At last, divestment is hitting the fossil fuel industry
where it hurts
Bill McKibben
Trillions of dollars of investments are being taken out of
carbon-intensive companies. Governments must now take notice
@billmckibben
Sun 16 Dec 2018 17.37 GMT Last modified on Sun 16 Dec 2018
18.08 GMT
‘We have recently marked the 1,000th divestment in what has
become by far the largest anti-corporate campaign of its kind.’ Photograph:
Dazman/Getty Images/iStockphoto
I remember well the first institution to announce it was
divesting from fossil fuel. It was 2012 and I was on the second week of a
gruelling tour across the US trying to spark a movement. Our roadshow had been
playing to packed houses down the west coast, and we’d crossed the continent to
Portland, Maine. As a raucous crowd jammed the biggest theatre in town, a
physicist named Stephen Mulkey took the mic. He was at the time president of
the tiny Unity College in the state’s rural interior, and he announced that
over the weekend its trustees had voted to sell their shares in coal, oil and
gas companies. “The time is long overdue for all investors to take a hard look
at the consequences of supporting an industry that persists in destructive
practices,” he said.
Six years later, we have marked the 1,000th divestment in
what has become by far the largest anti-corporate campaign of its kind. The
latest to sell their shares – major French and Australian pension funds, and
Brandeis University in Massachusetts – bring the total size of portfolios and
endowments in the campaign to just under $8 trillion (£6.4tn).
The list of institutions that have cut their ties with this
most destructive of industries encompasses religious institutions large and
small (the World Council of Churches, the Unitarians, the Lutherans, the
Islamic Society of North America, Japanese Buddhist temples, the diocese of
Assisi); philanthropic foundations (even the Rockefeller family, heir to the
first great oil fortune, divested its family charities); and colleges and
universities from Edinburgh to Sydney to Honolulu are on board, with more
joining each week. Forty big Catholic institutions have already divested; now a
campaign is urging the Vatican bank itself to follow suit. Ditto with the Nobel
Foundation, the world’s great art museums, and every other iconic institution
that works for a better world.
Thanks to the efforts of groups such as People & Planet
(and to the Guardian, which ran an inspiring campaign), half the UK’s higher
education institutions are on the list. And so are harder-nosed players, from
the Norwegian sovereign wealth fund (at a trillion dollars, the largest pool of
investment capital on Earth) to European insurance giants such as Axa and
Allianz. It has been endorsed by everyone from Leonardo DiCaprio to Barack
Obama to Ban Ki-moon (and, crucially, by Desmond Tutu, who helped run the first
such campaign a generation ago, when the target was apartheid).
And the momentum just keeps growing: 2018 began with New
York City deciding to divest its $189bn pension funds. Soon the London mayor
Sadiq Khan was on board, joining the New York mayor Bill de Blasio to persuade
the other financial capitals of the planet to sell. By midsummer Ireland became
the first nation to divest its public funds. And this month, a cross-party
group of 200 MPs and former MPs called on the their pension fund to phase out
its substantial investment in fossil fuel giants.
Heavy hitters like that make it clear that the first line of
objection to fossil fuel divestment has long since been laid to rest: this is
one big action you can take against climate change without big cost. Indeed,
early divesters have made out like green-tinged bandits: since the fossil fuel
sector has badly underperformed on the market over recent years, moving money
into other investments has dramatically increased returns. Pity, for instance,
the New York state comptroller Thomas DeNapoli – unlike his New York City
counterpart, he refused to divest, and the cost has been about $17,000 per
pensioner.
The deeper question, though, is whether divestment is making
a dent in the fossil fuel industry. And there the answer is even clearer: this
has become the deepest challenge yet to the companies that have kept us on the
path to climate destruction.
At first we thought our biggest effect would be to rob
fossil fuel companies of their social licence. Since their political lobbying
power is above all what prevents governments taking serious action on global
warming, that would have been worth the fight. And indeed academic research
makes it clear that’s happened – one study concluded that “liberal policy ideas
(such as a carbon tax), which had previously been marginalised in the US
debate, gained increased attention and legitimacy”. That makes sense: most
people don’t have a coal mine or gas pipeline in their backyard, but everyone
has – through their alma mater, their church, their local government – some
connection to a large pot of money.
As time went on, though, it became clear that divestment was
also squeezing the industry. Peabody, the world’s biggest coal company,
announced plans for bankruptcy in 2016; on the list of reasons for its
problems, it counted the divestment movement, which was making it hard to raise
capital. Indeed, just a few weeks ago analysts at that radical collective
Goldman Sachs said the “divestment movement has been a key driver of the coal
sector’s 60% de-rating over the past five years”.
Now the contagion seems to be spreading to the oil and gas
sector, where Shell announced earlier this year that divestment should be
considered a “material risk” to its business. That’s how oil companies across
the world are treating it – in the US, petroleum producers have set up a
website designed to discredit divestment,. and for a while had me under
round-the-clock public surveillance. The pressure is not preventing anyone from
acting: when Yale arrested 48 brave students who were occupying its investment
offices last week, they left chanting: “We’ll be back.”
Divestment by itself is not going to win the climate fight.
But by weakening – reputationally and financially – those players that are
determined to stick to business as usual, it’s one crucial part of a broader
strategy. The Carbon Tracker initiative in London published the first report
laying out the fact that the fossil fuel industry has five times more carbon in
its reserves than any climate scientist thinks is safe. And with activists
marching and going to jail, phrases such as “stranded assets” were soon
appearing in the mouths of everyone from hedge fund managers to the governor of
the Bank of England.
As Christiana Figueres, the former UN climate chief who
managed to push through the Paris accords in 2015, put it: “The pensions, life
insurances and nest eggs of billions of ordinary people depend on the long-term
security and stability of institutional investment funds. Climate change
increasingly poses one of the biggest long-term threats to those investments
and the wealth of the global economy.” Last year she turned down an honorary
degree from a US university because it hadn’t yet sold its stock.
We can’t count on governments alone to do the work necessary
– governments, from Canada and America to Russia and Saudi Arabia to China and
India, are still too often beholden to the fossil fuel companies. We need to
keep pushing hard on those companies – and we will.
• Bill McKibben is a writer and co-founder of the climate
campaign 350.org
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