Within just a few years, fossil fuel divestment has overtaken previous campaigns targeting apartheid in South Africa and tobacco advertising to become the fastest growing divestment movement in history.
In September, a report from Arabella Advisors found that 436 institutions and 2,040 individuals across 43 countries and representing $2.6 trillion in assets had committed to divest from fossil fuel companies.
What is Fossil Fuel Divestment?
Organisations, communities and individuals commit to fossil fuel divestment (FFD) by making a public pledge to stop buying stocks, bonds and investment funds from energy companies whose primary business relies upon coal, gas or oil. They also promise to invest in climate solutions, such as clean energy and sustainable agriculture.
Who’s involved in FFD?
The roots of the FFD movement may be found in the college campuses of the United States, where student campaigning has resulted in around 40 educational institutions (including the universities of California, Georgetown and Stanford) making full or partial divestments from fossil fuels.
The movement has spread rapidly beyond the education sector, taking in religious groups, municipalities, NGOs and healthcare organisations. While most divesting institutions are US-based, FFD has also become a worldwide movement, with the cities of Oslo in Norway and Uppsala in Sweden, and the Australian Capital Territory Government making their own commitments. Pledges to divest from fossil fuels have also been made by some surprising sources, including the Australian city of Newcastle (home to the largest coal port in the world) and the Rockefeller Brothers Fund (heirs to the Rockefeller oil fortune).
In the UK, the FFD movement has also seen exponential growth. Last year, the University of Glasgow became the first academic institution in Europe to divest from the fossil fuel industry. Since then, other higher education institutions, including the universities of Oxford and Surrey and the School of Oriental and African Studies (SOAS) have made pledges to reduce their fossil fuel investments.
Four UK local authorities – Oxford, Bristol, Kirklees and Cambridge – have committed to FFD, while councils in York, Bradford, Reading and Hackney are reviewing their fossil fuel investments.
Other high-profile organisations committing to FFD include the British Medical Association and the Environment Agency’s pension fund.
The factors driving FFD
Moral and economic arguments have converged to propel fossil fuel divestment. FFD advocates say it’s morally wrong to profit from climate change, a view powerfully expressed by Nobel laureate Archbishop Desmond Tutu:
“Just as we argued in the 1980s that those who conducted business with apartheid South Africa were aiding and abetting an immoral system, we can say that nobody should profit from the rising temperatures, seas, and human suffering caused by the burning of fossil fuels.”
There is also a growing recognition in the business world of the financial risks associated with investment in fossil fuels. As the Arabella Advisors report observed:
“Reports by Citigroup analysts, HSBC, Mercer, the International Energy Agency, Bank of England, Carbon Tracker Initiative, and others have offered evidence of a significant, quantifiable risk to portfolios exposed to fossil fuel assets in a carbon constrained world. The leaders of several of the largest institutions to divest in the past year have cited climate risk to investment portfolios as a key factor in their decisions.”
At the same time, falling costs have made renewable energy more attractive both to consumers and investors, although investment in clean energy is far from the estimated $1 trillion annually needed to limit global warming to 2˚C.
Resistance and resurgence
FFD is not without its critics, and some organisations have resisted pressure to change. Last month the Massachusetts Institute of Technology (MIT) rejected calls to divest its endowment from the fossil fuel industry. Instead, MIT argued that engaging with the fossil fuels industry was a more effective way to address climate change. Similarly, Harvard University has declined to stop buying fossil fuel company stocks, claiming its research and teaching contributes to a better understanding of global warming.
But FFD campaigners are not backing down. In May the University of Edinburgh ruled out a wholesale sell-off of its £27m investments in oil, gas and coal companies. However, after a 10-day occupation by students the university clarified its position, and announced it would fully divest from three of the world’s biggest fossil fuel producers within six months.
There is also growing pressure on local authority pension funds to reduce their fossil fuel investments. In September, it was reported that UK local government pension funds hold over £14 billion in coal, oil and gas companies.
The focus now shifts to the UN Climate Change Conference, starting today in Paris. Divestment campaigners are making it clear that they expect governments attending the Paris summit to follow the lead of the FFD movement by committing to phase out support for the consumption and production of fossil fuels.
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