Divestment Is Pushing Money Away From Fossil Fuels
And by this point, divestment has spread way beyond colleges and universities. Enormous pension funds serving New York City and state employees have announced that they will sell stocks; earlier this year, the Maine legislature ordered the state’s retirement fund to divest; and just last month, Quebec’s big pension fund joined the tide. We’ve seen entire religious groups — the Episcopalians, the Unitarian Universalists, the U.S. Lutherans — join in the call; the Pope has become an outspoken proponent (and many high-profile Catholic institutions have announced they will divest). Mayors of big cities have pledged their support, including Los Angeles, New York, Berlin and London. And an entire country, even: Ireland has announced it will divest its public funds.
And some of the most historically important investors in the world have joined in too: A Rockefeller charity, the heirs to the first great oil fortune, divested early. Just last week, the Ford Foundation got in on the action, adding a great automotive fortune to the tally. This month also saw the first big bank — France’s Banque Postale — announce that it would stop lending to fossil fuel companies before the decade was out.
Since most people don’t have oil wells or coal mines in their backyards, divestment is a way to let a lot of people in on the climate fight, because they have a link to a pension fund, mutual fund, endowment or other pot of money. When we began the divestment campaign, our immediate goal was, as we put it, to “take away the social license” of Big Oil: It was a vehicle to let people know the essential truth about the fossil fuel industry, which is that its oil, gas and coal reserves held five times as much carbon as scientists said we could safely burn. Later this week, the heads of the big oil companies will testify before Congress about whether their companies misled the public about global warming and sought to stymie action on the problem.
The movement has grown so large that it’s now also testing the ability of some companies to raise capital. As early as 2017, Peabody was listing divestment as a major concern; by the next year, Shell was warning shareholders that the campaign could have a “material adverse effect on the price of our securities and our ability to access equity capital markets.”
Early divestment adopters have been handsomely rewarded; over the last five years, the market has gone up at an annual rate of 16 percent, but the oil and gas sector has fallen at an annual rate of 3 percent. Now many investors are putting their money into clean energy, where returns have risen by an annual rate of 22 percent over the same period. And one other sweet result: It was largely alumni of college divestment fights who formed the Sunrise Movement, a group of young climate activists, and championed the proposed Green New Deal; this has been a training ground for activists around the world.