Common Doubts about Divestment

We’re trying to approach this work with humility. If you see a weakness with our strategy or a way for us to do this work better, we want to hear from you. Members of our team will be the first to admit, we can’t guarantee what the singularly best way to stigmatize investment in the factory farming industry is, but we believe that there is enough evidence in favor of divestment for it to be a worthwhile strategy to explore.

Below are some of the doubts we’ve heard raised about the value of divestment work. 

Doubt #1. An article from 2013 says the direct impact of fossil fuel divestment is limited.

This article by Ansar et al. has some limitations. It came out in the very early stages of the fossil fuel divestment movement. It was published in 2013, at a time when only a small handful of minor institutions had committed to divesting from fossil fuels. The authors were working with a very small set of data. In the seven years since the article came out there have been commitments to divest from fossil fuels from 1000+ institutions that collectively control $10+ trillion in assets. More recent articles on the topic present a general consensus that divestment work has had and will have a significant impact on the fossil fuel industry.

To say the impact of one institution divesting from fossil fuels is limited, is accurate in an academic and pedantic sense. It is like saying, the heat you can expect from a single spark is limited. While true, it ignores the fire you started with that spark.

While the article has its limitations, it makes some important points, and its point about the direct impact of fossil fuel divestment being limited is an important one that we account for in our theory of change.

Their point about direct impact being limited has also been taken out of context. While the article has been used as an argument against divestment campaigns, those who read the author's full findings will see they are quite optimistic about the impact divestment campaigns can have. When they say that “the stigmatisation process, which the fossil fuel divestment campaign has now triggered, poses the most far-reaching threat to fossil fuel companies” this is an argument for and not against the value of divestment campaigns. In fact our focus on finding ways to stigmatize investment in factory farming was inspired in part by this very article.

The goal of a divestment commitment is the public stigmatization of factory farming. These campaigns are a way to change the public narrative, to spark a movement in the financial world and beyond that will erode the financial supports and social license that hold up the factory farming industry.

The indirectness or directness of impact here is a matter of wording choice. Whether you directly convince someone to abandon the factory farming business, or indirectly convince a world of investors to avoid the industry through stigmatization, the effect is the same: less animals on factory farms.

"Advocacy groups have shut down maybe a dozen large factory farms and the industry has built about 10,000 more...advocates need to find a way to change the economics of factory farming."
OPP's Farm Animal Welfare Newsletter: Could We Go Beyond Factory Farming?

Doubt #2. Won’t there always be someone else willing to invest in this industry?

While there is some validity to this point, it side steps the fact that our work does not focus on the actual divestment of funds, but instead focuses on the stigmatization of factory farming as a horrid practice and financially unwise investment. This is a very important distinction.

It is true that, should an institution like Harvard divest and sell all of its various stock in companies tied to factory farming, other investors will buy that stock. Equity markets are fluid. But this is a point that does not grasp how the process of stigmatization takes place and the value of said stigma.

When large investors make a public commitment to divesting from factory farming it will send a clear message to the financial world: there is no future in factory farming. When Harvard divests from factory farming, they will cite financial reasons for doing so. Their divestment and even talk of their potential divestment will be covered by financial media outlets that are followed by investors around the world.

When investors see that a well respected institution like Harvard with its endowment of $40+ billion is divesting from factory farming, they will think they should too. After all, Harvard has smart fund managers, they regularly perform well financially, so if they are getting out of factory farming, other investors will think that they should get out of factory farming too.

"The financial world has deep ties to the global food system. Institutional divestment campaigns are a promising approach to directing investment away from harmful practices such as factory farming, and as such deserve serious exploration."
Dr. Jennifer Clapp - Member of the UN Expert Panel on Food Security

Doubt #3. An academic article from 1999 suggests the financial boycotts that were part of the anti-apartheid movement did not have a direct impact onaffect the South African financial markets

To say this article is an argument against divestment work would not be accurate. Like the other article mentioned above, this one happened many years before the fossil fuel divestment movement hit its stride. The authors examined anti-apartheid efforts and specificly looked at their impact on the performance of corporations and financial markets in South Africa. The authors took on an interesting topic and while one could doubt the truthfulness of their claims due to issues with their methodology, it is a moot point in this context. The findings in this paper bear no relevance on the value of divestment work, as the impact of divestment work comes less from specific divestments and more from divestment as a vehicle with which to stigmatize future investment.

Affecting financial value is related but distinct from the pressure one can apply and the feedback loop one could foster by stigmatizing investment in factory farming as a financially unwise decision. Consider the work of  corporate animal welfare campaigners. They get companies to make huge commitments. If these authors reviewed this corporate animal welfare work they would say the financial value of these companies has been unaffected, but by doing so they would ignore the fact that this corporate animal welfare work has indeed been accomplishing what it set out to do, which is to pressure companies to adopt and implement better policies. Financial value of specific companies is a poor metric to consider when the goal is stigmatizing the industry as a whole over time.

Doubt #4. If one of your main aims is media, why not just fund media coverage directly?

Even though much of the impact of our work is not media dependent, media attention from popular and financial news outlets does have a special role to play, so this is an important question to consider. 

The potential media we could see as a result of divestment work cannot be understated. Financial news outlets like Bloomberg and The Wall Street Journal run stories about divestment from fossil fuels almost daily. Since its inception the fossil fuel divestment movement has seen literally tens of thousands of articles be published on the topic. The type of media attention that divestment is given is rarely obtained by the animal protection movement. This is a missed opportunity.

It is important to remember that financial media plays a different role than popular media. Consider the media attention that Beyond Meat gets. A significant chunk of it is financial media. A type of media that animal protection groups basically never get. Beyond Meat will have done a world of good for animals even without this media, but with all this media, they can grow even quicker and continue to inspire people around the world to realize that the future is plant-based.

Financial news outlets run anything that they deem might have relevance to financial decision makers around the world.  Divestment at large institutions fits this criteria perfectly and so our efforts will be able to effectively and consistently get media in order to bring this issue to people and investors around the world in a way that traditional media strategies in the animal protection space struggle to do.

There is no future in factory farming.

Investors are abandoning industrial animal agriculture.

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