Divest to protest: A brief look at the financial protest movement
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Divest to protest: A brief look at the financial protest movement

January 11, 2018

New York City Mayor Bill de Blasio recently announced the city’s plan to divest $5 billion of its pension funds from “fossil fuel reserve owner companies.” During the mayor’s press conference, Michael Mulgrew, the president of the United Federation of Teachers (UFT), noted divestment’s purported role in ending apartheid in South Africa.

Divesting funds from companies for moral or political reasons is a concept called “protest divestment.” Below, we’ll explore the concept in the context of South Africa, its perceived effectiveness and some current examples. This framework can help evaluate the effects New York City’s proposed measure may or may not have on oil companies and the use of fossil fuels.

What’s protest divestment?

According to Investopedia, protest divestment involves selling a large amount of stock or other assets, such as real estate, in an effort to put “financial pressure on a corporation or government to force social change.”

How did it factor into apartheid?

Media outlets have used the end of apartheid in South Africa as an example of protest divestment use. Apartheid was a system of legislation in South Africa that, among other things, segregated its population by race, prohibited mixed-race marriages, and required non-whites to carry documents granting them permission to enter certain restricted areas. South Africa had aspects of this system in place between 1950 and 1994, when a new constitution took effect.

In the 1980s, college students, religious groups and other public organizations outside South Africa began to call on institutions to divest from companies that did business with the country. Schools such as the University of California, Yale University and Harvard University agreed to divest fully or partially their assets in South Africa, as did companies such as General Motors and IBM.

Economists who have studied the issue have concluded that divestment likely did not have a significant role in ending apartheid. Economists Siew Hong Teoh, Ivo Welch and C. Paul Wazzan studied the impact of U.S. divestments on South Africa and found that they had “little discernible effect on the valuation of banks and corporations with South African financial markets.”

Other factors, such as Nelson Mandela’s anti-apartheid movement, likely contributed more to the eventual end of apartheid. These factors also include sanctions on South Africa from countries such as the U.S., as well as various rights groups that protested and boycotted the South African government for at least four decades. In 1986, the U.S. passed the Comprehensive Anti-Apartheid Act, which encouraged South Africa to release political prisoners, including Mandela, and to establish a timetable for eliminating apartheid laws.

How effective is divestment?

As noted above, the financial impact of divesting may be minimal. Rebecca Leber of The New Republic wrote that divestment can be a tactic for “driving home the message of the broader campaign.” According to New Yorker contributor William MacAskill, divestment campaigns may be more effective as a “stigmatization” tool, rather than a means to financially “pressure” a large company or industry. MacAskill uses the following example to illustrate this:

Suppose that the market price for a share in ExxonMobil is ten dollars, and that, as a result of a divestment campaign, a university decides to divest from ExxonMobil, and it sells the shares for nine dollars each. What happens then? Well, what happens is that someone who doesn’t have ethical concerns will snap up the bargain. They’ll buy the shares for nine dollars apiece, and then sell them for ten dollars to one of the other thousands of investors who don’t share the university’s moral scruples. The market price stays the same; the company loses no money and notices no difference.

What are other examples of divestment campaigns?

In addition to divesting to protest apartheid, and oil and gas companies, groups have also used it to protest tobacco, coal and gun companies. Below are a few examples of those campaigns.


In the 1980s, members of the American Medical Association requested that the organization divest stocks in tobacco companies, citing the potential inconsistency of a health organization funding tobacco. During that time, medical professionals also campaigned for medical schools to divest. In 1990, Harvard divested $40 million from tobacco companies, and the City University of New York divested about $3.5 million worth of tobacco stock after a board member argued against funding “unhealthy” tobacco. Around the same time, the Boston-based Tobacco Divestment Project was founded to lobby companies to divest from the tobacco industry.

Divestment campaigns against the tobacco industry exist today as well. In 2010, the Norwegian government divested about $2.56 billion from tobacco companies for ethical reasons. The Dutch pension fund ABP recently announced plans to divest $4 billion from tobacco companies and nuclear weapons manufacturers. ABP Chairman Erik van Houwelingen said the investments had been a “dilemma” for some time, and that “changes in society” contributed to the decision to divest.


In 2016, the New York City Employees’ Retirement System voted to divest about $10.5 million in shares from retailers such as Dick’s Sporting Goods that sell guns to the public. A public spokesperson said, “We will no longer do business with companies that fund the deaths of our family members and friends.” In 2013, the Chicago Teachers’ Pension Fund board voted to divest $146,000 from two gun companies.

Celebrities such as Snoop Dogg, Seattle Seahawks linebacker Bobby Wagner and NBA Memphis Grizzlies forward Matt Barnes have also publicly declared their intent to divest from gun companies to protest gun violence.


In November, The Guardian reported that 15 insurance companies had divested about £15 billion (about $20.3 billion) from the coal industry over the past two years. Johns Hopkins and Columbia universities also recently announced plans to divest.

Columbia University’s trustees voted to divest from companies deriving more than 35 percent of their revenue from thermal coal production, and to participate in the Carbon Disclosure Project’s Climate Change Program to demonstrate its “longstanding commitment to climate change.” Trustees of Johns Hopkins, which had divested from tobacco in 1991, said its decision to divest from “thermal coal” was based on advocacy from student groups who had lobbied for the change for two years. Additionally, the California State Teachers’ Retirement System board voted to divest from U.S. coal companies last year.


New York City’s isn’t the only government looking to divest funds from the oil industry. Norway has proposed selling $35 billion in oil and natural gas stocks; the final decision may not be made until fall 2018, according to Norway’s Finance Ministry. “Our perspective here is to spread the risks for the state’s wealth,” Egil Matsen, the deputy central bank governor overseeing the fund, said in an interview in Oslo. “We can do that better by not adding oil-price risk.”

The Rockefeller Family Fund announced in 2016 that it divested from Exxon and planned to divest from other fossil-fuel companies after it said Exxon had allegedly “misled the public” about climate change.

Media outlets that analyzed the campaigns listed above did not examine whether any of the divestments directly resulted in political or social change.