António Guterres, UN Secretary General, uttered those forthright remarks above in the opening speech to the COP26 climate summit in Glasgow. The mood was somber as dignitaries from across the world gathered to assess the state of the climate crisis and to commit to achieving additional zero emissions goals. In the midst of scrutiny and accusations, there was a glimmer of hope, however. That’s because efforts to delegitimize fossil fuel companies are working. Major investors are reorganizing their portfolios and divesting. In fact, nearly 1,500 institutions controlling almost $40 trillion in assets have committed to divesting from fossil fuels.
No More Blah, Blah, Blah!
18-year-old Swede Greta Thunberg, one of the world’s best known climate campaigners, joined protesters Monday at a demonstration outside the COP26 conference. In remarks to the crowd, she called out world leaders for failing to meet their goals to address global warming. “No more blah, blah, blah,” said Thunberg, imploring people in power across the world to act with more urgency in tackling harmful emissions. “No more whatever-the-f–k they’re doing inside there.” Prior to the event, she defended the recent actions of Insulate Britain protesters, who have been blocking roads, saying, “sometimes you need to anger people.”
Greta Thunberg, the environmental activist, joined protesters outside the United Nations climate conference in Glasgow and accused political leaders of inaction in the fight against the climate crisis. https://t.co/VRYbuTNehl pic.twitter.com/23ZqHuduLx
— The New York Times (@nytimes) November 1, 2021
Thunberg’s remarks support the important work of divestment advocates the world over. Divestment is the decision to reduce assets in a particular sector or industry due to moral, ethical, or political reasons. Divestment in contemporary contexts seeks to delegitimize fossil fuel industry assets, and, when it takes on a critical mass, it can have real power to move markets — even when the world’s authority figures drag their proverbial feet at the behest of business.
“Divestment has Helped Rub Much of the Shine Off What was Once the Planet’s Dominant Industry.”
Big Oil once dominated Wall Street, literally setting the market pace as a major component of both the Dow Jones Industrial Average and S&P 500 indices. The 5 largest publicly-traded oil companies (ExxonMobil, Royal Dutch Shell, Chevron, BP, and Total) spent over $1 billion on decades-long lobbying efforts to block climate action and on advertising campaigns to mislead the public about Big Oil’s role in the climate crisis.
But a new report says that those days are over, with ExxonMobil removed from the Dow stock exchange in 2020 and oil and gas companies now making up only 2.7% of the stock market’s value, down from 28%. The report, titled, “Invest-Divest 2021: A Decade of Progress Toward a Just Climate Future,” argues that divestment has “helped rub much of the shine off what was once the planet’s dominant industry.”
What are the key findings of the report?
- An enormous $39.2 trillion of assets under management have been targeted for divestment.
- There are now 1,485 institutions publicly committed to at least some form of fossil fuel divestment. That’s as if the two biggest economies in the world, the US and China, combined, chose to divest from fossil fuels.
- Since the movement’s first summary report in 2014, the amount of total assets publicly committed to divestment has grown by over 75,000%.
- The number of institutional commitments to divestment has grown by 720% in that time, including a 49% increase in just the 3 years since the movement’s most recent report.
- The divestment movement has grown so large that it is now helping hold fossil fuel companies accountable for the true cost of their unregulated carbon pollution.
The report is a joint effort among the Institute for Energy Economics and Financial Analysis, Stand.earth, C40, and the Wallace Global Fund. “Institutions around the world must step up now and commit to joining the divest-invest movement before it is too late—for them, for the economy, and for the world,” the report urges. “If money talks, $40 trillion makes a lot of noise.”
2021 is a Good Year: Major Institutions Delegitimize Fossil Fuel Industry
“Major new divestment commitments from iconic institutions have arrived in a rush over just a few months in late 2021,” the report notes, “including Harvard University, Dutch and Canadian pension fund giants PME and CDPQ, French public bank La Banque Postale, the US city of Baltimore, and the Ford and MacArthur Foundations.”
