Taking a multidisciplinary approach in the constructivist tradition, this Article combines discourse analysis, a survey, and legal analysis in an exploration of the fossil fuel divestment campaigns at Harvard and Stanford. The legal analysis identifies the fiduciary framework through which divestment decisions must be made, while the survey and discourse analysis give insight into whether campaigners exhibit a sophisticated approach to that framework Specifically, this Article argues that because fiduciary law and the rules governing divestment set the bounds of the possible in the endowment management arena, and because those rules contain specific prohibitions against politically motivated divestment, the way campaigners talk about divestment matters. By contextualizing divestment law and the campaign discourse within the broader cultural politics of climate change, the article reveals the relationship between discourse and policy formation in the divestment movement.
Ideally, the campaigners should align their discourse with the rules governing divestment if the endowment trustees are the target audience. Yet as the analysis reveals, the campaign is simultaneously targeting multiple audiences and advancing multiple goals. Distinct and at times disparate discursive narratives are employed, symptomatic of the broader ideological clashes within the cultural politics of climate change. While the neoliberal-managerial discourse variant aligns fairly well with the rules governing divestment, its rhetorical gains are undermined by a politicized eco-radical discourse that chafes against the divestment rules (viz., prohibitions against politically motivated and blanket industry-wide divestment). The dual discursive deployment and discursive misalignment incurs opportunity costs for the campaigners. Additionally, the survey and discourse analysis results reveal an agenda well beyond the scope of endowment management.
The final analysis revisits the goals of the campaign and argues that fiduciary law can accommodate environmental, social, and governance concerns. Those seeking to "green" the endowments are more likely to succeed if they frame their arguments and methods as consistent with fiduciary duty and endowment finance. Ultimately, however, such accommodation will fail to satisfy some campaigners. Those seeking radical political and socioeconomic reform through the divestment movement are unlikely to find it in the realm of endowment management.
INTRODUCTION 338 II. BACKGROUND 340 A. The Fiduciary Law of Endowments 340 B. Fiduciary La w and Socially Responsible In vesting 343 C. Socially Responsible In vesting and University Endowments 350 1. Socially Responsible In vesting at Harvard 350 2. Socially Responsible In vesting at Stanford 352 D. The Law of Divestment 353 1. The Standard for Divestment 353 2. Presumption Against Divestment 355 E. History of Divestment at Harvard and Stanford 358 F. Climate Change as a Unique Divestment Issue 362 G. The Fossil Fuel Divestment Campaigns 368 1. Divest Harvard 371 2. Fossil Free Stanford 373 3. General Success to Date 374 4. A Comparative Note on Campaign Strategy 376 III. DISCOURSE AND THE CULTURAL POLITICS OF DIVESTMENT 377 A. Discourse and Dominance 378 1. Narratives 380 B. Legal Discourse 380 C. Climate Discourse and the Cultural Politics of Climate Change 382 1. Managerial and Radical Climate Discourses 384 2. Ecospeak 386 D. The Political Climate 387 IV. METHODS AND LIMITATIONS 389 A. School Selection Methods 389 B. Discourse Analysis Methods and Limitations 390 C. Survey Methods and Limitations 391 V. ANALYSIS 393 A. Discourse Analysis 393 1. Time Is Up 393 2. Fossil Fuel Companies Are Villains 395 3. Divestment is Heroic 397 B. Narrative Tensions 397 C. Survey Analysis 399 1. Survey Results 399 a. What do you hope to achieve through the divestment of fossil fuels? (Q4) 399 b. Why divestment over other forms of climate activism? (Q5) 400 c. How familiar are you with "fiduciary duty"? (Q12) 401 d. Did you intentionally frame your arguments to address the fiduciary obligations of the Board of Trustees? (Q18) 402 e. Do you feel the fiduciary obligations of the Board of Trustees and endowment managers help or hurt the divestment campaign s efforts? How so?(Q19) 402 D. Summary of Discourse and Survey Analyses 403 VI. MISALIGNMENT AND OPPORTUNITY COSTS 404 A. Audience and Arena 404 B. Motives and Goals 405 C. Opportunity Costs 407 1. Rhetorical Costs 408 2. Climate Action Costs 409 3. Social Costs 410 VII. FIDUCIARY LAW AND THE LAW OF DP/ESTMENT, REVISITED 413 A. The Law of Divestment 414 B. Legal Constructivism Revisited 416 C. Fiduciary Approaches to Socially Responsible Investing and Climate Change, Revisited 418 VIII. CONCLUSION 422 APPENDIX 423 I. INTRODUCTION
