Big numbers – dollars and institutions – behind divestments from fossil fuels

This is a re-post from Yale Climate Connections by Kristen Pope

About $39 trillion – that’s trillion, with a T – is the total some 1,500 institutions are planning to divest from funds in fossil fuels. And those numbers are growing.

The Global Fossil Fuel Divestment Commitments Database, maintained by two nonprofit divestiture advocacy groups, and, tracks institutions that have pledged to divest from fossil fuels fully, partially, or with regard to certain subsets, such as coal. The roughly 1,500 institutions include pension funds, governmental, philanthropic, faith-based, and educational institutions, and others.

Faith-based organizations comprise the single largest group at about 35% of the total, followed by educational institutions (nearly 15%), philanthropic foundations (12.6%), pension funds (11.8%), governments (11.4%), and for-profit corporations (8.7%).

Calling climate change “the most consequential threat facing humanity,” and pointing to a “need to decarbonize the economy,” Harvard University President Lawrence Bacow in September 2021 called an end to the university endowment’s “direct investments in companies that explore for or develop further reserves of fossil fuels.”

Divestment advocates, including a coalition called Divest Harvard, had pushed for the university to divest for nearly a decade. “It was a great triumph of a decade-long struggle by thousands of students and lots of faculty and alumni,” author, writer, and founder Bill McKibben chimed in, commending their “perseverance.”

Nearby Boston University soon followed suit, joining universities, including Brown, California Institute of the Arts, Columbia, Cornell, George Washington, Georgetown, Oxford, Rutgers, Syracuse, and many others in the U.S. and around the world. (Details on Yale University’s fossil fuel investments policy are here and on its implementation of those principles here.)

Divestment seen as no substitute for carbon taxes

Werner Antweiler, environmental economist at the University of British Columbia, says divestments are often symbolic in nature, especially since many of the world’s fossil fuel companies are owned and operated by governments.

“My sense is that these divestments are driven by the need for symbolism, even though they are likely to have very little practical consequence on fossil fuel producers,” Antweiler says. “Many fossil fuel producers around the world are state-owned rather than publicly traded on stock markets, and thus divestment campaigns have zero effect on them.”

While Antweiler praises activists for their efforts to generate climate action, he points out that many people worldwide are reliant on fossil fuels for many aspects of their lives, from driving vehicles to heating homes. Many people simply do not have the option of entirely avoiding fossil fuel use in their daily lives, he says, as cleaner alternative energy solutions are not readily available or affordable in all cases.

“I am a strong advocate of urgent climate action,” Antweiler says. “But as an environmental economist, I also have a good understanding of what works and what doesn’t when it comes to public policy. By far the best policy is to put a price on pollution that reflects the social cost of carbon.”

Antweiler points to the Canadian government’s carbon pollution pricing system, which is setting a price of $170 Canadian (approximately $132 in U.S. currency) per tonne of carbon emissions by 2030, as an example of carbon taxing. Antweiler also emphasizes the importance of investing in new technologies and infrastructure that will support clean energy.

“We are in a climate crisis and what is needed is strong government action – effective carbon pricing,” Antweiler says. “Our countries need to make a transition to net-zero emissions, and this requires investment into clean energy, improving our electricity grids, and transitioning to electric mobility. The problem is not about punishing fossil fuel companies, but about driving investment into everything that helps us make a transition to carbon-free energy.”

Fueling the next generation

Sociologist Sabrina McCormick, an associate professor at George Washington University, works with a range of climate change-related issues.

“I’ve heard people talk about divestment not being the most efficient or targeted strategy to actually move the needle and move forward in our transition to renewables, but I do think it’s a wake-up call to the energy industry about what this growingly powerful group of people wants to see happen,” McCormick says. “So, they may be 18 now, but in a couple of years, they’re going to be the ones – and, in fact, even now they’re the ones – we’re all trying to hire, and so if we want to have this innovative younger generation as a part of our organizations – as we all do – we’re going to need to step up and engage in these kinds of practices.”

McCormick says that if leaders across a wide array of industries and institutions prioritize climate action, real change could be possible. As the next generation of leaders pushes for these changes, they are sending a signal on what today’s youth and tomorrow’s leaders value. The reality that some institutions are under pressure to divest – and many do divest – showcases the power these activists have to influence change.

“I think the divestment movement – because I really do think it is a movement – it both indicates a growing concern, especially [among] young people and millennials, and their ability to influence institutions – the institutions that they patronize – in order to address climate change,” McCormick says.

Posted by Guest Author on Friday, 14 January, 2022

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