Environmental activist and writer Bill McKibben believes the movement to pressure institutions to stop investing in and profiting from carbon-emitting industries has led institutions to pledge to withdraw $15 trillion in investments by polluting companies.
It’s an incredible achievement in just a decade. However, the growing visibility of climate divestment has also cultivated an audience of detractors. Some Opponents Say Divestment Cannot Be Helpful change the request for fossil fuels – and in fact, falling stock prices can make these companies attractive less ethical investors. Going further, such critics claim that the economic harm of divestment to companies has always been minimal – even in the era of apartheid South Africa, where divestment as a tactic was born.
But measuring the success of divestment solely on its financial impacts is a mistake. The real power of divestment is its ability to change mindsets and mobilize action, with effects that reach far beyond the targeted investors and companies.
What happened in South Africa shows why. From 1960 to the 1980s, anti-apartheid activists were unable to persuade governments to push back against South Africa’s oppressive race laws. American presidents, for example, were reluctant to act because South Africa was an important ally and regional policeman during the Cold War. So activists in the United States and elsewhere turned to divestment to undermine apartheid, refusing to invest in companies doing business in South Africa.
But divestment was not seen as a way to hurt the South African economy, or even punish American companies. In 1966, minister and activist George M. Houser, who helped found the American Committee on Africa (ACOA), a group dedicated to opposing colonialism in Africa, writes a strategic document advocating what he called “divestiture” – both the withdrawal of existing investments and the banning of new ones.
At the time, ACOA was working with other groups to boycott Chase Bank (then known as Chase Manhattan Bank) over its policy of lending to South Africa. “This campaign is not based on the thesis that even if the full economic might of the United States were brought to bear…the architects of apartheid would feel pressured to accept new policies,” Houser wrote. Rather, he argued that the disengagement would “dramatically affect the prospects of many other powerful countries”. Houser’s model was the strategy that became divestment and, in many ways, continues to guide the movement today.
Initially, the tactic targeted specific companies and financial institutions engaged in large-scale projects in South Africa. Polaroid was targeted in 1970 for selling photographic equipment used to produce the hated booklets that helped control the movement of people in South Africa. Then, in the mid-1970s, activists began to pressure city and state governments to withdraw investment from companies working in South Africa.
Divestment gained momentum with small wins at Hampshire College in 1977 and the University of Wisconsin in 1978. Within a decade, when companies found themselves constantly criticized for their presence in South Africa, divestments have multiplied and some companies have withdrawn.
But beyond these material effects, the divestment had a huge effect that even Houser might not have fully anticipated: it helped build a truly national anti-apartheid movement in the United States. Until the divestment, the anti-apartheid movement in the United States had limited success. Although ACOA was technically a national committee, it was first and foremost a New York institution. Consumer boycotts of imported South African products, such as platinum, could often be difficult to sustain. And as long as South Africa dodged the news cycle, it cut the wind from the sail organization. But divestment broke out. Where Houser hoped to induce other countries to back the sanctions, the strategy worked in American hearts and minds.
What made divestment different and ultimately so popular? Part of it was a moral appeal. It is no coincidence that the movement grew rapidly in churches and on college campuses: whether or not you could stop apartheid, profiting from it was immoral. Part of it was also political. Activists have had great success reminding Americans that while American companies were cutting manufacturing jobs, they were hypocritically taking advantage of cheap labor in South Africa.
But the way divestment created opportunities for action was even more fruitful: in the words of activist Cherri Waters, “Movements need something for people to do.” Divestment created tangible goals for people to organize around and against that were also specific to where they lived: college pension boards, church investment boards, and local governments. Lobbying these organizations was effective and helped the movement spread across the country.
This widespread activation led many Republicans to endorse sanctions against South Africa against President Reagan’s wishes. Richard G. Lugar, a prominent Republican senator from Indiana, began supporting sanctions after complaining about not being able to go to their children’s house baseball games without his constituents asking him what he was going to do against apartheid. The pressure to do something became overwhelming enough that Congress authorized sanctions against South Africa in 1986.
The critics are right, in a way: the economic impact of apartheid-era divestment on business was small. The decline in US stock prices alone has not been economically detrimental to South Africa. Even the companies’ withdrawal was largely a blow to the morale of South Africans.
But that doesn’t take away from its importance as a strategy. By raising awareness of apartheid and the role of the United States in maintaining it, divestment activated a core group of people who would support further action against apartheid. It’s important to stigmatize companies and reduce investor confidence, but the main benefit of the tactic is that it organizes people, gives them action, and leaves them open to pushing for even more substantial change.
Against climate change – a non-human target that does not have the same pure evil that underpinned apartheid – this approach is all the more critical. Whether or not it affects the bottom line, what matters is creating movement of people.
Zeb Larson is a writer and historian whose research has focused on the anti-apartheid movement. This article was produced in partnership with Zócalo public square.