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One Thing: The Financial Reality Behind Campus Calls to Divest
CNN 5 Things
May 5, 2024
In recent weeks, several colleges have called in police to break up pro-Palestinian encampments that have popped up on campuses across the country. While demands from students vary from school to school, one of the most common is for universities to divest from Israel-linked businesses and entities. In this episode, we hear about the history of divestment protests at Columbia University and how these campaigns would play out in practice.
Guest: Matt Egan, CNN Business Reporter
Episode Transcript
Julia Vargas Jones
00:00:02
Hey, David, it's 10:07 a.m. on Wednesday morning.
David Rind
00:00:10
This is Julia Vargas Jones. She's a freelance reporter for CNN. She's also been trying to finish up her master's degree in journalism and politics at Columbia University in New York City. And for the last few weeks, Julia and her fellow grad student, Corrine Catibayan, have been watching as protest against Israel's war in Gaza took over campus. Students had set up shop on the lawn and said they weren't leaving until their demands were met.
Julia Vargas Jones
00:00:40
Outside of Hamilton Hall.
David Rind
00:00:42
But the night before, Julia sent me this voice note. University officials sent in the NYPD to clear out a building which had been barricaded by protesters 56 years to the day after police stormed in to arrest over 700 people who are protesting the Vietnam War and gentrification in Harlem back in 1968.
Julia Vargas Jones
00:01:03
And it it just looks kind of battered. The windows are broken. The doors.
David Rind
00:01:11
By morning, hundreds had been arrested. And the tent encampment, which inspired dozens of other protests at other schools around the country, was just gone.
Julia Vargas Jones
00:01:21
It's really striking because this is where all the tents were, and they were here for so long that they've left marks on the grass. So the grass that, was covered by tents is like this pale green, and all the grass around it is.
Corrine Catibayan
00:01:39
Yeah. What we're seeing here is, cleared out West Lawn right now. There are two NYPD officers on the West lawn to make sure that nobody comes in.
Julia Vargas Jones
00:01:56
It's weird. And I wonder, you know, if this is what it's going to feel like for the next few days. It's also, I think we got used to seeing the protesters and seeing the tents, and I just assumed that this would go through graduation. So I think going forward, I think we're going to need a bit of an adjustment to instead of seeing the tents and hearing the chants, just seeing NYPD on campus.
David Rind
00:02:31
'These dramatic, occasionally violent protests around the country have raised a lot of serious, thorny questions. When should you call the cops on your own students? When does free speech become hate speech? Where is the line between criticizing Israel and anti-Semitism?
Student
00:02:49
'All talk of anti-Semitism, I think, is a tactic meant to keep people afraid and try to ignore what we're saying. And what we're saying is that there's a genocide going on in Gaza, being funded by our government that our university is profiting off of.
Student
00:03:04
When these people are chanting excuse my language in unison, Zionist on the quad lawn of Emory University. And I have to stand by and hear that. And we're told that we don't belong on campus because we don't identify with their movement. It it that to me that says that they don't want to have a dialog.
David Rind
00:03:24
Remember, to the vast majority of students at these colleges are not involved in these demonstrations. There have also been accusations of outside agitators infiltrating campus groups. There are no easy answers to any of this, but I do think it's worth listening to what exactly these protesters are demanding.
Protestors
00:03:50
Disclose. Divest We will not stop. We will not rest.
David Rind
00:03:57
Disclose. Divest. Those are the big ones. But what do they mean? And would they have any teeth? My guest this week is CNN business reporter Matt Egan. We're going to talk about what past divestment protests on campus can tell us about the chances of this one succeeding from CNN. This is One Thing. I'm David Rind.
David Rind
00:04:25
So, Matt, you've been covering how Israel's war in Gaza has been playing out on American college campuses ever since October 7th. But this really kind of got kicked up about two weeks ago on the campus of Columbia University, just uptown, from where we're sitting now in New York City. And the tent encampment there has kind of become a model for other colleges across the country. But I do really want to get at what is exactly driving these protests like beyond just calling out the atrocities in Gaza, which is obviously a big factor here. What exactly are these students looking for?
Matt Egan
00:04:57
'Well, David, you're right. The initial focus really was on the anti-Semitic incidents involved in some of these protests and how the colleges and law enforcement were responding, but not as much on the demands. And when it comes to the demands, it really runs the gamut. Some of it is actually quite local. For example, at Columbia, they're demanding support for low income Harlem residents, and they want the university to sever ties with the NYPD. But there are some common themes, right? One of them is that they want the universities to call for a cease fire. They also want to end academic relationships between their universities and Israeli ones. But the most common thing, by far, the one we hear first and foremost, is around divestment.
