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Over the past decade, nearly 1,500 investors and institutions controlling almost $40 trillion in assets have committed to divesting from fossil fuels—a remarkable achievement that climate campaigners applauded Tuesday, while warning that further commitments and action remain crucial.
“Divestment has helped rub much of the shine off what was once the planet’s dominant industry. If money talks, $40 trillion makes a lot of noise.”
“Amidst a depressing era in the race against climate change—with killer fires and titanic storms, political stalemate, and corporate greenwashing—the fossil fuel divestment movement is a source for tremendous optimism,” states a new report—entitled Invest-Divest 2021: A Decade of Progress Toward a Just Climate Future—published Tuesday.
“Ten years in, the divestment movement has grown to become a major global influence on energy policy,” the publication continues. “There are now 1,485 institutions publicly committed to at least some form of fossil fuel divestment, representing an enormous $39.2 trillion of assets under management. That’s as if the two biggest economies in the world, the United States and China, combined, chose to divest from fossil fuels.”
The paper—a joint effort between the Institute for Energy Economics and Financial Analysis, Stand.earth, C40, and the Wallace Global Fund—comes on the eve of the United Nations Climate Conference in Glasgow, and notes that 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 continues:
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 three years since the movement’s most recent report. The true amount of money being pulled out from fossil fuels is almost certainly larger since not all divestment commitments are made public.
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.
“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 U.S. 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.
“Divestment remains a critical strategy for the climate movement,” the publication states. “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.”
Bill McKibben, co-founder of the climate action group 350.org, wrote in a Tuesday New York Times op-ed that “divestment has helped rub much of the shine off what was once the planet’s dominant industry. If money talks, $40 trillion makes a lot of noise.”
“This 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 new report.
The report’s authors contend that institutional investors must agree to three 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; and
- Adopting 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.”
“Societies, economies, and the climate are all changing,” the paper concludes. “The financial world will have to change with them.”
Rev. Lennox Yearwood Jr., president and CEO of Hip Hop Caucus, said in a statement that “the climate crisis is here, and so are climate solutions. We know communities of color are disproportionately impacted by the climate crisis here in the U.S. and across the world. In order to create a just future, we must divest from fossil fuels and invest in communities on the frontlines of the climate crisis.”
“It is not enough to divest from only some fossil fuels or with only some of your portfolio—all investors must immediately divest all fossil fuels from all of their portfolio, while investing in climate solutions.”
Yearwood added that “over 10 years the divest-invest movement has become one of the most powerful global forces in a just transition to a clean energy future.”
Ellen Dorsey, executive director of the Wallace Global Fund, said that “the activist-driven divestment movement has yielded unprecedented and historic results in moving tens of trillions of dollars out of the industry driving the climate crises and exposing its failing business model.”
“But investors need to do more,” she argued. “It is not enough to divest from only some fossil fuels or with only some of your portfolio—all investors must immediately divest all fossil fuels from all of their portfolio, while investing in climate solutions with at least 5% of their portfolios, scaling to 10% rapidly.”
“Mission investors have a unique role to play to ensure the energy transition is a just one and that all people have access to safe, clean and affordable energy by 2030,” Dorsey added. “To do anything less does not address the scale or pace of this climate crisis.”