In my last post, I listed the decision by the Rockefeller Fund to sell shares in fossil fuel companies as well as the growing fossil fuel divestment movement as one of the most significant facts that “pave the road to Paris 2015”. Altogether, the coalition of institutions and individuals pledging to sell some or all of their fossil fuel assets are responsible for at least $50bn of investment in the fossil fuel industry. The Financiual Times (FT) calls it “a global campaign that aims to combat climate change by making fossil fuels as unpopular as tobacco.”
It is interesting that the FT reported this week about a rift emerging among investors in some of the world’s biggest energy companies over their approach to this campaign. Some big investors concerned about global warming say it is better to hang on to shares in oil and gas companies such or coal groups, and use the holdings as a way to engage directly with companies to encourage them to adopt more climate-friendly strategies.
Norway’s huge $845bn oil fund is one of such companies after being advised that active ownership of, and engagement with, fossil fuel companies on climate change was preferable (to a sell out of coal and oil companies).
So dinvest or engage? Or both?
Research by a London-based think-tank, Carbon Tracker, showed that the best way for the world to avoid dangerous climate change is to keep from using most of the known oil, gas and coal reserves. But Carbon Tracker itself does not recommend a pure divestment strategy.
“We’re not advocating blanket divestment,” the CEO Anthony Hobley told the FT. “We think both engagement and divestment together will achieve more. The sum is greater than the parts because either alone isn’t going to achieve the ultimate objective of a climate-secure energy system.” Read the article here
The choice is there
I believe that many investors will think twice before joining the divestment movement as long as demand for energy is strong and renewable energy sources aren’t a realistic alternative to fossil fuels – which may be for many decades. But the choice is there, and the movement is going strong. According to a study by the University of Oxford, the campaign has grown faster than any other previous divestment movement, including those against apartheid in South Africa and against tobacco.
Who knows, maybe one day having assets in a coal company will be as unpopular as smoking. This is definitely an interesting campaign to watch.