Underscoring the paper’s assertion, ABP, Europe’s largest pension fund, announced Tuesday that it would stop investing in fossil fuel producers. “This is really fantastic, after all these years of campaigning, we finally succeeded,” said Liset Meddens, director at Fossielvrij NL, according to Common Dreams. Meddens called the development “a huge victory for the climate, human rights, and all life on Earth.” A statement from ABP announcing the move cited the recent climate reports from the International Energy Agency (IEA) and IPCC as motivating the decision and also referenced “broad support” for the change from the fund’s 2.4 million civil servant and teacher members.
The change will affect over $17 billion in assets, roughly 3% of the fund’s total, including ABP’s shares in oil giant Shell. The shift comes because, according to ABP board chair Corien Wortmann, the “board sees the need and urgency for a change of course.”
“We part with our investments in fossil fuel producers because we see insufficient opportunity for us as a shareholder to push for the necessary, significant acceleration of the energy transition at these companies.”
Last month, New York City Mayor Bill de Blasio and Comptroller Scott M. Stringer, along with trustees of 3 of the City’s pension funds, announced a commitment to achieve net zero greenhouse gas emissions in their investment portfolios by 2040. This includes a goal to double investments in climate change solutions, such as renewable energy, energy efficiency, and green real estate, to over $8 billion by 2025 and achieve a total of over $37 billion in climate solutions investments by 2035. These are in line with achieving the Mayor’s State of the City goal of $50 billion in total pension fund investments in climate change solutions by 2035.
Bill McKibben, co-founder of the climate action group 350.org, wrote in a New York Times op-ed that “divestment has helped rub much of the shine off what was once the planet’s dominant industry.”
Starting with the immediate goal to “take away the social license” of Big Oil, McKibben says the movement has now expanded far beyond its origins as a student-driven effort on college campuses. Divestment campaigners now target cities, states, foundations, banks, investment firms, and any player who participates in the global investment pool.
Actually good, major climate news: today New York City is announcing its public pensions are fully divesting out of the fossil fuel industry and into renewables & climate – a massive shift of about $50 billion. 🌎
This move is led by NYC workers. Here’s why this is a big deal.⤵️ https://t.co/JldJ6WTIJ7
— Alexandria Ocasio-Cortez (@AOC) October 21, 2021
Efforts to delegitimize fossil fuels have been “handsomely rewarded,” McKibben shared. “Over the last 5 years, the market has gone up at an annual rate of 16%, but the oil and gas sector has fallen at an annual rate of 3%. Now many investors are putting their money into clean energy, where returns have risen by an annual rate of 22% over the same period.”
The movement will keep growing and keep depriving Big Oil of “both its social license and its access to easy capital,” McKibben said in a separate statement introducing the “Invest-Divest 2021” report.
“Divestment remains a critical strategy for the climate movement,” the report explains. “It must be combined with an accelerated push for investment in a just transition to a clean, renewable energy future if the world is to avoid a future of worsening human injustice and irreversible ecological damage. Financial arguments against divest-invest no longer hold water.”
Final Thoughts about Efforts to Delegitimize Fossil Fuels
The efforts to delegitimize fossil fuel investments are a source for tremendous optimism. The “Invest-Divest 2021” report’s authors outline that institutional investors must agree to 3 principles “if they want to be on the right side of history and humanity.”
- Immediately and publicly commit to fully divesting from and stopping all financing of coal, oil, and gas companies and assets.
- Immediately invest at least 5% of their assets in climate solutions, doubling to 10% by 2030—including investments in renewable energy systems, universal energy access, and a just transition for communities and workers—while holding companies accountable to respecting Indigenous and other human rights and environmental standards.
- Adopt net-zero plans that both immediately cut investments in fossil fuels and ensure that all other assets in their portfolio develop transition plans that reduce absolute emissions by 50% before 2030.
“Institutional investors everywhere are beginning to come to terms with the danger that fossil fuels pose to their investment portfolios, their communities, and their constituencies,” the report states. “This realization is important but it is not enough. Institutions around the world must step up now and commit to joining the divest-invest movement before it is too late—for them, for the economy, and for the world.”
After 10 years of advocacy to delegitimize fossil fuel holdings, the divestment movement has grown to become “a major global influence on energy policy,” the publication concludes. “Societies, economies, and the climate are all changing. The financial world will have to change with them.”
Image retrieved from NOAA (public domain)
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