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Steven Syre | Boston Capital

Drive to dump coal stocks won’t bring any clean results

A plume of steam billowed from the coal-fired Merrimack Station in Bow, N.H., in January. Divestiture advocates are calling for universities to sell off their investments in coal stocks as part of an effort to shape public opinion in a way that sees fossil-fuel energy companies as irresponsible corporate citizens.Jim Cole/Associated Press/File 2015

Sell coal stocks!

Any broker or financial adviser who gives you that bit of advice today should be fired on the spot. The shares of US coal companies have already been crushed and are unlikely to recover anytime soon.

But universities and other big institutional investors are being pushed to get out of coal right now, part of a broader campaign against fossil fuels and their effect on the planet’s climate.

Norway — one of the world’s great producers of oil, gas, and hypocrisy — opted this month to divest its huge $890 billion sovereign wealth fund of investments in companies that derive at least 30 percent of their business from coal.

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Closer to home, a climate change committee at the Massachusetts Institute of Technology recommended last week that the school divest its $12.4 billion endowment of investments in coal and tar sand companies.

It followed the lead of a few other schools, notably Stanford University and Georgetown University.

Institutions like MIT think about targeting coal because it is among the dirtiest and most ecologically harmful fossil fuels — the easiest of all targets for the divestiture movement. But dumping coal stocks is merely a symbolic gesture because it produces so little tangible impact.

Get a look at a sample of US coal companies: Peabody Energy Corp. and Arch Coal Inc. both sank to all-time lows this month. Peabody shares, worth more than $70 early in 2011, were available for $2.66 on Monday. Arch Coal stock fell from more than $35 to 46 cents over the same period. Alpha Natural Resources Inc. has plunged from more than $65 to 39 cents since early 2011. Cliffs Natural Resources Inc. has shed about 95 percent of its value.

Divestiture didn’t kill those stocks. Newly abundant fossil-fuel alternatives, particularly natural gas, did most of the damage.

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Endowments that divest their coal stocks won’t make any real difference, but they don’t take any real risks by selling, either. It’s hard to imagine those portfolios have any significant investment in American coal stocks to dump.

Of course, selling those shares is only a first step for environmental advocates. Think of coal as a gateway fossil fuel for the broader divestiture movement.

That means real debates about selling oil and gas stocks, investments in industries that power most of the things we do. Those companies aren’t sick at all, and nearly every big diversified investment portfolio owns lots of their shares.

And how would divesting investment funds put the financial squeeze on Exxon Mobil Corp. and other giants of the oil and gas world? Once again, they would not.

A giant oil company like Exxon posts revenues of more than $100 billion every quarter. The company’s stock market value tops $350 billion. Endowments and like-minded investors selling shares of those giant oil and gas companies would not make a dent in the market. Divestiture advocates would be the first people to tell you that.

“The whole idea is not to hurt these companies financially,” said Karthik Ganapathy of 350.0rg, a leading voice in the fossil fuel divestiture movement. “It’s all about long-term public opinion shaping. We want [oil and gas companies] to be seen like tobacco companies — irresponsible corporate actors driving our world to a place we don’t want to go.”

The ethical debate about those kinds of investments is all over the map. Harvard University president Drew Faust may have to deal with protesting students, but she spelled out her clear opposition to the divestiture movement in a recent letter to the Globe. Boston College has been giving its divestiture activists the cold shoulder — but now the pope himself is calling for a “revolution” to combat climate change.

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And the impact on endowments and other funds that divest? Unlike sales of coal stocks, the dumping of oil and gas investments could have a very real effect on investment performance.

Looking back, stock market history provides an answer for every divestiture opinion. The results all depend on what period of market activity researchers choose to track.

Funds that dumped Standard & Poor’s energy-sector stocks 10 years ago and redirected that money into the broader S&P 500 index would be ahead of the game today. But go back 20 years and the results would be reversed.

Divestiture advocates like Ganapathy at 350.org concede they don’t know how the performance of funds that dump all their fossil fuel investments would be affected by that decision. They just don’t buy warnings about dire consequences.

But oil and gas divestiture probably would have an impact on the performance of endowments that help fund colleges. Any institution that chooses that path would have to explain why that risk is in everyone’s best interest.

Kicking coal out of the portfolio was the easy decision. Tougher conversations about divestiture are next.

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MORE COVERAGE:

Bill calls for greener investments

Horowitz: Harvard students protest for divestment

Yale students invade president’s office demanding divestment

Jacoby: A valentine for fossil fuels

Faculty helps bid to get colleges to shed fuel stocks

Jacoby: ‘Fossil free’ isn’t folly free


Steven Syre is a Globe columnist. He can be reached at syre@globe.com. Follow him on Twitter @GlobeSteveSyre.