Why A Movement To Disinvest from Fossil Fuels?

By Chuck Collins 11-17-2014 | Series:
pau2000 / Shutterstock.com
pau2000 / Shutterstock.com

If Quaker antislavery activist John Woolman were alive today, he would probably be doing everything in his power to resist the fossil fuel industries destabilizing our climate.

Woolman, who in the mid-1700s refused to cooperate with any aspect of the slave trade, would probably divest any ownership interest he had in big oil, gas, and coal companies. To profit financially from corporations that are destroying the planet would be unconscionable.

The divestment movement received a tremendous boost the day after 400,000 people took to the streets of New York City for the People’s Climate March. In advance of the United Nations Climate Summit on Sept. 22, the Rockefeller Brothers Fund — an $860 million foundation built on the oil fortune of John D. Rockefeller — announced its commitment to divest its holdings of fossil fuels.

This was the latest wave in a series of Divest-Invest announcements including the launch of Divest-Invest Individual, which facilitates a meaningful role for individuals in the divestment and reinvestment movements. More than 700 inaugural investors – with investments totaling $2.6 billion – announced their intention to divest from fossil fuel industries and reinvest in clean, renewable energy. Hundreds of individuals have since taken the pledge to stop new investments in fossil fuels and divest from the top 200 carbon-holding companies within five years.

“The destruction of the earth’s environment is the human rights challenge of our time,” said South African Archbishop Desmond Tutu in a video-taped message to the UN Climate Summit. He called on world leaders to freeze further exploration for new fossil fuel sources. “Divest from fossil fuels and invest in a clean energy future. Move your money out of the problem and into solutions.”

Divestment Primer and Climate Change

Sparked by student campus organizing in 2012, the call to disinvest from fossil fuels has expanded to more than 550 universities, cities, states, and religious institutions across the United States, Canada, Australia, and Europe.

A “terrifying new math,” as 350.org founder Bill McKibben has written, brings urgency to the divestment movement. Scientists have demonstrated that 80 percent of the world’s current fossil fuel reserves need to stay in the ground to prevent the worst scenarios of the planet warming by more than 2 degrees Celsius.

Yet the oil, gas, and coal industries, particularly the largest 200 companies (by ownership of carbon assets), continue to invest more than $600 billion a year exploring new fossil fuel assets. Strategies to engage the fossil fuel sector, including shareholder activism, have fallen short as the fundamental business model of these corporations is in conflict with human survival.

After the collapse of 2009 UN Climate talks in Copenhagen and the failure that same year of the U.S. Congress to pass legislation to reduce carbon emissions, activists called for a reevaluation of strategies. Many laid blame with the fossil fuel sector for wielding its considerable power to block the road to a clean energy future.

Divestment is an indirect approach to reducing carbon emissions, recognizing how oil, gas, and coal corporations have captured our political system. Similar strategies were essential to regulation of the powerful tobacco industry in the 1990s.

The public witness of fossil fuel divestment – and the ethical renunciation it implies – aims to delegitimize and weaken the political power of the fossil fuel sector and its ability to block carbon regulation, investments in conservation, and renewable energy.

The case for divestment is both ethical and financial. A number of studies indicate that divesting from fossil fuels does not sacrifice financial returns – while remaining in coal, gas, and oil poses considerable financial risks. As movements succeed in pressing for carbon regulation, the assets of the fossil fuel sector will become “stranded” and worth less, driving down investment returns.

"I signed up for individual pledge for moral and ethical reasons, but also because of a business imperative,” said David Blood, formerly of Goldman Sachs and co-founder of Generation Investment. “As an investor, it is important to understand the significant risks of holding carbon assets in their portfolios. A thoughtful way to mitigate that risk is to divest –but also seek opportunities in the transition to low carbon economy.”

Divest and Invest

The fossil fuel divestment movement is going beyond the message to divest and calling for a shift of billions in investments into renewable energy. Global investment in clean energy peaked in 2011, with a record high of $317.9 billion, but has declined the last two years.

Divest-Invest is a call to policymakers, businesses, and investors that we must join forces to accelerate our transition to a low-carbon and equitable economy, close the clean energy investment gap, and move “a clean trillion a year” to meet the massive need for renewable energy and infrastructure. Movement leaders also urge high-impact investments in a “just transition,” building resilient enterprises and communities.

The global divestment and reinvestment movements are gathering steam. Major U.S. religious denominations, including the United Church of Christ and the General Synod of the Church of England, are now divesting from fossil fuels or intensively reviewing their investment practices.

Archbishop Tutu has urged the world to adopt the strategies and tactics that brought an end to Apartheid in our struggle against the worst carbon emitters.

“It makes no sense to invest in companies that undermine our future,” he said. “To serve as custodians of creation is not an empty title; it requires that we act, and with all the urgency this dire situation demands.”

To learn more, visit http://divestinvest.org/.

Chuck Collins is a senior scholar at the Institute for Policy Studies and co-editor of www.inequality.org . He is co-chair of Divest Invest Individual. His most recent book is 99 to 1: How Inequality is Wrecking the World and What We Can Do About It.

Image:  / Shutterstock.com

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