An introduction to Fossil fuel divestment — what is the current status and does it work? by Maik Günther, from the Heinrich-Böll-Foundation.
“Fossil fuel divestment has grown into a truly global movement, with institutions divesting on every continent and permeating every sector of society.”
More than 600 institutions across 76 countries, representing $5 trillion in assets, have committed to divest from fossil fuels. This includes, among others, the world’s largest sovereign wealth fund Norway’s GPFG , and financial giants Allianz and AXA, the Rockefeller Brothers Fund, as well as the cities of San Francisco and Berlin, and Stanford University.
For a social movement that since 2012 has been challenging the business model of the fossil fuel industry by calling to divest — removing capital from stocks, bonds or funds invested in fossil fuel companies — this is momentous.
The Dawn of Fossil Fuel Divestment
The argument that investing in fossil fuels — oil, coal, and gas — is morally problematic started to take shape on US campuses in 2011. Motivated by previous divestment campaigns, for example those against South African Apartheid in the 1980s or the tobacco industry in the 1990s, students urged university boards to withdraw their school’s endowments from fossil fuel companies. Their argument? Investing in companies that contribute to the destruction of the earth contradicts the key mission of higher education in preparing younger generations to shape and protect that earth.
Inspired by these ideas, in 2012 Bill McKibben, founder of environmental NGO 350.org and one of the leading figures-to-be of the global fossil fuel divestment moment, published a landmark article in Rolling Stone magazine. Therein, McKibben addressed three numbers:
2 degrees Celsius: The maximum amount of temperature rise the planet can bear before dangerous climate change occurs
565 gigatons of carbon dioxide: The amount of emissions that can be released before that point is reached (the so-called global carbon budget)
2,795 gigatons of carbon dioxide: The amount of emissions that would be released from burning all reserves currently listed in fossil fuel companies.
These figures, according to McKibben, meant that the unexploited reserves of oil, coal, and gas identified by the global fossil fuel industry equated to five times more carbon than can be emitted before the planet’s temperature would rise by more than two degrees. In other words, if fossil fuel companies eventually extracted and sold every reserve listed in their balance sheets, catastrophic climate change is bound to occur.
To address this mismatch between burnable and to-be-burned carbon, 350.org launched its first divestment campaign in 2012. Building on the students’ ideas, the activists called upon any organization that serves the public good — mostly governments, educational and religious institutions — to cut their ties to the fossil fuel industry. They also urged society to view the fossil fuel industry in a new light and to distance itself from this “rogue industry, reckless like no other force on earth. It is ‘Public Enemy Number One’ to the survival of our planetary civilization.”
Since then, a number of universities, faith-based organizations, foundations, and cities have, to varying degrees, committed to divest from fossil fuels. The movement particularly picked up momentum through divestment announcements by a number of symbolic institutions and endorsements by opinion leaders. In 2014, the World Council of Churches, representing half a billion Christians, ruled out all fossil fuel investments. The Guardian Media Group divested its funds, following its subsidiary newspaper’s “Keep it in the Ground” campaign.
In 2015, the UNFCCC — the UN Secretariat overseeing climate change — backed divestment as “it sends a signal to companies, […] that the age of ‘burn what you like, when you like’ cannot continue.” That same year, the G7 called for a complete decarbonization of the world’s economy. And Leonardo DiCaprio, during an address at Davos’ World Economic Forum in 2016, urged to stop allowing “the corporate greed of the coal, oil and gas industries to determine the future of humanity,” and to “leave fossil fuels in the ground where they belong.”
Fossil Fuel Divestment in the Financial sector
While sparked by a moral imperative — “If it’s wrong to wreck the planet, then it’s also wrong to profit from that wreckage” — moral concerns, over time, became supplemented with concerns about economic risks from stranded assets, and legal attention about fiduciary duty.
Whilst climate-associated risks were certainly present before the campaign, as the movement progressed, the financial sector started to recognize the economic risks of remaining invested in fossil fuels. In particular, the notion of stranded assets, introduced by financial think-tank Carbon Tracker in 2012, signaled a turning point: if the world’s governments fulfill their pledges to tackle climate change by cutting carbon emissions (exacerbated by Paris’ push toward a 1.5 degree future), close to 80% of global fossil fuel reserves would have to be kept in the ground, creating the so called carbon bubble and making investments in them worthless, or stranded.
Today, financial institutions increasingly recognize this risk. In 2014, Bank of England Governor Mark Carney publicly stated that “the vast majority of reserves are unburnable,” while calling for investors to consider the long-term impacts of their decisions. In 2015, the International Monetary Fund and the World Bank called to cut “harmful” fossil fuel subsidies. And a recently launched report by the G20-Financial Stability Board — incorporating the world’s most powerful central bankers and finance ministers — urged companies to disclose climate-related risks of their operations.
In addition to regulative bodies, climate concerns also entered the for-profit financial mainstream — including large insurers, pension funds, and banks — with companies such as AXA and Allianz divesting, and Goldman Sachs, HSBC, and Blackrock, for instance, issuing climate change warnings and calling on investors to incorporate climate risk screenings for new investment decisions.
