I lived in Sydney in the 1970s, and I seem to remember a fuss when it was discovered, learned or alleged, that the Sydney Anglican diocese owned some buildings close to White City, then the hub of tennis, that were used for prostitution. Again, memory tells me that those responsible said that the Church simply owned the buildings, and did not know what they were used for. ‘Well, you’d better do something about it!’, was the politically correct retort of the time. And the next day a space-ship landed, or some other event took over the front page. We learned no more.

But ‘divestment’ — getting rid of property of some kind that that has been part of your portfolio — is back on the front page. There are many reasons for divestment (it is the opposite of investment): you may want to focus on what you do best, or you need some cash, or you sell bits that are more trouble than they’re worth, and so on. But for organisations that simply hold lots of shares, like superannuation funds, or as a reserve, divestment can also occur for ethical, political or ideological reasons.

And this is plainly what prompted the Australian National University not simply to sell some shares, but also to publicly announce that it had done so: all the companies seem to be in fossil fuels and mining, the most prominent being Santos, which is the largest producer of natural gas for the Australian market. Santos felt rather piqued by the announcement, which was accompanied by revelations that in the ANU’s assessment the company was doing ‘social harm’. One might ask whether or not the various benefits of natural gas had been incorporated in that assessment.

Anyway, there were cries of outrage from the Government, the Mining Council and several companies, and enthusiastic support from those, like the Greens, who see  the University’s action as a form of boycott (which it is). Such boycotts have a long history, and I can remember them when South Africa still endured apartheid, and later when it became embarrassing for it to be known that one had shares in tobacco companies*.

For a former political scientist like me the really interesting question is the process through which the University came to make the decision. I have a modicum of sympathy for every vice-chancellor, past and present, and see in the ANU Vice-Chancellor’s statements on the matter a CEO finding the whole issue to be awkward, and that he will be damned whatever he does.

And he wrote to me, as an ANU graduate, to set the record straight, though non-graduates can read the same story in the Sydney Morning Herald and the Canberra Times. To summarise, various ‘stakeholders’ wanted the ANU to divest from all fossil fuels. Professor Young wanted a more nuanced approach, so he hired a consultant, and came up with something that looks like what Stanford University does (so it must be kosher).

The ANU seems to have a portfolio worth about $1.6 billion, and the shares involved are a trivial proportion, 1 per cent of its portfolio, and of course an even more trivial proportion of the share backing of the companies involved. But the reasonable reader might well still shake her head in puzzlement, and ask why such an action is appropriate for a University. After all, as Professor Young writes, We invest for the betterment of its community – students, staff and researchers. The returns on these investments fund scholarships, staff salaries, research projects and new infrastructure.

But then he adds, The University has a responsibility to invest wisely but also in a manner consistent with the desires of our stakeholder students, alumni and staff. There has been growing sentiment from our community to not just get a good financial return from our investments but also to invest in companies which would have activities consistent with the goals of the University, and do not manifestly cause social harm. 

The problem here is that the only group which seems to have had its view canvassed on this issue is the student body, and 82 per cent of the 2000 students  who took part were in favour of the University’s action (ANU had 18,569 students either last year or earlier this year). The ‘short version’ of the question put to them was ‘Should ANU stop investing in fossil fuels which drive dangerous climate change?’ Hmm. If alumni were asked their views I seem to have been missed. I’m not aware that staff were consulted, but parts of the ANU do seem to be basins of belief in AGW.

How did Professor Young explain the need to divest? Well, on the one hand, he said, My own views are that the world must eventually move away from the use of fossil fuels. This, however, will take decades. In the meantime we will require such fuels.

And on the other he said, What will our industries be in 20 or 30 years’ time? I am confident they will not be in producing fossil fuels. Australia should not be an adopter of alternative energy, we should be a producer.

I am reminded of the need for American Presidential candidates to be able to say the right things to the right constituencies. Professor Young said that the approach we have adopted is considered, measured, analytical and appropriately balances the desires of our community and the requirement to achieve an appropriate financial return. There you go.

