For about a year now, there have been calls for institutions to divest from businesses that are facilitating Israel’s absurdly destructive bombing campaign in Gaza. I assume the divestment is targeted at the manufacturers of the weapons and munitions that Israel is using.
Divestment isn’t a new idea; my first memory of it was when I was a kid in the '80s and people were advocating for divestment from South Africa in order to pressure them to end apartheid.
I’m wondering what divestment is intended to achieve, and what it actually achieves. I can think of a couple of kinds of divestment. One is international businesses refusing to expand their business activities in a particular country, and I can see how this could inflict direct economic losses to the target of divestment. But the other is about simply selling off shares of stock in businesses that are the target of divestment, and that one has me scratching my head.
Presumably the intent of selling off shares is to inflict some kind of economic/financial pain on those companies in an attempt to compel them to stop supporting Israel’s activities in Gaza. But if I sell my shares of Bombs-R-Us to some other shareholder, what have I actually achieved? Bombs-R-Us just sends their dividends to the new shareholder instead of me, and they don’t really care who is holding those shares. Maybe by lowering demand for shares, I can make the share price take a hit, but ISTM this would only be very temporary: after all, in the long term the stock market is a weighing machine, so the share price should eventually gravitate back toward something reflective of the actual business fundamentals, shouldn’t it? The dip in share price would only be a problem for the remaining shareholders if they decided to sell their shares while the price was low.
Has any target of divestment ever confirmed that selling off shares of stock had a meaningful effect on their policies/plans?