To ensure the long-term financial stability of her children, my grandmother bought a large stake in a fossil fuel company that she bequeathed to my father. I find it heartbreaking that the investment she has made, and which my father has made to provide safety, is one of the things that is actively leading the planet into terrible destruction. My father is older and would not consider parting with this company. These holdings will be much of his legacy to my siblings and me. I hope my father will live for many years to come, but when this stock – and the wealth that comes with it – comes to me, then what should I ethically do with the money? I feel guilty and disgusted at the prospect of benefiting from the suffering of so many. Name withheld
The case for Divesting fossil fuel companies consists in the fact that such a large-scale divestment would stigmatize their activities, put pressure on their share prices, and (through an indirect mechanism of action) reduce the amount of capital available to them. We want to limit investments in the exploitation of fossil fuels; we want to encourage investments in alternatives. But some people are less motivated by considerations about capital flows and more motivated by the desire to have clean hands – to feel unsullied by the fossil fuel industry and its painful legacy.
There are some complications here. One is that most of the oil reserves are state owned and not directly affected by sales campaigns, so the strategy is quite limited in its impact. Another is that the world currently relies on fossil fuels for most of its energy needs, including most of its electricity, and although we should be decarbonising ASAP (which is much faster than oil and gas companies want) We can’t flip a switch that would prevent a transition period: oil companies cannot yet be wiped out.
Then the question arises, how do you think about socially responsible shareholder activists? The hedge fund engine No. 1 managed to appoint three directors who are committed to getting the company to spend more on reducing carbon by becoming a shareholder in Exxon Mobil and attracting the support of much larger investors. Can environmental, social and governance (ESG) investors play a positive role in energy reform?
If all you want to do is keep your hands clean, these things are not something you can explore. The great economic and political theorist Albert O. Hirschman examined “exit” and “vote” as ways of responding to dysfunctional organizations. In this case, exit means withdrawing from these entities; Voice means speaking and trying to redirect it. A combination of exit and voice could be optimal here.
What if the share goes into your possession? I would recommend a forward-looking approach: the question is what can be done to solve one of the great problems facing humanity. That could mean liquidating your holdings and increasing social pressure on the company. It could also mean donating some of the money to a nonprofit group that works for a greener world; it could mean investing resources in the alternative energy sector.
Your father will not think about parting with this company out of sentimentality. Apparently, he has been caught up in the fact that his mother made the investment – a backward-looking consideration. Also, don’t get caught up in backward-looking considerations. Dwell on the fact that this wealth came from an investment made by someone else a few generations ago is another form of sentimentality. Almost every inheritance involves benefiting from the sins of the past. Awareness of historical errors is salutary, but the task is to fix things in the future.
Kwame Anthony Appiah teaches philosophy at NYU. His books include Cosmopolitanism, The Honor Code, and The Lies That Bind: Rethinking Identity. To submit a request: send an email to email@example.com; or email The Ethicist, The New York Times Magazine, 620 Eighth Avenue, New York, NY 10018. (Provide a phone number for the day.)