MIT couldn’t bring itself to divest from fossil fuels [1, 2, 3], but at least the Administration has a plan:
- research to further understand climate change and advance solutions to mitigate and adapt to it;
- the acceleration of low-carbon energy technology via eight new research centers;
- the development of enhanced educational programs on climate change;
- new tools to share climate information globally; and
- measures to reduce carbon use on the MIT campus.
#1 and #3 are good, but that’s what MIT should be doing anyway. I was already counting on that.
#2 is good; if MIT puts money into the research centers, that’s above and beyond the call of duty. Otherwise, if they pull in money to do this, it’s just business as usual.
#4 is called the Internet. Silicon Valley is working on lots of information sharing tools, and it’s not at all obvious that MIT has that much to contribute.
#5 is basic citizenship in the 21st century. If you’re not carbon neutral, you’re behind the game.
So, fine, but I’m not impressed. MIT, of all organizations, should know that more is required; they are plugged into climate modeling and do some good work. They presumably know about the global carbon budget; that we’ve burned through half (or more) of the total fossil fuel that we can safely burn; that we need to stop burning fossil fuels in no more than 30 years.
MIT claims that they can engage with fossil fuel companies and make more of a difference than they could by divesting. (FYI there was an excellent debate on the subject at MIT.) But, engagement doesn’t really work.
Engagement is a False Hope
I have spent 19 of the 28 years since I left MIT in large corporations (AT&T, Lucent Technologies, and Google), and as a result of those experiences, I am profoundly dubious of the value of engaging with companies whose core businesses are centered around fossil fuels.
Why engage? If one engages with a fossil fuel company, the point of engagement must be to change their core business. Is that a realistic goal? (Another possible goal may be to defer a decision while other people do the hard work of turning off the fossil fuel economy.)
As an analogy, allow me to reverse the question and pretend we’re trying to change MIT rather than fossil fuel companies. “Could donor engagement successfully cause MIT to change its primary missions of education and research?”
Could we Change MIT by Engagement?
Despite the fact that MIT is smaller than many corporations (and therefore perhaps more agile), and despite the fact that MIT faculty and staff are well educated and capable of doing many things well, I suggest that you would not have success making the change. For the purpose of discussion, let’s consider converting MIT into a software development company. At first glance, this is a sensible option: nearly every professor, post-doc, grad student and undergraduate is probably able to write computer programs. But, would the MIT Corporation go along with this?
I should hope it would not. While the individual people in MIT are smart and capable of writing software, collectively, MIT doesn’t “know” how to do it. MIT doesn’t have procedures for deciding what software to write; it doesn’t have a culture that helps people to collaborate in large groups; it doesn’t have a strong post-mortem culture for dealing with the inevitable errors. To be blunt, MIT doesn’t know how to do most of the things that software companies do. The people don’t have the necessary experience, the organizational structures don’t exist, and there is no institutional memory of (for example) handling the publicity surrounding a change of a user privacy policy.
So, transforming MIT into a software company would likely fail, even if all the staff were behind the transition. But, of course they wouldn’t be. It’s hard to change jobs; some people would argue, some would leave, some would pretend to play along while looking for other opportunities. Collaboration and cooperation would suffer, because you’d never know if that person you need to talk to is mentally part of the new “MIT Software” or if they are still an academic at heart.
Similar problems would arise if the Board of Directors of some large fossil fuel company wanted to transform the business into an (e.g.) reneweable energy company. Major business transformations are very risky, and even if they work, they can lead to years of lost profits. Consequently, they get put off as long as possible. Rather than transform the company, it may make sense to simply run the company into the ground as a cash cow, extracting profits until the company collapses.
People outside of corporations often believe that a CEO is a dictator, able to pivot their company at will. But the reality is different. CEOs can shut down parts of a company, and they can aim money at new initiatives, but the success of the new area is largely out of their hands. Growing a new business area depends far more on the staff than the CEO. So, CEOs have their limits; they may feel unable to pivot a company, even if the Board of Directors thinks that it’s a good idea. (And, of course, the shareholders will not appreciate the loss of profits associated with a major change in corporate direction, so the Board and the CEO might be overruled.)
As a result of these factors, shareholder engagement with companies whose core business is centered on fossil fuels is, essentially hopeless. If you could actually succeed in convincing any fossil fuel company to pivot to a new direction, you are likely to see a collapse or a struggling company a few years down the line. From an investment perspective, the odds would simply not be very good.
Engagement makes sense when a company uses fossil fuels as a replaceable energy source, or a small part of its business. By all means, engage with those companies. But engagement with the fossil fuel core can only be an exercise in futility.