David Rind
00:05:43
Yeah, this is a word I've heard a lot, but can you explain, like what it is and how these students actually want this to happen?
Matt Egan
00:05:50
Yes. So we often don't think about it. But colleges, they actually manage a lot of money and they have to invest that money. I mean, some of these endowments are very large. At Columbia, for example, we're talking about over $13 billion the size of their endowment. Wow. At, Harvard, over $50 billion.
David Rind
00:06:10
This is money coming in from donors.
Matt Egan
00:06:12
That's right. Money coming in from donors. And that money gets invested in various places, including some of it going into the stock market.
Student
00:06:21
So divesting means that there are institutions and companies that Columbia profits from. That is funding directly funding the genocide that is happening in Palestine.
David Rind
00:06:33
So the schools hold some of these stocks and companies, and the students are like, hey, some of these companies are linked back to Israel in some way. Like how does that connection work?
Matt Egan
00:06:44
Exactly.
Student
00:06:44
And an example of that would be there's a group called Shut Down Ghost Robotics. And so there's this, project that makes these robot dogs that are sent to Israel to be used as soldiers and they kill people. And so obviously, that is not all encompassing divestment, but that's a way that the university could start to divest from Israeli apartheid by cutting off and closing down that program.
Matt Egan
00:07:06
'Some of the students, they want the universities to sell off their ownership stakes in companies that either enable Israel's military or in some cases, they want the schools to divest completely from Israeli companies or companies that even do business in Israel. Of course, that's easier said than done. I spoke to Mark Udall. He leads a group that opposes anti-Semitism on campus, and he was the former president of University of California. And he told me, sometimes it's pretty murky to really figure out which companies are doing how much business in Israel and what that relationship is to the war. There's also the problem of the fact that universities, they really invest a lot of their money, most of it not directly in the stock market, but indirectly through private equity firms. And when they do that, they're really agreeing to have the private equity manager put their money wherever the private equity manager thinks it's going to grow the most.
David Rind
00:08:06
Oh, so it's not like it's always a conscious choice from the university to say, hey, we like this business and they just happen to be related to Israel, but they kind of put the money with these private equity and it goes wherever it may go.
Matt Egan
00:08:18
That's right. Exactly. Then there's also the problem that even though endowments are big, these public corporations, they're even bigger. So if a university divest many companies, they probably wouldn't even notice it. There was this stunning stat that I heard from a Yale lecturer, Kerry Kosinski, who told me that endowments they only own point 1% of public companies, 0.1 percent. So that's not going to move the needle if they sell. Another issue with divestment is that if you sell, someone else is going to buy, and there's no guarantee that whoever the buyer is is going to care about whatever it is that is causing this divestment push in the first place.
David Rind
00:08:59
Like that moral stand that you may be taking somebody else. They don't care about that.
Matt Egan
00:09:04
Absolutely. Right. And again, that's on top of the fact that there's really no guarantee that there'd be any sort of impact on the stock price.
Student
00:09:11
Today's threats come after days of fruitless negotiations in which the university refused to seriously consider our demands for divestment and financial transparency.
David Rind
00:09:21
So I've heard these students, they say divest. They also say disclose. Are schools even willing to make clear what kind of investments they have?
Matt Egan
00:09:30
Schools don't need to. They're not required to be nearly as transparent as, say. Hedge fund managers are where they have to report quarterly what it is that they own.
Speaker 9
00:09:43
They offered us limited financial disclosure by giving only their direct holdings, yet not the indirect holdings, which account for the vast majority of this university's endowment.
Matt Egan
00:09:56
University endowments. They don't need to do that. And there is a good case for endowments to be more transparent, in part because it might actually improve some of their performance, which in some cases has been lacking. The fact that they want endowments to be more transparent. It makes some sense there. Whether or not they're going to do that is another another question.
David Rind
00:10:17
That was my next question. Are any of these schools actually willing to divest in the way the students are asking for?
Matt Egan
00:10:22
'We've heard from, a number of different universities flat out rejecting that, most notably Columbia's president saying, we are not going to divest from Israel. And most of the experts that I talked to, they say that that's not going to happen, that it would set a, a negative precedent, that it would be practically very challenging. What we did hear from one university, Brown University, reaching a deal with pro-Palestinian protesters. And Brown University has agreed to vote on divestment. And that is, a significant milestone. That's really not something that we've seen, at any time in recent history. And so that that is notable there.