My guess is that the ANU Council, no doubt amply filled with good people who like to do good things, put so much pressure on its V-C that  he had to find a way out that gave something of what they wanted, but left him able to deflect a lot of the Green push. Maybe I’m wrong. But potential donors may well wonder whether political forces like the ones in play in this case give the right protection to their donations.

* WA Opera is not presenting Carmen over the next couple of years because it is about girls in a cigarette factory. Read about it here.


Join the discussion 15 Comments

  • Doug Hurst says:

    The ANU is ignoring its majority stakeholder – tax payers like me who think fossil fuels are a blessing of nature and who know we can’t power the world with renewables in their current form. I expect divesting Anglican priests, like the one reported in today’s Australian, to put faith ahead of facts, but feel I have a right to expect better of a university.

  • Peter Donnan says:

    Your last sentence about WA Opera indicates how bizarre politically correct thinking can become.

    M. West [SMH] in commenting about ANU divestment writes : “Stanford University has done the same. No hysteria there. Glasgow has done it, too, to positive press. Add to these another dozen universities and colleges and the likes of the Rockefeller Brothers Fund, the British Medical Association, the World Council of Churches and, last week, the Anglican Church of Canberra and the Anglican Super Fund”.

    Decisions around public institution investments sometimes may occur within ethical or political frameworks but the primary drivers, one might think, would be return on investment and solid income returns.

    If for instance, there is a public moving away from fossil fuel investments etc. the share price can be affected. There is also some public odium if ANU is headlined in the media as the top subscriber in Australia to carbon/fossil investment. Santos, for instance, recently had a large write-down for its investments associated with coal seam gas in northern NSW. There is strong local opposition. Some years ago Geoff Cousins had a go at Gunns in Tasmania with considerable impact.

    Share prices are sometimes determined by a mixture of fear and greed, certainly not by scientific findings in most cases.

    It would be hard to argue, after the GFC, that the stock market is highly ethical, highly informed by science but it is very susceptible to emotion, primal instincts, stampedes etc. And that is a worry for any institutional investors, even local councils or universities.

    So even Doug Hurst’s observation below, that ANU is ignoring its major stakeholders, is debatable. The early movers, the insiders make money on the stock market and the laggards, the majority, often float on the unpredictable waves of public sentiment, barely knowledgeable about the science or lack of science around climate change. In our society money is often the measure of everything so the stock market is where it all happens!

  • David says:


    If you think the ANU’s decision to divest from fossil fuel stock was so ill advised, no doubt would would have snapped them up. Did you? 🙂

    • Don Aitkin says:

      I don’t operate in the share market, David, and all we have are some Telstra shares bought when they were offered to Telstra subscribers many years ago. They’re not worth much, but they have paid for themselves over the years, and are now worth (in today’s money only) what we paid for them…

      And I didn’t say the ANU’s decision was ill-advised. I thought the V-C had found his way out of a difficult spot. But equally, I don’t think that students are the right advisers in re buying and selling the University’s reserve equities, as it happens.

      • David says:

        Well student opinion is surely more relevant that alumni. Students are the todays clients and alumni are yesterdays clients. Why would you consult alumni ?
        Anyway looking at this price trend, selling Santos was not bad advice. They are tanking. I hope your Telstra are doing better than these.


        • Don Aitkin says:

          What expertise is it that you think undergraduate students have about the right way to manage a university’s $1.6 billion portfolio?

        • Peter Kemmis says:

          I disagree, David. Just because my children will in due course select my nursing home, does not mean that I will let them have the ignition keys until they’re old enough, and sensible enough, to be able to drive.

          And if you look at Santos even over a 3 year period, I think they’re probably a very good BUY at present. It’s a bit like studying climate – you need to select a reasonable time span, and undertake a lot of due diligence, before you can draw a conclusion. Peter Donnan’s comment below about what moves a stock market, especially in the short term, can be a confusing mixture of fear and greed. But there’s also a lot of patience, and reliance on fundamentals, exercised by many serious investors. Seriously, the average undergraduate hasn’t a clue about stocks, or the market. As for a poll of students, or anyone – goodness, you can get whatever result you want, just so long as you frame the question/s properly (shades of Shaw’s “Back to Methuselah”).