U.S. college and university endowments hold vast sums of wealth. (1) Harvard's endowment, the largest in the world, reported a value of $35.7 billion in 2016. (2) Coinciding with the strength of endowments has been a shift in the expectations placed on universities to solve economic and social problems, (3) and a growing trend in fiduciary finance towards greater inclusion of socially responsible investment (SRI) in charitable fund management. (4) The broader cultural clashes in environmental politics and the debates over the role of universities and finance in a climate-conscious society converge in the arena of fossil fuel divestment by endowments. (5) Campaigners promoting divestment may find the state of flux in SRI and endowment management to be advantageous. (6) Yet because the bounds of the possible in the arena of endowment management are circumscribed by fiduciary law, it is essential that the divestment campaign discourse "benefit from a facade of legitimacy" that presents divestment as consistent with and supportable by the structures, principles, and rules governing endowment divestment. (7) Taking a multidisciplinary approach in the constructivist vein, this Article argues that the ideological origins and radical political undertones of the campaign may impact the ability of the campaigners to effectively harvest that benefit. (8)
This Article uses the fossil fuel divestment campaigns at Harvard and Stanford, home to two of the world's largest endowments, (9) as case studies to explore how fiduciary law and the cultural politics of climate change shape the campaigns. A combination of discourse analysis, a survey of campaigners, and legal analysis are employed. The analysis focuses on the campaign's arguments for divestment over and before attempting insider strategies (10) because this issue is both a point of cleavage between competing ideologies and a pivotal cog in the legal standard for divestment, thus providing insight into the "real" agendas and ideologies of the campaigners. (11) The results identify costly rhetorical and strategic tensions within and between the campaigns and fiduciary law that are symptomatic of tensions between the competing worldviews dominating climate politics. In the final analysis, the goals of the campaign are re-examined, and fiduciary law is revisited as a means of reconciling environmental, social, and governance concerns with endowment management.
A. The Fiduciary Law of Endowments
Endowments are charitable trusts and endowment managers are trustees whose fiduciary duties are legally enforceable. As such, for endowment managers, fiduciary law is the framework through which all investment decisions must be guided. It speaks a specific language that the ears of fiduciaries are attuned to hear (and legally obligated to listen to) as their guiding voice. In the language of rhetoric, fiduciary law can be thought of as a vocabulary and a grammar governing the debate over divestment; it defines acceptable words and terminology while providing the rules by which those words and terms may be accepted.' (2) Thus, fiduciary law defines the boundaries of possible outcomes in the endowment arena while also providing the rules of play.
Fiduciary law is a particular breed of law that arises from a relationship of trust--the word "fiduciary" comes from the Latin fiducia, meaning "trust" or "confidence." (13) Based in common law, fiduciary law differs from state to state, but both California and Massachusetts have adopted the Uniform Law Commission's Uniform Prudent Management of Institutional Funds Act (14) (UPMIFA), which governs endowments. Fiduciary law applies in relationships of trust where property is granted by one party--the grantor--and discretionarily managed by another party--the trustee (here, the managing boards)--for the benefit of a third party--the beneficiary (here, the university). (15) In order to ensure the trust relationship remains honest and trustworthy, (16) fiduciary law imposes strict duties on trustees, including duties of loyalty, care, and prudence. (17) Fiduciary duty is the highest standard of duty implied by law. (18)
The duty of loyalty requires endowments to be managed consistently with the endowment's purpose. (19) At most schools, including Harvard and Stanford, the purpose of the endowment is to fund the school's academic mission. (20) Thus, the goal of endowment management is to generate as much income as possible for the support of the school's mission; in turn, the mission colors endowment management by placing mission-related restrictions on certain types of investments (e.g., by allowing divestment where grave social injury is occurring). (21) To preserve the atmosphere of neutrality, inclusiveness, and tolerance considered integral to educational environments, the duty of loyalty prohibits politically motivated investment decisions. (22) Like many modern institutional investors, (23) both Harvard and Stanford have SRI guidelines outlining approved consideration of environmental, social, and governance (ESG) factors. (24) Adherence to those guidelines forms part of the duties of loyalty and care. (25)...