It is “one minute to midnight” for the climate – do you know where your money is right now? Suston provides a primer on the divest from fossil fuel movement.
The COP26 climate summit opened with a sense of solemnity, standing in stark contrast to the wild celebrations that followed the signing of the Paris Agreement five years earlier. Despite unprecedented ambition levels and global coordination, the world remains on track for a 14% increase in greenhouse gas emissions by 2030 at best, not the 45% decrease required to meet the 1.5°C goal. At the opening ceremony, a somber Prime Minister Boris Johnson warned that it was “one minute to midnight” for the climate.
Thirty years of this kind of political rhetoric (or “blah-blah-blah” as some would call it) have many climate activists saying that this might be as good as it gets if we leave it to our politicians. Instead, it’s time we go for the jugular – fossil fuel financing.
Divestment again? That’s so 2012…
One environmental non-profit pushing for fossil fuel divestment is Protect Our Winters (POW) Europe and its Divest the Dirt campaign. Dan Yates, European Partnerships Manager at POW Europe explains why now is the time to put our money where our mouths are:
“The International Energy Agency has stated that to meet the 1.5°C target in the Paris Agreement, there should be no more development of new oil, gas, or coal beyond 2021, this year is the last year we can allow our banks to be funding new fossil fuel projects if there is any hope of meeting the Paris 2015 target of net zero by 2050.”
Rather than pressuring politicians or big oil directly, Dan Yates believes fossil fuel divestment can provide the greatest leverage and the potential to mortally wound the industry. Indeed, this “potential” of fossil fuel divestment to create meaningful change is regularly cited, and is irresistible to those looking for maximum impact: The UK non-profit Make My Money Matter estimates that greening one’s retirement savings can be 21 times more effective at reducing a person’s carbon footprint than giving up flying, eating a vegetarian diet and switching energy provider – combined.
While a little research and a couple of emails to our bank executives certainly sounds a lot easier than the more demanding lifestyle changes above, the reality is that this promised potential has so far gone unrealized and divestment has spent the second half of the last decade stamped as an utter failure.
Why has it now returned to the forefront? There’s suddenly a whole lot more “skin in the game,” for starters. But first, a little history lesson.
“Divest from Fossil Fuels!” A student movement is born
Divestment is essentially the opposite of investment. In the case of fossil fuel divestment, this refers to the selling off of coal, oil and gas assets like stocks, bonds and investment funds, and a commitment to end fossil fuel sponsorship in the future.
This climate strategy came to the forefront when environmental activist and founder of 350.org Bill McKibben launched the Go Fossil Free: Divest From Fossil Fuels! Campaign in 2012.
“Most people don’t have an oil well in their backyard,” explained Bill McKibben, acknowledging that many people feel distant and disempowered from the fight to curb climate change.
“But everyone lives near some pot of money. And so the climate fight has come to college campuses, to church denominations, to union halls with pension funds. It’s made the abstract very real for millions of campaigners.”
The campaign sent shockwaves across the world and had initial success with several academic institutions pressured by insistent student activists. But before long, it began meeting increased resistance and skepticism. In 2013, Harvard University President Drew Faust denounced the movement in a statement as a moral crusade that would likely have a “negligible financial impact on the affected companies,” arguing that if the university was to sell its fossil fuel shares, “those shares would no doubt find other willing buyers.”
Indeed, within 5 years of its launch the Go Fossil Free campaign had steered roughly $52 billion away from fossil fuel investments – a mere fraction of the $2.7 trillion that just 35 global banks have provided in financing to fossil fuel companies since the signing of the UN Paris Agreement in 2016.
As more and more heavyweights dug in their heals, the campaign lost steam and was soon shrugged off as a misguided flop. Until now.
What a difference a trillion makes
In the months leading up to the COP26 summit, the divestment movement was fanned from a quiet ember and into a roaring flame. Suddenly, the “heavyweights were onboard: New York City announced it would divest its pension fund, the Ford Foundation – built on the profits of the combustion engine, would divest its $16 billion endowment from fossil fuels. Harvard University pivoted 180 degrees in September, announcing it would divest its $50 billion endowment, followed by five major investment groups collectively managing 60 trillion in assets that called on their utilities holdings to decarbonize by 2035.
Returning to the question of why proponents believe divestment might actually work this time? Simply put, trillions might achieve what billions could not.
“Dumbest Movement in History” or with history on its side?
As the divestment movement regains steam, opponents have once again rallied to decry what a ridiculous waste of time and good money it represents – only this time, instead of mocking how little impact it would have, they warn of what may happen should it become too powerful. Dubbed the “Dumbest Movement in History,” predictions range from an unprecedented energy crisis to an inability to implement the transitional fuels and carbon capture technology the UN 1.5°C trajectory requires.
Dan Yates admits it’s too early to say if the current momentum will be enough to make any change at all, lacking a recent success story. But he points to precisely “history” to show that the movement may not be such a bad idea after all:
“Though not recent, the truly formative idea of using divestment by retail banks as a tool for change was the “British Banks” campaign of the 1980s focused on the apartheid South African government,” explains Dan Yates, who continues:
“Public pressure resulted in the withdrawal of most major British banks by 1991, which were refusing to provide any new loans to the South African government. This campaign is credited with being the single most important factor in the end of apartheid in South Africa.”
3 STEPS TO DIVEST FROM FOSSIL FUELS
POW Europe is calling on businesses and individuals to find out what their money might be doing behind their back and take action. The Divest the Dirt campaign provides an actionable three-step plan for what businesses and private citizens can do.
- RESEARCH: Find out if your bank or financial institution is fighting or fueling climate change. POW has partnered with Bank Track and its Fossil Banks project, which has conducted background research on most major European Banks.
- PRESSURE: If the institutions finances fossil fuels or does not have an explicit policy on the matter, contact, question and pressure the CEO. You can do this with a few clicks online at Divest the Dirt.
- FOLLOW THROUGH: If you’re not satisfied with the results of the first two steps, follow through by moving your financing to another financial institutions. Here again, the Fossil Banks project can help.
Main photo: Steve Buissinne