As Pro-Palestinian protests continue to sweep across major US universities, a unifying message has emerged. From Princeton University in New Jersey to the University of Southern California in Los Angeles, the same chant can be heard: “Disclose! Divest! We will not stop, we will not rest!”
Signs marking the perimeter of the student encampment on Columbia University’s West Lawn display a similar message — from the Columbia University Apartheid Divest group — reading, “Divest all finances, including the endowment, from corporations that profit from Israeli apartheid, genocide, and occupation in Palestine.”
Israel denies accusations of genocide. The specifics of student protesters’ divestment demands vary in scope from school to school.
That coalition at Columbia wants the school to divest its $13.6 billion endowment from any company linked to Israel or businesses that are profiting from the Israel-Hamas war. Protest leaders have mentioned selling shares of major companies in speeches.
Other students, like those at Cornell University and Yale, are asking their schools to stop investing in weapons manufacturers. Other common threads include demanding universities disclose their investments, sever academic ties with Israeli universities and support a ceasefire in Gaza.
So far, universities have mostly refused to budge on any of it, and some experts doubt the effectiveness of such a campaign. But students remain steadfast in their demands. So what is it, exactly, that they’re demanding?
What it means: The concept of divestment appears fairly simple at face value — an investor or institution sells off its shares of a company to avoid complicity in activities they deem unethical or harmful.
That action is intended not only to reallocate funds to more ethical investments but also to make a public statement that can pressure a company or government to change policies. There’s a history of student activists targeting endowments during demonstrations. In the 1980s, students successfully persuaded Columbia to divest from apartheid South Africa.
More recently, Columbia and other universities have divested from fossil fuels and private prisons.
But a quick look under the hood shows that things aren’t so straightforward. Critics argue that while divestment can be an effective expression of disapproval and a call for change, its actual impact on corporate behavior and market trends is more tenuous.
Stock prices remain steady: Research finds that there’s very little correlation between divestment campaigns and stock value or company behavior, Witold Henisz, vice dean and faculty director of the environmental, social and governance initiative at The Wharton School of the University of Pennsylvania, told CNN.
Economists from the University of California system studied the impact that widespread divestment movements had on South Africa in the 1980s and found that there was almost no effect on share price. The researchers posited that it was likely because “the boycott primarily reallocated shares and operations from ‘socially responsible’ [investors] to more indifferent investors and countries.”
When you sell shares, said Henisz, you essentially give someone who cares less about the issue voice and you give up your own voice. Divesting may feel good, he said, “but it may have perverse outcomes.”
It’s really rare that there are enough sellers and few enough buyers to actually change the cost of capital, he added. Proponents for divestment counter that its value lies in raising awareness and stigmatizing partnerships with targeted regimes or industries.
Detangling interests: University investments are much more complicated now than they were in the 1980s. Many endowments are managed by asset managers and are invested in opaque private equity funds.
“The economy is so global now that even if a university decided that they were going to instruct their dominant management groups to divest from Israel, it would be almost impossible to disentangle,” said Nicholas Dirks, former chancellor of the University of California, Berkeley.
In regard to the calls to divest from any company with Israeli links, “it’s not clear to me that it’s really possible to fully divest from companies that touch in some way a country with such close political and trade ties to the US,” Dirks said.
How it might end: Still, college students at schools across the United States say they won’t end their protests until university administrators meet their demands.
Negotiations between the Columbia administration and student protesters have been progressing but remain contentious.
But most schools are unlikely to agree to divest or to make any politically charged statements, said Dirks, who is also the former vice president of Columbia’s Faculty of Arts and Sciences. “There are shared objectives that people have, which are to make sure students can be students and that faculty can exercise some governance roles,” he said.
Conversations about reinstating suspended students and expunging their records will likely be negotiation points, he said. “They’ll try to find a way to get to the end of the year and have students finish their classes and graduate.”
