As the undeniable consequences of the climate crisis abound all around us, in some positive news, divestment from the fossil fuel sector is steadily on the rise, as documented in the 2021 Invest Divest Report released October 26th. Dozens of organizations, including Green America, have endorsed the report, produced by the Institute for Energy Economic and Financial Analysis, STAND.earth, C40, and the Wallace Global Fund.
Divestment, the act of pulling one’s assets from an unacceptable investment, is a powerful strategy for social change, especially when part of a larger social change movement. Fossil fuel divestment now involves 1,495 institutions in 71 countries that have made public commitments and represents $39.2 trillion of assets under management. These commitments are for both full and partial divestment. Incredibly, this represents a 75,000 percent increase in assets from the first report in 2014. Since this only includes public divestment announcements, and institutional money, we know the actual number is even higher.
As the report discusses, thanks to student activists, the divestment movement jump-started on college campuses. Now, however, religious organizations, charitable foundations, governments, pension funds, companies, non-profit organizations, healthcare institutions, and others are joining this strategy to align their assets with their values.
The success of the fossil fuel divestment movement is seen not only in its growth but in its political and economic impacts. As more institutions publicly divest to protect the climate and life on earth, holding fossil fuels is increasingly stigmatized and viewed as an immoral choice. With the passage of time, fossil fuel divesting is also understood as a financially sound and prudent investment strategy. As the Rockefeller Foundation, founded on oil profits, states: “We’re confident that sound portfolios can be created without exposure to fossil fuels, and our investment performance since 2014 supports that belief.”
The report cites BlackRock, the largest investment firm in the world, on the benefits of fossil fuel divestment, now that multi-year divestment financial data is available: “…no investors found significant negative performance from divestment, but rather, have reported neutral to positive results.
Insurance firms, credit rating agencies, banks, and others are finally taking a hard look at “stranded assets” -- fossil fuels that must remain in the ground to prevent the worst climate impacts and which will therefore lose all value in a clean energy economy. Fossil fuel stocks now regularly underperform the market.
The report also notes that even where divestment is lacking, financial institutions and companies are feeling increasingly pressured to demonstrate they are moving away from fossil fuels. More and more of them are claiming “net zero” goals by 2050, “without sufficient short term targets, realistic plans for implementation, or, most importantly, clear policies for excluding fossil fuels. However, they are an important signal that pressure from the movement is effective and expanding.”
The Invest-Divest report and movement now call on all institutional investors to:
Publicly commit to fully divest from fossil fuels where past commitments were partial;
Invest at least 5% of their assets now in climate solutions and increase that to 10% by 2030; including support for a just transition that supports workers and communities most harmed by the climate crisis and fossil fuel industries;
Adopt net zero plans that end fossil fuel investment and have all other assets are linked to transition plans that cut emissions in half by 2030.
All of us, institutions and individuals, must take action on climate; please use and share these Green America resources to help us achieve the clean energy future the times demand:
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