Besides asset risks, divestment also ignited a debate among legal scholars warning that trustees and investors who fail to consider climate risks may jeopardize their legal duty as fiduciaries. UNFCCC Executive Secretary Christiana Figueres, for instance, while linking the dangerous rise in greenhouse gases in large part to “past investments in […] fossil fuels,” warns that “institutional investors who ignore climate risk face being increasingly seen as blatantly in breach of their fiduciary duty.”
Taken together, fossil fuel divestment today has grown into a truly global movement, with institutions divesting on every continent and permeating every sector of society — from purpose-driven organizations, to cities and faith groups, even mainstreaming into the financial sector. The movement has become the fastest growing divestment campaign in history and, in fact, “one of the great movements of the 21st century,” as heralded by Hans Joachim Schellnhuber, one of the world’s most influential climate scientists.
The Government of Canada to invest $1.8 billion to spur clean innovation in developing countries
MARRAKECH, Morocco, Nov. 16, 2016 /CNW Telbec
Today, the Honourable Catherine McKenna, Minister of Environment and Climate Change, and the Honourable Marie-Claude Bibeau, Minister of International Development and La Francophonie, announced that Canada will invest nearly $1.8 billion to mobilize private-sector support for developing countries’ efforts to transition to cleaner, more sustainable economies.
This funding is part of Canada’s historic $2.65 billion pledge to help countries and communities around the world pollute less, be better equipped to resist the effects of climate change, and make a positive contribution to a global clean economy. It will leverage private-sector investments in areas such as clean technology, climate-smart agriculture, sustainable forestry, and climate-resilient infrastructure. Canada will deliver this support through a range of trusted partners, including multilateral development banks, with demonstrated expertise in innovative finance solutions to address climate change.
Canada’s action on climate change will help communities in Canada and around the world in tangible and meaningful ways such as improved air quality; better, more sustainable jobs; and more access to economic opportunities.
“The global economy is shifting inexorably towards a cleaner, more sustainable future. This shift comes with an opportunity to help some of our world’s most vulnerable populations. This investment will help communities in developing countries create sustainable green jobs and lessen their reliance on more polluting sources of energy. And it will spur innovation by creating new opportunities around the world for the clean-technology sector.” – The Honourable Catherine McKenna, Minister of Environment and Climate Change
“In supporting a wide range of partners and programs, Canada is ensuring that the world’s poorest and most vulnerable have access to the right tools and opportunities to make a difference. With this investment, Canada is not only helping developing countries transition to low-carbon, climate-resilient economies, but we are also advocating for the empowerment of women and girls.” – The Honourable Marie-Claude Bibeau, Minister of International Development and La Francophonie
This funding is in addition to Canada’s investments in bilateral programming to help developing countries reduce greenhouse gas emissions and adapt to the impacts of climate change.
Canada’s bilateral support will focus, in particular, on empowering women and girls, and it will align with our commitment to support the United Nations Sustainable Development Goals.
The 2009 Copenhagen Accord committed the developed world to mobilize $100 billion per year to support green growth and climate resilience in developing countries. This commitment will create tremendous opportunities for business growth and innovation as companies invest in and market clean technology.
According to the World Bank, the Paris Agreement will help open up nearly $23 trillion in new opportunities for climate-smart investments in emerging markets, between now and 2030.
For further information: Caitlin Workman, Press Secretary, Office of the Minister of Environment and Climate Change, 819-938-9436; Media Relations, Environment and Climate Change Canada, 819-938-3338 or 1-844-836-7799 (toll free)
Energy Start-Ups in Germany to Receive Leadership and Robust Assistance
Under the leadership of Germany’s Frank-Walter Steinmeier, Minister of Foreign Affairs and Sigmar Gabriel, Minister of Economic Affairs, a new and exciting organization has been created to assist startups in Germany’s energy and environment space.
With three separate, but interlocking components; (1) THE START UP ENERGY TRANSITION (2) THE PROJECT (3) THE START UP ENERGY TRANSITION AWARD this organization works to facilitate and empower persons, groups, organizations and companies to excel at their maximum potential in the energy sector of the German economy.
The FIRST GLOBAL START-UP AWARD for VISIONARIES and VANGUARDS fighting against climate change. It attracts innovative start-ups and supports them in making their visions become a key success factor for the worldwide energy transition. To support this, we will organize the
The START UP ENERGY TRANSITION TECH FESTIVAL to stimulate new business models by connecting the best of all interdisciplinary stakeholders. Start-ups from around the globe will work together with customers and investors to improve their products and to kick-off new ideas.
And we created the START UP ENERGY TRANSITION NETWORK to ensure a continuous exchange of the best ideas and talents among the participants and our partners and sponsors. We want this network to accelerate co-operations and drive innovation within the international debate on climate change.
The FIRST GLOBAL START-UP AWARD for VISIONARIES and VANGUARDS will officially launch on the 22nd and 23rd of November during the DENA congress with the first annual awards ceremony taking place in March 2017 in Berlin.
German Energy Agency Assists Energy Start-Ups
The German Energy Agency (DENA) is looking for start-ups interested in participating along with other organizations that want to be involved as sponsors, ambassadors, media and network partners.