What is DivestInvest?
DivestInvest is a global movement of investors working to accelerate the clean energy transition. It centers on moving investments away from fossil fuel companies and into climate solutions such as energy efficiency, renewable energy, battery storage, sustainable agriculture and clean energy access.
Why are people doing it?
Every investor will have their own rationale for acting but the three most common are ethical, financial and legal. Ethical, because it's unseemly to profit from companies driving climate change. Financial, because the fossil fuel industry is in decline while clean energy is booming. Legal, because fiduciaries have a duty to manage climate risk and divestment pulls portfolios out of harm's way.
Does DivestInvest really change anything?
DivestInvest has already made real change, enabling society to envision an economy beyond fossil fuels. It also sends a strong signal to governments, the market, and civil society that a powerful investor movement supports increased ambition on climate change. Then UNFCCC Executive Director Christiana Figueres said DivestInvest was instrumental in enabling the Paris Agreement. Hans Joachim Schellnhuber, founding director of the Potsdam Institute for Climate Impact Research in Germany, said the divestment campaign is the most important action that has ever happened on climate change. The invest side is equally important and DivestInvest ensures more money is flowing to climate solutions, such as renewable energy. For many investors, DivestInvest has improved returns too.
What effect does this have on fossil fuel sector?
The stigmatization of the fossil fuel sector has profound consequences. Reputation matters: companies like Peabody Coal noted in their reports to shareholders that divestment is a material threat to its business (Peabody emerged from bankruptcy proceedings in May 2017). Fossil fuel companies are struggling to recruit young talent. Also, as HSBC said about divestment, “Less demand for shares and bonds ultimately increases the cost of capital to companies and limits the ability to finance expensive projects, which is particularly damaging in a sector where projects are inherently long term.”
How much money has actually moved away from fossil fuels and into climate solutions?
The tally on this site represents total assets held by institutions that have committed to some form of divestment (ranging from just selling coal investments to divesting from all fossil fuels). The specific value of assets divested or invested is not shared by most organizations so we cannot track it.
Don’t we still need fossil fuels?
It is entirely possible for the world to be powered only by renewable energy, as shown by numerous studies including by Stanford University. No one is expecting the transition to happen overnight. But with the majority of new power generating capacity installed coming from renewables, and the rapid proliferation of technologies including electric vehicles, we are very close to a tipping point where all new energy around the world comes from renewables. It's this growth in supply that matters for investors.
How much investment is needed in renewable energy?
Estimates of clean energy investments needed vary, but a common figure cited is $1 trillion per year. This is achievable if the world’s markets and subsidy regimes move away from fossil fuels and into renewables.
Aren’t most fossil fuels owned by national oil companies?
Yes, most reserves are owned by national companies. This only increases the rationale for divesting from public companies, whose higher costs, and less government protection, mean their assets will be stranded first.
Isn’t engaging with fossil fuel companies more effective?
Investors have been trying to change the fossil fuel sector for decades without effect. The Rockefeller family, founders of Exxon Mobil, gave up after 15 years of unsuccessful attempts. In the face of growing shareholder pressure today, the fossil fuel companies continue to seek to expand their fossil fuel business, rather than acknowledge the need for society to slash fossil fuel use and replace it with renewable energy.
Divest Invest Newsletter