Skip to main content

Divestment as a Long-Term Rather Than a Short-Term Play

April 06, 2015

Divestment 040615The Financial Times over the weekend has a thoughtful take on the fossil-fuel divestment movement, suggesting it can be driven as much by good business sense as ethics.

“This is the thesis of the Carbon Tracker Initiative, a think-tank hoping to make capital markets take the economic and financial implications of climate change seriously,” writes Sophia Grene under the headline “Divestment Refuseniks May Yet Save the Planet.”

Grene quotes Mark Campanale of Carbon Tracker Initiative: “What we support is the case that at some point the burning of fossil fuel will come to an end. The business model of oil companies is looking increasingly unsustainable. A lot of people think this is cyclical [because of the low oil price], but we are making the case it is structural.”

Grene adds that many companies, philanthropies and public entities “are in fact making less comprehensive plans than their supporters might approve, and that a typical commitment “would involve no new investment in oil and tar sands and a promise to divest from companies with more than 50 per cent of their revenue from thermal coal over the coming five years.”

Excerpts:

  • “Given that oil and tar sands are among the most expensive and inefficient ways to produce energy, and the current low oil price means they are unlikely to be profitable in the foreseeable future, these are hardly difficult investment decisions.”
  • “Campanale refuses to be drawn on the relative merits of divestment and engagement, saying only ‘all investors are doing is making a judgment call.’”
  • “It is possible to marry divestment and engagement. This is the strategy of the New School … Although the New School’s $340m endowment fund has stated it will reduce its holdings in the 200 companies on the divestment campaign’s list of shame to less than 1 per cent of its assets within five years, this commitment is part of a wider initiative to reduce its own carbon footprint and study ways to reduce demand for carbon globally.”

Full article.

Join our newsletter

Keep up to date with all the latest from IEEFA