DIVESTMENT

Divestment is a double-edged sword that climate campaigners and the concerned public are using to simultaneously remove finance from the fossil fuel sector, and raise awareness about the need to shift away from our current reliance on the industry.

Obviously the economic impact of one person removing their savings from a bank or switching super funds isn’t going to cripple the fossil fuel industry, but by taking a stand, voting with their money and publicising their actions, those who divest can make a real and measurable impact.

A 2018 article from University of Sussex’s Science Policy Research Unit looked into the impact of divestment: “Divestment has put questions of finance and climate change on the agenda and played a part in changing discourse around the legitimacy, reputation and viability of the fossil fuel industry.

This cultural impact contributed to changes in the finance industry through new demands by shareholders and investors and to changes in political discourse, such as rethinking the notion of ‘fiduciary duty.’ Finally, divestment had significant impact on its participants in terms of empowerment and played a part in the revitalisation of the environmental movement in the UK and elsewhere.”

Financial experts note that divestment has had a significant impact on coal companies in particular:

“We’ve noticed that a growing number of investors and financial institutions have announced bans or restrictions on coal investments, particularly from 2013, which have in our view been a driver of the [circa 60% coal] sector de-rating over the past five years.” – Goldman Sachs, 2018

“Divestment increases the cost of capital for fossil fuel companies. Imperceptibly at first, but then – as coal has found – meaningfully. It also shuts off access to talent, and scares off allies.” – Michael Liebreich, Chairman and CEO, Liebreich Associates

Check out our how to switch banks page to find out more about making the most of divestment action.

As of June 2020, institutions managing more than US$14 trillion have committed to divest, while more than 58,000 individuals have registered divestment commitments of $5.2 billion.

One of the most noteworthy divestment actions to date has been the Norwegian sovereign wealth fund’s decision to ditch its holdings in companies that derive more than 30% of their business or revenue from coal. Valued at over $1 trillion, the fund’s decision to divest was largely brought about by sustained community pressure.

More recently BlackRock, one of the world’s largest fund managers, vowed to divest from thermal coal.

As reported by GoFossilFree.org, some other great examples of institutional divestment include the Rockefeller Brothers Fund, the British Medical Association, New York City and Ireland.

More locally, a host of divestment commitments have been made including the cities of Sydney, Melbourne and Newcastle, La Trobe University and health fund Medibank, among hundreds of other institutions.

Want to tell others about divestment? Check out our campaign materials.