Universities Urged to Reject Divestment

Academics Max M. Schanzenbach and Robert H. Sitkoff have published an opinion piece arguing that universities should reject divestment campaigns, asserting that such actions are both ineffective and difficult to reconcile with their fiduciary duties. The authors contend that divestment strategies, often employed by student and faculty groups to pressure institutions to sell off investments in companies involved in controversial industries such as fossil fuels or weapons manufacturing, do not achieve their stated goals of impacting corporate behavior or generating significant financial returns.

Schanzenbach and Sitkoff's argument centers on the idea that divestment campaigns often fail to create meaningful financial pressure on targeted companies. They suggest that the volume of shares divested by a single university is typically too small to influence stock prices or corporate decision-making. Furthermore, they posit that the funds divested are often reinvested in similar industries or companies, thereby negating any intended ethical or environmental impact. This perspective challenges the common assumption that divestment is a powerful tool for social and environmental change, particularly within the context of university endowments, which are managed with a primary responsibility to support the institution's mission and long-term financial health.

The authors also highlight the inherent conflict between divestment activism and the fiduciary duty of university trustees and investment managers. Fiduciary duty requires these individuals to act in the best financial interests of the institution and its beneficiaries, which typically means maximizing returns and managing risk prudently. Schanzenbach and Sitkoff argue that divestment decisions based on political or social criteria, rather than purely financial ones, can compromise this duty. They suggest that such decisions may lead to lower investment returns, increased portfolio volatility, and potential legal challenges if they are perceived as not being in the best financial interest of the university. This raises complex questions about the role of universities in social activism and the ethical considerations involved in managing large investment portfolios.

By advocating for universities to "just say no" to divestment, Schanzenbach and Sitkoff aim to steer academic institutions back towards a more traditional understanding of their financial responsibilities. They propose that universities should instead focus on engaging with companies through shareholder advocacy, direct dialogue, and responsible investment policies that align with their values without sacrificing financial performance. This approach, they argue, offers a more effective and ethically sound method for universities to exert influence and promote positive change in the world, while upholding their core mission of education and research. The piece, published on September 11, 2026, encourages a critical re-evaluation of divestment as a strategy within higher education.