted by the time of their study. So that meant that we could safely, between now and 2050, emit an additional 565 gigatons of CO2 without surpassing, or at least having an 80 percent chance of not surpassing the 2 degrees Celcius threshold.
So this was quite an astounding finding, because what it meant was the known reserves of the top 200 fossil fuel companies are five times as big or contain CO2 that is five times as great as the amount we think we can safely emit between now and 2050. And the markets assume that all of those reserves, when they value these companies, that all of those reserves can be extracted and burned.
So ultimately what we are dealing with here is a carbon bubble. We are dealing with major fossil fuel companies whose reserves cannot be extracted and burned without humanity potentially collectively committing suicide, to be perfectly blunt about it.
So Bill McKibben, who has been a longtime activist, since 1989, in the climate change debate, took up these studies and published what is now a famous article in Rolling Stone which described this calculus as the terrifying math of climate change, and went around the United States to generate support for, amongst other things, divestment from fossil fuels and to heighten public consciousness of the seriousness of the situation.
And as result of that initiative by Mr. McKibben, whose efforts in this space have been nothing short of heroic, a number of institutions have divested. And most notably, Stanford University announced very recently that it was going to divest from coal companies. It’s a limited success, because it’s only targeting coal companies, not oil and gas companies. But nonetheless, it is Stanford University, and that should provide a significant degree of legitimacy to the initiative.
PERIES: That’s great. How is University of Toronto, and how did the president react to your petition?
LASCARIS: Well, I was not actually, you know, focused on the University of Toronto’s relationship to the fossil fuels industry until the summer of last year. I’m a graduate of the University of Toronto Faculty of Law, and I’m asked to speak there as a guest lecturer frequently, so I follow fairly closely developments at the faculty. In June of last year, the faculty announced that it was awarding an honorary doctorate to a titan of the Canadian oil industry, whose name is Murray Edwards. He’s one of the wealthiest individuals in Canada. Wikipedia describes him as the individual who perhaps has the most at stake on the planet in the tar sands in northern Alberta. The company that he cofounded and of which he remains a substantial shareholder and a board member, Canadian Natural Resources has announced plans to spend $25 billion to develop the tar sands. And I was quite taken aback that my alma mater was awarding a doctorate to Mr. Edwards.
This caused me to inquire further, and I found out that the endowment of the university is heavily invested in the fossil fuels industry. In fact, its single biggest holding last summer was in Shell. I believe it had a $10 million holding. So at that point, I came to the conclusion that as a matter of good conscience I didn’t think I could continue to be a guest lecturer at the faculty. And I took that question up with senior members of the faculty.
And what I was urged to do was to try to effect change from within, rather than to withdraw my support from the faculty in potentially a public matter to try to generate support for divestment. And this led me to learn of the chapter of 350.org of the University of Toronto. And I was pleasantly surprised to find that they’d already done a great deal of work in this regard, that the students who made up this chapter had assembled a petition and had put together a very compelling 190 page brief, which they wanted presented to the University of Toronto president.
And when I was put in contact with them, I was honored to be asked to make that presentation. And I did that in March of this year.
And we were very gratified to learn a few days later that the University of Toronto’s president has struck an advisory committee for the purpose of assessing the proposed–. Now, that means that there’s going to be a debate.
PERIES: And I understand, Dimitri, you’re being asked to debate. Is it divestment or engagement that is a better strategy for effecting meaningful change in terms of investment in this area. So what are you going to argue?
LASCARIS: Well, the first thing I’m going to argue is that engagement has not only been a colossal failure; it is doomed to be a colossal failure. And that is simple for this reason, as Naomi Klein has said: the business model of fossil fuels companies is to wreck the planet. It is written into their DNA to develop oil and gas reserves, to exploit oil an gas reserves, and to sell oil and gas reserves to the public to be burned. And any engagement policy is effectively trying to change the way they fundamentally do business, and in my view, that’s not something that can realistically be achieved.
And a perfect example of this was a recent success or what was believed to be the success of an activist group of shareholders in persuading Exxon Mobil to disclose in its shareholder disclosures the risks arising from the fact that its reserves greatly exceed what can be safely extracted and burned. And, you know, at the time, everyone thought that this was a gamechanger, but when in fact the new ExxonMobil effectively said was, well, we don’t think that we’re going to have to leave any of our reserves in the ground. We think it’s highly likely that we’re going to be able to extract and exploit all of them.
And that’s just as I say. If you’re long the fossil fuels industry, if you’ve investing in the fossil fuels industry, whether wittingly or unwittingly, you are making a wager that humanity is going to collectively commit suicide.
And that representation by ExxonMobil, in my view, is completely devoid of credibility. A much more effective strategy is to divest on a massive scale, which would cause demand for the shares of these companies to go down, and therefore their cost of capital to go up. They will become less profitable. And quite apart from that, the divestment will stigmatize these companies and, I think, send a powerful moral message to the public at large that their mission is not consistent with the interests of humanity, and particularly of future generations. And we need to disengage.
That’s going to be the view that we’re going to be articulating, and I’m hopeful that the administration of the university, amongst other universities, will be persuaded at the end of the day to do the right thing.
PERIES: Well, I wish you a favorable outcome, Dimitri. And our time is up. So think you for joining us on The Real News Network.
LASCARIS: Thank you.
PERIES: And thank you for joining us on The Real News Network as well.
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