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Fossil fuels on the backfoot as divestment pledges hit $2.6 trillion

divestment pledges hit $2.6 trillion

Creative Commons: 2015

With renewable energies booming globally, and the fossil fuel industry in terminal decline, the movement to shift investments out of dirty energy towards clean renewables has exploded, topping $2.6 trillion dollars.

New analysis shows that to date over 400 institutions and 2000 individuals have pledged to ditch their holdings in fossil fuels and the movement received its latest ringing endorsement, today, as actor and environmentalist Leonardo DiCaprio announced a pledge to rid himself and his foundation of dirty investments.

Leonardo DiCaprio said:

Climate change is severely impacting the health of our planet and all of its inhabitants, and we must transition to a clean energy economy that does not rely on fossil fuels, the main driver of this global problem. After looking into the growing movement to divest from fossil fuels and invest in climate solutions, I was convinced to make the pledge on behalf of myself and the Leonardo DiCaprio Foundation. Now is the time to divest and invest to let our world leaders know that we, as individuals and institutions, are taking action to address climate change, and we expect them to do their part this December in Paris at the U.N. climate talks.

It is now widely accepted that large swathes of known fossil fuels must be left in the ground if the world is going to limit global temperature rise below the internationally agreed danger threshold of 2C.

Yet despite this warning, research has shown that billions of dollars are still being pumped into finding and developing new, and increasingly risky coal, oil and gas reserves.

These, as well as the vast majority of existing reserves are essentially “unburnable” and are at risk of becoming stranded as climate action devalues fossil fuel assets, causing massive market losses.

In response to this warning – backed up by research from the world’s leading scientists and economists – more and more institutions are pulling their funds out of these risky, dirty energy companies, and shifting their investments into fuelling a renewable energy future.

What began as half a dozen college campuses in 2011, has grown to a global movement that is reaching right to the heart of the financial sector.

 

Today, large pension funds and private sector actors, such as insurance companies, hold over 95% of the total combined assets of those committed to divest, as they look to reduce their carbon risk and harness the benefits of renewables.

This includes Norway’s $900 billion Sovereign Wealth Fund, the California Public Employees’ Retirement System, and Sweden’s AP2 Pension, along with other pension funds in the US, Australia, Norway, and Denmark.

Thomas Van Dyck, Managing Director-Financial Advisor of SRI Wealth Management Group said:

The Report shows that more and more investors are reducing their carbon risk today and diversifying their portfolios with the goal to harness the upside in the sustainable clean growth industries of the future. That underscores what I see every day as a financial advisor–that the demand for fossil-free investment products is increasing.

Meanwhile, the movement is spreading across sectors, with faith and medical institutions also leading the way in highlighting the moral imperative for divestment. To date 126 faith-based organizations with a collective $24 billion in assets have committed to divest, including the World Council of Churches, the Church of England, the United Church of Canada and the Quakers in Britain.

In 2014 the British Medical Association became the first health organization in the world to commit to divest its assets of fossil fuels. Members of the Canadian Medical Association voted to divest from fossil fuels in August 2015.

Rev. Lennox Yearwood, Jr., president and CEO of Hip Hop Caucus said:

This shift in investment flows is especially critical for underserved communities and people living in poverty, who are disproportionately affected by the negative impacts of climate change. Climate change hits the poor first and worst. It is a racial and economic justice issue that must be addressed with solutions like the Divest-Invest movement to empower these communities, eliminate health disparities and drive the shift to a clean energy economy.

In Universities, commitments have nearly tripled in the past year, as 40 educational institutions with $130 billion in assets have pledged to divest. A number of prominent universities have committed in 2014, including the University of California, Georgetown, and Oxford.

State and local governments also continue to support the movement. Providence, Rhode Island became one of the largest cities to commit to divesting all its funds from top coal companies. In Australia, the city of Newcastle— home to the largest coal port in the world – voted to divest, as did the government of the Australian Capital Territory.

May Boeve, Executive Director of 350.org said:

If these numbers tell us anything, it’s that the divestment movement is catching fire. Since starting on the campuses of a few colleges in the U.S., this movement has struck a chord with people across the world who care about climate change, and convinced some of the largest and most influential institutions in the world to begin pulling their money out of climate destruction. That makes me hopeful for our future, and it’s sending a clear message to world leaders as they head into Paris: It’s time for them to follow suit, and divest our governments from fossil fuel companies too.

And the movement continues to grow, further pushing fossil fuels onto the backfoot.

There are still hundreds of active divestment campaigns taking place on campuses, within local governments and against pension funds across the globe, and as more and more institutions wake up to the reputational damage that comes from sinking their money into dirty energy, the campaign continues to clock wins.

The surge in the divestment and investment movement comes at a critical moment, as the world’s leaders converge on Paris in December 2015 to negotiate an agreement to curb catastrophic warming.

Meanwhile, campaigners continue to put pressure on those those companies and governments failing to heed this warning, taking legal action against those seen to be fuelling the climate crisis, adding to the mounting pressure globally for governments to make meaningful commitments to transition to a clean energy economy.

Divesting and investing in clean energy has offered millions of individuals across the world an opportunity to take direct action on climate, challenge fossil fuel companies, take back power from the dirty energy industry and call on their governments to show climate leadership by following investors’ suit and quitting fossil fuels.

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