Fossil Fuel Divestment Doubles In Size, Reaching $5 Trillion
Global fossil fuel divestment continues to grow, with new figures showing that divestment has doubled in size, and now represents $5 trillion in assets under management across 688 institutions in 76 countries.
According to a new report from Arabella Advisors, the global divestment of fossil fuels doubled in size since September of 2015, and contains commitments from 688 institutions and 58,399 individuals, across 76 countries, representing $5 trillion in assets under management. The report, Global Fossil Fuel Divestment and Clean Energy Investment Movement, was published Monday by the Divest-Invest network exactly a year after the Paris Agreement was reached.
“As we enter the final weeks of 2016, the hottest year in history, the success of the divestment movement is undeniable,” said May Boeve, 350.org Executive Director. “What began on a few college campuses in the US has spread to every corner of the world, squarely into the financial mainstream. Divestment has permeated every sector of society: from universities and pension funds, to philanthropic and cultural institutions, to cities, faith groups, insurance companies and more. Now at $5 trillion, the movement is unstoppable. Institutions and investors must choose whether to be on the right side of history.”
“In the face of intensifying climate impacts, and regressive and anti-climate governments like the Trump administration, it’s more critical than ever that our institutions — especially at the local level — step up to break free from fossil fuel companies.”
The authors of the report make an interesting analysis of the global divestment movement, which originally started out as a movement “sparked by mission-driven institutions acting out of a moral imperative to confront the climate crisis.” The second wave of divestment was “driven by financial concerns about economic risk from stranded fossil fuel assets” — a topic we have discussed at length here at CleanTechnica. However, the authors note that since then, the reasons for divestment have expanded, and gained more legitimacy:
“Now, diverse legal scholars, businesses, and investors are warning that fiduciaries who fail to consider climate change risks in their investment analyses and decisions may be at risk of breaching their legal duty as fiduciaries. The emerging view that fiduciary duty may actively compel divestment of fossil fuels has the potential to pressure financial managers and institutions that once argued their fiduciary roles acted as a barrier to consideration of climate risk.”
“The financial markets are fast losing faith in the investment case for fossil fuels,” said Mark Campanale, founder and executive director of Carbon Tracker Initiative. “A technological revolution is underway in the energy and transportation sectors, as cheap solar and electric cars take away demand for coal and oil. With a climate trifecta of physical risks, stranded assets and the threat of legal liability — fiduciaries are now on notice to implement measures to protect their portfolios. Over time, climate risk management will likely become an enforceable obligation, as financial market regulators stand ready to move from rhetoric to tough action.”
The outworking of these trends is the emergence of new clean energy investment vehicles, fossil-free funds, large investment deals, capital commitments, and coalitions all driving more capital to the clean energy sector — buoyed by the clean energy sector’s own growth and development. As such, clean energy investment reached $329 billion in 2015, thanks in part to several divesting institutions making commitments to redirect their investments to clean energy. Specifically, the report concludes that individuals and institutions “that have pledged to both divest and invest in clean energy and climate solutions collectively hold $1.3 trillion in assets” — a healthy reservoir of potential investment into clean energy.
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