David Rind
00:11:16
Have protests calling for divestment. Have they ever worked like, have they ever actually effected any change?
Matt Egan
00:11:24
They have even Colombia specifically.
Student
00:11:27
Can you speak to your perspective on the link? Many people have drawn between Colombia's current investment in mass incarceration and its former investment in the formal institution of slavery, and what accountability for complicity in the system look like at a place like Colombia?
Matt Egan
00:11:43
Colombia recently has agreed to divest from fossil fuels from private prisons. Then you go back to the 80s.
Reporter
00:11:52
No business. No business with South Africa. Pressure is mounting for U.S. companies to get out of South Africa. These demonstrators are demanding that Mobil Oil get rid of its South African refineries. And as the demonstrators say, stop exploiting nonwhite workers.
Matt Egan
00:12:09
'There was a movement to get Columbia to divest from companies that were connected to apartheid in South Africa. And Columbia eventually did do just that, right. They sold most of their stock in some companies that were linked to South Africa, including some major American brands like Coca-Cola and Ford. What's interesting, though, is there was some research by the academics at the University of California. They studied the impact from that divestment movement, and they found almost no impact on the stock price in South Africa. And that's because they found that really what happened was the stock just got transferred from socially responsible investors to ones who were more indifferent. And so I think that is just kind of another reminder that if there's no mismatch right between the buyers and the sellers, then there may not be an impact to the stock price.
David Rind
00:13:01
Interesting. But I guess, like so say any of these schools do go ahead. They do divest. What I'm hearing you say is it may not impact a company's stock price, at least not in the short term. I guess in theory, there could be fewer willing buyers and that could drag down the price over time. But is pure association more? The thing here, like, is the symbolism that comes with the school saying, we don't want anything to do with company X, really, the thing protesters are after here.
Matt Egan
00:13:30
I do think that the protesters, they do see significant value in in two things. One is making that moral stance saying we don't agree with in this instance how Israel is conducting the war and we don't want our university money to be associated. That's one point. The other point, though, is raising greater awareness, right, that maybe it's not going to impact the stock price. Maybe it won't change what the companies do. Maybe it won't change how Israel conducts the war, but that it's raising awareness and to some extent, the fact that you and I are talking about it right now does mean that there is some more awareness.
David Rind
00:14:06
I was going to say I don't think a lot of people quite realize that universities have like investments in weapons manufacturers, and some are like, why the heck is that the case?
Matt Egan
00:14:15
Right. I would stress, though, that oftentimes the universities are investing broadly and they're not necessarily saying, listen, we want to throw $4 billion after the makers of drones, they're sort of saying, listen, these are broad companies, these are broad investment vehicles, and they're going to grow and we want our money.
David Rind
00:14:34
Maybe in the same way that like a regular person has a stock account and they don't know where the heck that money's going.
Matt Egan
00:14:40
Absolutely. A lot of people have for one case, and a lot of those for one case, are invested in major diversified companies. They may have a presence internationally and they may be have a presence in Israel. They may have companies that make weapons as well.
Student
00:14:56
This encampment is a minor inconvenience compared to the generational shaping events taking place now in Gaza.
David Rind
00:15:05
And that awareness, too, is kind of its own interesting thing with these protests maybe drowning out some of the actual coverage of the war. What some of these protesters say they want in the first place. Matt. Thank you.
Matt Egan
00:15:18
Thank you so much, I appreciate it.
David Rind
00:15:27
One thing is a production of CNN audio. This episode was produced by Paola Ortiz and me, David Rind. Our senior producer is Faiz Jamil. Our supervising producer is Greg Peppers. Matt Dempsey is our production manager. Dan Dzula is our technical director. And Steve Licktieg is the executive producer of CNN Audio. We get support from Haley Thomas, Alex Manasseri, Robert Mathers, John Dianora, Leni Steinhardt, Jamus Andrest, Nicole Pesaru, and Lisa Namerow. Special thanks to Katie Hinman. Just a reminder we love reviews, ratings, and reviews on Apple Podcasts or wherever you listen. It helps other people discover the show. And if you like the show, don't you want other people to listen to? Seems like a no brainer to me. Thanks for listening. We'll be back next week. Talk to you then.