          As for the Rothschild disinvestment, what a joke! They’re in it for the money, and they’ve just been conned into thinking fossils are a sunset industry, and renewables a sunrise one, and that should be where the money is. Altruism my foot! They’ve just made a poor investment decision, but one where they hope to improve their PR. “Oh, our grandparents have truly sinned, but now we have seen the light! And as our reward, we’ll continue living off the fat of the land, thank you, and God bless us all.”

          As for “stranded assets”, there’s too much demand for fossil fuels for a long time yet, because renewables aren’t going to cut it, and we need to build a lot more nuclear capacity to replce fossil fuels in due course. Sure, solar in remote areas in the underdeveloped world has a vital place to play a la India, but I don’t accept the nonsense that’s being parlayed at present about stranded assets and the rest.

          Start looking at some evidence about the climate, David; go beyond your sociological convictions, and you’ll have a chance to recognise what I’m getting at.

          Really, I come across such nonsense at our esteemed ANU, that this latest is yet another of its ideological passion-driven whims.

          Sorry, Don, for sounding off so strongly, but really, I’ve had a gut-full of such pseudo-piety.

          • Peter Donnan says:

            Just a very brief response to one point you made about the stock market – because I understand this site is not a stock picking site. I am a very modest investor and have previously had Santos shares but after reading an article contrasting Santos and Woodside Petroleum, about a year ago, I went for WPL. Your point, Peter, about fundamental analysis and reliance upon fundamentals – especially low debt-to-equity ratios – is an approach I try to adopt.

            The general point I was making is that despite all the various learned fora, scientific journals, IPPC, Climate Change institutes, sites such as this etc – many of the issues are played out in the stock market and all sorts of drivers and crazy forces operate. If you are convinced of the fundamentals, and have business sense, such as Maurice Neumann, there is a good return on investment possible.

            What would be most disturbing is when ideological, economically illiterate groups of students, set agendas. They have been doing this for a long time, of course. It was popular in Europe in 1848. When they are joined by Greens, by people who believe ‘moral challenges’ are involved, by scientists whose methodologies are flawed, by a research system that is wonky, there the whole stock market becomes contaminated!
            And that may well be the same environment in which climate change is being analysed as well.

          • Peter Donnan says:

            One interesting point I forgot to include was that the Chief Executive of the firm [CAER] that advised ANU, Duncan Paterson, “confirmed the advice had not been about fossil fuel divestment, but rather about the social and environmental operations of each firm”.

        • Don Aitkin says:

          Why would I consult alumni? Well, I don’t think I would have gone down that path at all, but if one were, on such a matter, canvassing the nearest and dearest of a university’s very many ‘stakeholders’, I would expect the alumni to include quite a few who knew how investment in equities actually worked.

          • David says:

            Dear Don and Peter,

            If ANU wanted investment advice they should go to a
            stockbroker. But obviously the ANU was not canvassing students for that sort of advice. They are looking to massage their public profile, being a corporate citizen compete with Stamford etc, with an ultimate aim of attracting more [and dare I say brighter 🙂 ] students. The govt pay’s $50 to $100K on their behalf.

            If Woolworths were going to do market research would they
            ask people who shopped there last week or in 1972? I can
            totally understand why the ANU would not be interested the opinion of alumni, unless they make big annual donations.

          • Don Aitkin says:

            Hard to disagree, but I do think that the V-C found himself in a difficult situation.

  • Mike says:

    Seems to me most comment here is of the point. The ANU is entitled to run it’s affairs as seen fit. To advertise it on moral grounds having taken advice of a minority of it’s students is totally wrong. I am amazed at the 1.6 billion figure.

Leave a Reply