Columbia Has Divested Before: Here's What Happened | WSJ

Summary

The video discusses the growing student protests across U.S. universities calling for divestment from companies linked to Israel, particularly in response to the Israeli military's actions in Gaza. The movement, rooted in the Boycott, Divestment, Sanctions (BDS) movement, seeks to target university endowments with investments in companies like Google, Amazon, and Caterpillar. However, universities have largely rejected these calls, citing financial complexities and the small impact of such divestments. The video also explores the historical context of divestment movements, comparing them to the South African apartheid-era divestment campaigns.

Takeaways

• 😀 Columbia's pro-Palestinian protests sparked similar student movements nationwide, urging universities to divest from Israel-linked investments.
• 😀 The BDS movement (Boycott, Divestment, and Sanctions) underpins the student demands for divestment, with specific calls targeting companies like Google, Amazon, and Airbnb.
• 😀 University endowments, which are often managed through private equity and hedge funds, present a challenge for divestment due to their complex and secretive nature.
• 😀 Some universities, including Columbia, Yale, and NYU, have refused to divest from Israel, despite student protests.
• 😀 The divestment calls echo past student movements, like the South African apartheid divestment campaigns in the 1980s, which led to significant corporate pullbacks.
• 😀 Critics argue that divesting from Israeli-linked companies could have minimal impact on university portfolios, given that these investments are typically a small portion of larger endowments.
• 😀 Modern university endowments are diversified, and divestment from specific sectors or companies may require overhauling entire investment strategies.
• 😀 The BDS movement believes divestment is a moral imperative, citing allegations of genocide and apartheid against Palestinians by Israel.
• 😀 Historical precedents like the South African divestment campaign show that economic pressure might not always result in immediate political change, but can influence public perception.
• 😀 Fund managers for university endowments prioritize maximizing returns, making it difficult to justify divestment unless it aligns with their financial strategies.
• 😀 Despite criticisms, there are investment firms that help institutions tailor their portfolios to ethical or socially responsible criteria, offering a way to implement divestment without sacrificing returns.

Q & A

What sparked the student protests at Columbia University?

The student protests at Columbia University were sparked by a pro-Palestinian encampment, which led to similar protests across the country and renewed calls for universities to divest from investments related to Israel and companies profiting from the Israeli war in Gaza.

What is the Boycott, Divestment, and Sanctions (BDS) movement?

The BDS movement is a Palestinian-led campaign that encourages boycotting, divesting from, and imposing sanctions on Israel to protest its treatment of Palestinians. It is the foundation of many students' demands for divestment from Israel-linked companies and funds.

What are the main targets of divestment calls from students?

Students are calling for divestment from companies that are perceived to profit from Israel's military actions in Gaza. These include companies like Google, Amazon, Airbnb, and Caterpillar, which are allegedly involved in supporting Israel's military operations or its settlements.

How does the divestment process work in practice?

Divestment involves selling off investments or business interests in specific companies. For universities, the process can be complicated, especially when investments are made through private equity or hedge funds. Some funds may need to be reallocated if managers do not comply with the requested divestment guidelines.

What challenges do universities face in divesting from Israel-linked companies?

Universities face several challenges, including the secretive nature of modern endowments, the complexity of disentangling investments, and the potential small impact of such divestments. In many cases, divesting from these companies could have little effect on the overall portfolio or global economy.

Why have universities been reluctant to divest from Israel-linked investments?

Universities have been reluctant to divest due to the difficulty in tracking and separating investments within complex portfolios. Furthermore, the financial impact of such divestments may be minimal, and university trustees are typically focused on maximizing returns rather than aligning investments with political causes.

What historical context is drawn upon by the protestors in the divestment movement?

Protestors draw parallels between the current divestment movement and the divestment campaign against apartheid in South Africa during the 1970s and '80s. The South African divestment movement ultimately led to a significant economic impact, though the exact role it played in ending apartheid is debated.

How do university endowments typically operate in terms of investments?

University endowments typically operate with a diversified portfolio managed by fund managers who allocate funds across various asset classes like stocks, real estate, and private equity. Their primary goal is to maximize returns for the university.

What impact did the South African divestment movement have on university endowments?

The South African divestment movement led to over 150 universities cutting ties with companies doing business in South Africa. While the economic impact of this divestment was debated, it is believed to have contributed to the symbolic isolation of South Africa and increased international pressure on the apartheid regime.

How do critics of divestment view its effectiveness?

Critics argue that divestment from companies linked to Israel or other causes may not have a significant economic impact. Studies have shown that divestment can simply reallocate shares to less socially responsible investors, with little to no effect on the target company or industry.